Pallets and Reusable Asset Management in the Chinese Supply Chain – China Fast Forward

Last December, a major pallet conference was held in Wuxi, Jiansu province, China. Victor Cheng, Pres/CEO of iLogic, was on hand to fill in attendees about current pallet trends in the U.S. and Canada. Vic, the only invited speaker from North America at the event, introduced masLogic™ – iLogic’s flagship asset tracking platform. Maslogic was selected last year by the 9BLOC pallet pool for its launch in the U.S.

In developing an asset pooling system, Victor stressed that crucial success factors include standards, web-based framework, best practices, collaboration and key customer endorsements.

Other speakers at the conference included representatives of major international pallet rental companies and several recognized economists and logistics specialists.

Vic recently took the time to respond to some of my questions in this www.packgingrevolution.net exclusive, and I came away with the sense that in China, progress in the area of logistics is moving fast:

 

Vic, you recently attended a pallet conference in China. What group organizes it – the pallet manufacturing industry, or the pallet customer and logistics sector? How was it received in terms of audience size, demographics, etc.

It was a real honour for iLogic to be invited to speak at this important event last December. The name of the conference was the “2012 China Pallet International Conference & 2012 Annual Meeting of Global Pallet Entrepreneurs”. This conference was organized by the China Pallet Professional Committee and the Asia Pallet System Federation. China Pallet Professional Committee is an Association mainly composed of pallet manufacturers in China. The Asia Pallet System Federation is a group representing the pallet industries in Japan, Korea and China.

A majority of the attendees were owners and senior management of pallet and container companies. However, industry observers, pallet users, supply chain experts, government officials, pallet industry suppliers and academics were also in the audience.

There were more than 200 people attending this conference. They came from all regions of China as well as from countries including Korea, India, Japan, Australia, Europe and North America.

vic-cheng-ilogic

Victor Cheng speaking at the China International Pallet Conference in December 2012.

 

What did you speak about, and how did it resonate.

I addressed two topics during my talk: 1. The status and trends of the North American pallet industry and 2. the role of information technology in the management of returnable assets. I gave a brief introduction of our masLogic returnable assets management software platform and demonstrated how technology can contribute to logistics efficiency as well as environmental sustainability. I suggested a number of critical success factors for the pallet industry, based on what we have learned in the past 25 years in the pallet management software business.

The industry trends and technology topics were both very well received by the audience. The audience was also very curious and enthusiastic about best practices and ideas which can help them grow their businesses. From the numerous discussions we had during and after the conference, it’s apparent that there are tremendous opportunities for collaboration and synergy. I was also aware of the potential role that iLogic can play in connecting the various interested parties.

 

What was your impression of the event, and what did you identify as some of the key issues of concern for pallet suppliers, as well as for the customer size of the equation.

My overall impression of the event was extremely positive. There was a tremendous sense of optimism and enthusiasm amongst the delegates. The domestic as well as the international demand for their products and services is growing and the potential for rapid future growth is attainable.

As I saw it, their major concern is business direction, container standardization, operation efficiency, role of recycling, environmental sustainability, and the general investment trends and economic outlook of the country.

Compared to North America, the China pallet industry is still new. There appeared to be a keen interest amongst many participants to learn more about the business models of successful N. American pallet companies as well as what products, services and systems their North American counterparts employ to make money.

 

Were you surprised by anything?

I was surprised by the rate of change and diversity of China as well as some of the participants’ knowledge of the global pallet industry. Compared to Canada, China is growing and changing in many areas at a breath taking pace. As I toured different parts of China, I was in awe of the improvement in transportation infrastructure, advancement in renewable energy and growth in social and education systems.

I was also surprised by the diversity of China. Depending on which part of the country you are in, China could be very different in terms of culture, transportation and network infrastructure, investment velocity, government influence, and business practices.

I was definitely impressed by the willingness and zest of many of the Chinese pallet industry entrepreneurs to educate themselves about the pallet industry. They traveled globally and tirelessly to learn about our industry’s trends, new ideas and best practices.

 

What is your sense of the logistics transformation going on in China, in terms of infrastructure development and the rate of change, and how does relate to the role of the unit load in general, and the pallet in particular.

Overall, there is room for improvement in China’s supply chain systems. Some industry studies estimate that in developed countries, the supply chain logistics cost constitutes approximately 9 to 11 percent of GDP. Whereas in China, the logistics costs were estimated to be around 20% of GDP. The relatively lower efficiency could be due to ineffective infrastructure, unnecessary transportation, repeated handling and material damage or loss. If calculated at 10% of GDP, excess consumption in logistics costs in China should be about 1 trillion yuan, or more than 100 billion US dollars annually. Thus, establishing a highly efficient and low-cost logistics system is critical and significant to the sustainable development of China’s economy.

There are industry and government experts who recognize the importance of the role of unit load in logistics efficiency. The amount of containers and pallets in use is increasing at a rapid rate. There are some related governmental initiatives coming out in China which encourage and facilitate a wider adoption of the unit load technology.

 

Is there a strong interest in reuse and pallet management, or is it more of an expendable pallet market for fast moving consumer goods?

In order to serve a growing, vast and diversified country like China, it is likely that one-way, exchange and other models will be used at the same time. Due to the limited supply of raw materials as well as increased environmental concerns, I also see a strong emerging trend towards reuse and recycling in China’s pallet industry.

As the number of pallets continues to grow in China, there is an important and urgent need to manage these mobile assets efficiently. Many of the conference delegates showed an interest in masLogic to help them manage their own or their customers’ asset pools, and to explore the synergies in working with their North American counterparts.

 

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