Pallet Rental: What Does CHEP Do?

CHEP pallets dominate the pallet rental market for fast-moving consumer goods.

CHEP, a Brambles company, is the world’s leading provider of pallet and container rental or hire services, serving over 500,000 customer locations in more than 55 countries, served by 775 service centers. With an inventory of more than 300 million of its distinctive blue CHEP pallets, the basis of the company’s business model is to supply pallets to customers that they use to palletize goods for shipment. CHEP collects them after delivery when they are emptied, refurbishing them as necessary before reissuing them to other customers. In some markets such as Australia, CHEP pallets may also be exchanged between trading partners and returned when broken or no longer needed.

Why Does CHEP Use Blue Pallets?

If you are wondering why there are so many blue pallets, the answer is that CHEP paints its pallets blue. CHEP uses blue as a pallet color coding aid as well as a marketing advantage. The blue color makes pallet identification easier. It helps facilitate inventory audits in customer warehouses, for example, or in spotting its pallets from a distance at processing plants or distribution centers. The distinctive blue color also stands out, and hence, has been a marketing advantage for the company.

How Does CHEP Work?

The CHEP pallet system works through a rental or hire model. Pallet rental, a service pioneered and now dominated by CHEP, offers many attractive benefits to pallet users. Because of CHEP’s extensive network, it can often reissue pallets in the region from which they are recovered, thus helping to avoid the expense and negative environmental impact of repositioning them great distances, as might be required in a long-distance “point to point” pallet retrieval system, or example.

Additionally, as a “pay per use” or sharing economy model, it allows pallet users to pay only for the pallet or container trip rather than the entire price of purchasing a pallet or container. This model enables shippers and their customers to enjoy the benefits of a higher quality pallet than would typically be possible when pallets are purchased by the shipper.

Benefits to the Shipper

• Order pallets only as needed, avoiding the necessity to carry extra pallets during slow periods
• Easier to budget, less susceptiple to lumber pricing volatility
• Consistently high quality pallets
• Reduced product damage
• Widely accepted by customers
• Cheaper freight rates because pallet exchange and backhaul not required.

Benefits to the Receiver (Distributor, Retailer, OEM)

• Predictable inbound quality supports more efficient unloading and loading
• Reduced product damage
• Reduced or eliminated pallet purchase or repair
• Reduced solid waste generation
• Improved racking safety

Benefits to the Transport Provider

• Eliminates pallet exchange or acceptance disputes at the receiver location
• Eliminates carrier accountability for pallet management
• Faster turnaround times during loading and unloading

What Do CHEP Pallets Cost?

The price of a new CHEP pallet is comparable to that of a similar quality wood pallet. As a CHEP customer, however, you pay for the rental or hire, unless you are unable to account for missing hires, in which case you may be charged for the missing equipment. Typically, CHEP and other rental pool pallets are premium-priced units, designed for durability and long service life.

What Is the Standard Size of a CHEP Pallet?

CHEP pallets typically match the standard pallet size of the country or economic market being served. So, for example, the primary pallet size if 48×40-inch in the Americas. In the UK, the standard CHEP pallet size is 1200×1000 mm, while in continental Europe it is 1200×800 mm. In Australia, it is 1165×1165 mm. In newer pallet markets, the trend is towards the 1200×1000 mm pallet footprint. CHEP has also developed fractional sized platforms such as half pallets and quarter pallets, which can help optimize retail display while reducing stocking labor.

History of CHEP

CHEP, originally the Commonwealth Handling Equipment Pool, was formed after World War 2 by the Australian government to manage millions of pallets as well as forklifts left behind by the U.S. military. In 1958 CHEP was sold to Brambles. CHEP expanded to the UK in 1974,  and continental Europe in 1978.  It entered Canada in 1979 and the U.S. in 1990.  In countries that it entered early in the course of grocery industry palletization, it quickly came to dominate those markets, such as in the case of the UK and Spain. In countries where pallet systems were already established, market share growth generally came more slowly, depending upon the health of the existing system.

Freight Lane Collaboration and Other Innovation

CHEP is involved in several noteworthy activities. For example, it collaborates with shippers and receivers in its network to identify underutilized or empty freight miles. By working together, companies in CHEP’s network can take advantage of revenue generated by miles that would otherwise be empty, while those tendering the freight can take advantage of attractive rates.  CHEP has published several examples of its customers who have reduced freight cost and greenhouse gas impact as a result of such collaborative efforts in both the Americas as well as in Europe.

In one case reported in 2019, Mahou San Miguel, a leader in the Spanish brewing sector, has enjoyed considerable benefits since joining the Collaborative Transport Solutions project of CHEP in 2015. In 2018, it managed to reduce the CO2 emissions associated with its road transport by 12.4% compared to 2017. Specifically, both the brewery and Taisa Logistics, its integral logistics operator, reduced the empty run by 300,000 km and saved the emission of 400 tons of CO2 into the atmosphere.

CHEP European Pallet Specification Update

In November 2018 CHEP introduced a new pallet design update to its traditional 1200 x 800 wooden pallet in the European market. The 1200 x 800 is already being used by CHEP customers in 23 countries. As of July 2019,  5.7 million of the new pallets had been introduced (with 3 million of them in Spain).

The new pallet is described as a more robust platform that offers higher quality and safety, as well as higher performance and durability. It maintains the same dimensions and tolerances as the prior pallet model so that operations in the supply chain and automatic warehouses are not affected. This new design increases the area covered with material by 90.6%, resulting in a significant reduction in the potential risk of damage to the packaging.

Pallet Repair Automation

CHEP has increasingly been turning to automation in its depot operations.  In March 2018 it announced its intention to invest $240 million in sophisticated repair automation, including digital inspection and robotic repair. It has announced several new automated operations, including South Ockendon, as well as facilities near Hamburg, Germany and Vienna, Austria.

CHEP Circular Economy Initiatives

CHEP has been active in promoting the sharing economy aspect of its pallet rental system, and its benefits regarding its sustainability advantages such as waste reduction. In June 2019. Brambles/CHEP launched its Zero Waste World program in North America. This program, being rolled out globally in the coming months, brings together leading retailers and manufacturers to create smarter and more sustainable supply chains. As businesses strive to please consumers by operating faster, easier and cheaper, they are also tasked with addressing climate change by minimizing the environmental impact of their operations. Through cross-sector collaboration, CHEP seeks to solve the dual challenge of growing consumer demand and global concern for the environment.

Through its extensive supply chain network, CHEP in a unique position to collaborate with companies to help save them time, money and resources, all while creating greater value for society. For example, CHEP’s Transport Collaboration solutions are cutting empty miles, wasted fuel and carbon emissions, while improving the performance of customers’ supply chains.

2021: Impact of COVID-19, Lumber Unavailability and Network Challenges

The COVID-19 pandemic saw dramatic shifts in demand. For example, restaurant restrictions resulted in the foodservice channel slowing markedly, while at the same time, the retail supply chain surged. Retailers began building inventory, which required more pallets. High inventory levels also translated into pallets dwelling longer at retailers, so that enough of them were not becoming emptied for reissue to other customers.  In 2021, unprecedented lumber price increases also shocked unprepared supply chains as pallet prices lept upward.

“Before COVID, we had situations where retailers were asking the manufacturers to absorb a lot of the inventory and hold the buffer stock,” Jason Adlam, Vice President New Business Development at CHEP USA, told Reusable Packaging News in April 2021. “Subsequently, erratic supply chain behaviors have caused unpredictability in stocking and ordering behavior: Some manufacturers are holding buffer stock, some are operating under very short just in time windows, and others are holding inventory much longer than usual.”

“I am very proud of how our teams responded to the challenges we faced in 2021 and our ability to strengthen our global leading position in sustainability while continuing to manage ongoing uncertainty across supply chains due to COVID-19, Brexit, and the unprecedented conditions experienced across global lumber markets,” Brambles CEO Graham Chipchase stated in August 2021/

“Looking forward, we are accelerating our Shaping Our Future program to transform our business to benefit our people, our customers, and our shareholders. This will include a step change in digitization and improved customer experience as well as further developing our culture of innovation and continuous improvement.

 

Other Recent CHEP News Stories

Brambles Delivers Strong Results in a Year of Dramatic Shifts and Challenges

Brambles becomes a carbon neutral operations company

CHEP Canada Receives EcoVadis’ Platinum Sustainability Rating

Goodman starts construction of sustainable new CHEP Service Centre in Queensland

CHEP seals new contract with KTC edibles

CHEP extends relationships with UK customers Rhenus and Burton’s Biscuit

Pre-pack promotions with the new CHEP pallet top industry awards for sustainability

Al Sadhan Group Increase Supply Chain Efficiencies from New Business Contract with CHEP

CHEP Europe achieves top Corporate Social Responsibility rating from EcoVadis

HENKEL and CAPSA FOOD reduce empty kilometers and CO2 emissions with the Collaborative Transportation Solutions from CHEP

CHEP Benelux wants to bring customers together to share transport

France: CHEP takes the train with Nestlé Waters and Combronde

Nestlé MENA and CHEP agree to contract renewal and business expansion replacing white exchange pallets

Coca-Cola European Partners Signs Five-Year Renewal with CHEP

CHEP certified as a Top Employer in Europe for fourth year running

CHEP Promotion Analytics: new service for better promotion planning and more sales success