This CPC communication to members was sent to Canadian Pallet Council members in May by CPC President and CEO, Belinda Junkin, outlining efforts of CPC to that point in mitigating the decision by Loblaw, Canada’s largest grocery retailer to no longer return CPC interchange pallets to suppliers. The attempt to develop a one – way model has not successful. (Back in the 1990s, CPC explored the possibility of a number of models, including a one – way system, but membership decided to move forward with its “enhanced” pallet interchange system, which emphasized steps to improve pallet quality.)
Here is that communication:
COMMUNICATION TO MEMBERS
MAY 15, 2013
As you know, over the last number of weeks we have been working to develop a one – way model that would be acceptable to Loblaw, in order to allow members to continue to ship into Loblaw and retrieve their pallets. Several discussions and consultations with Loblaw culminated in the presentation of a one – way program to Loblaw on Monday, May 6, 2013.
At that meeting Loblaw raised several issues that would make the one – way program difficult to implement successfully. Most significantly, there was no acceptable process to distinguish between the pallets that came in under the exchange program and those that came in under the one – way system. The result is that pallets shipped in on the one – way program would be indistinguishable from pallets available to Loblaw to be used to repay member imbalances. In short, Loblaw has indicated that they see it as inevitable that any one – way plan would result in the program absorbing not just Loblaw imbalances, but those of other distributors as well. As the model is implemented at Loblaw and elsewhere, distributors could use the one – way pallets to pay off existing balances, prior to returning pallets to the one – way depots.
In addition, Loblaw indicated that it would expect to use CPC pallets internally, as needed, for a period of perhaps months at a time to palletize Loblaw product as this is its current practice with the other pallet pool. Both of these factors would result in reduced numbers of pallets available for return to the membership within the one – way system.
We have spoken with a number of supplier members, including those with significant Loblaw imbalances, as well as members of the pallet industry who could have been used to support a one – way return. There is no place within our model to absorb these potentially significant balances without increasing costs to a point at which the model ceases to be feasible. That, together with the lag time to return pallets, has made the CPC one – way model uncompetitive. As a result, we will not be moving ahead with a one – way program.
We remind members that Loblaw is not acknowledging CPC pallets shipped into them unless a special arrangement has been made, so those shipping into Loblaw on CPCs who have not made an arrangement with Loblaw to do so after April 21, 2013 should not expect Loblaw to return those pallets.
The one – way model was the last remaining option under consideration by the CPC to ensure that it remained viable. The Loblaw decision to withdraw from the CPC has been a tipping point for our organization. CPC pallet use is down, and is expected to continue to decline as members move to a pallet option that is universally acceptable. The revenues from the current level of member participation do not support the costs of the organization. The CPC board will be meeting shortly to consider how to respond to these circumstances. As always, if any member wishes to provide feedback on these developments, you are welcome to contact us.
President & CEO