Australian Logistics Council Hopes to Improve the Australian Pallet System

It looks like relief might finally be on the horizon for Australia’s complex and sometimes contentious pallet system, although insiders stress that there will be no easy fix. Australia’s two largest pallet providers – CHEP and LOSCAM – have joined with members of the Australian Logistics Council to focus on improving the efficient use of pallets in the Australian supply chain.

“As the peak national body representing the major companies participating in the Australian freight logistics industry, ALC is encouraging collaboration among the key players to drive productivity and efficiency in our national and international supply chains”, said Michael Kilgariff, ALC Managing Director. “ALC is now calling for expressions of interest from ALC Members to participate in the Working Group that has been established to address these important issues.”

“All participants in the supply chain – including suppliers, transporters, retailers and pallet providers – have an interest in promoting their more efficient use,” Kilgariff said. “However, until now there has not been a nationally consistent approach to the development, promotion and implementation of best practice for the use of pallets in Australia. This has led to the application of inconsistent practices across the industry as well as conflicting information being provided among supply chain participants, all of which affects efficiency and productivity.”

Simplification of the system should help eliminate abuse and promote fairness. “Having a complicated pallet system provokes gains and losses between trading partners, more rejections and corrections, and generally more effort to manage accounts,” added Andrew Whittam, CEO of Adelaide-based 2ic Software, the world’s leading supplier of independent pallet management software. “Losses in particular create disputes and extra work for both pallet controllers and management. Simplifying the system can only increase overall efficiency.” 2ic Software’s 2ic Pallets application allows pallet users to manage multiple pallet pools, including CHEP and Loscam, through a single interface.

According to Kilgariff, the working group will aim to deliver a greater degree of national consistency and uniformity when it comes to the use of pallets by supply chain participants. “It will be responsible for developing and implementing a process guideline for dispute resolution for pallet transactions across the supply chain,” he said.

“This is a very positive step for stakeholders right across the supply chain,” commented Phillip Austin, CHEP Australia & NZ President. “I’m looking forward to working with other members of ALC to develop a best practice model to bring increased clarity and efficiency to the pallet hire process.”

Daniel Bunnett, LOSCAM’s Regional Director said, “LOSCAM supports the establishment of the ALC Pallet WorkingGroup as it will help drive greater collaboration and transparency across the industry and also deliver greater standardisation and understanding along the entire supply chain.”

After years of frustration, Whittam cautions that the fix may not be quick and easy. “Reform appears straightforward on the surface – everyone has an opinion on how to fix it – but there are many factors to consider. From a financial point of view, pooling systems are generally have transfer fees, equipment rental, or both. Pallet company revenue and the costs for each party must not be radically different to the current system to allow a smooth transition and acceptance from everyone. The system needs to ensure responsibility for the equipment as it flows through the supply chain. It must not encourage bad practices, like not submitting transfers for processing, or become an exchange-only system. There is more to it than meets the eye.”

Guarded optimism is also expressed by John Stuart of Pallet Loss Prevention, whose comments below are reproduced with permission from Australasian Transport News:

“Pallet pooling or pallet hire in Australia is a good model but over the years it has been widely recognised that it is not working efficiently and reform is needed.  It operates like a football match where there are no rules, no umpires, half a dozen teams and every man for himself.  If you are a small player and not fully alert then you could end up in a bad way.  In 2008 the Victorian transport Association approached the Victorian Small Business Commissioner to try and get agreement on what the rules should be and how to resolve disputes.  A group of wise men from the major players were invited to work through the issues and by the end of 2011 the end result was a draft voluntary code of conduct.
A crossroads had now been reached and among the choices were to sign off on the voluntary code or to have the Federal Government legislate a mandatory code such as exists for franchising and other areas where small players needed to be protected.  CHEP and Loscam support the need for reform and it appears that they believe this can best be achieved through the Australian Logistics Council (ALC).  The ALC membership includes many of the major players and has the potential to take the reform process to the next step.  The press release from the ALC will be welcomed by many in industry but the small players will be asking if their interests will be looked after.  The challenge for the ALC will be to get all the big players to agree on a fair process and then to have the reforms implemented within a reasonable time frame.   Until meaningful change is implemented the game will continue without rules, albeit there has been some encouraging signs from some of the major players.
The ALC initiative may not be the only way to achieve pallet hire reform but industry will be hoping that it succeeds”.

All ALC Members are eligible to be on the Working Group. Other industry members may only be invited to contribute by invitation of the ALC Board. The Terms of Reference for the ALC Pallet Process Standards Working Group is available at www.austlogistics.com.au under the Regulation tab.

 

 

 

 

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