Pallet and Container Theft Indictments: Shaping Public Opinion

With last week’s U.S. headline leading news about million dollar plastic pallet and container theft in Maryland, the reusable packaging community is left with much celebrate, and also much to ponder with respect to what the public believes about container theft, and what businesses believe they must do to prevent it.

To summarize the story, a group of Maryland businesses, including Coca Cola, Pepsi Cola, H&S Bakery and Cloverland Dairy had hired J.R. Investigative Services to investigate unacceptably high levels of container loss. James Rood, a private investigator with the firm, observed a recycling company taking pallets into its possession that were marked as property of assorted other companies. As a result, 5 individuals were indicted for stealing $400,000 worth of reusable plastic pallets and containers from local businesses.

Prince George’s County State’s Attorney Glenn F. Ivey stated at last week’s press conference that there is a nationwide problem of plastic container and pallet theft from bakery, dairy and soft drink businesses. To emphasize how serious that Coca Cola is about the problem, the press conference was symbolically held at the local Coca Cola offices. The businesses involved in the case collectively lost over $6 million worth of reusables during 2008. This may seem like a lot, but while searching the Internet for more background on the company involved, I found this link at alibaba.com, indicating that the recycling company had available 30,000 pounds of plastic container regrind a day! That translates into a lot of containers and pallets. (see picture of the offering below from the alibaba site).

GEG Recycling

Coca Cola seems to be making a case that the container loss is a result of some degree of organized crime. “We wanted to be sure to help provide the case for how sophisticated this issue is,” Curtis Etherly Jr., vice president of public affairs for the Mid-Atlantic Coca-Cola Bottling Company, said at the press conference. “We’re talking about the use of vehicles, organization and structure to move large amounts of plastic pallets.”

Court documents state that the owners of the indicted recycling company were repeatedly warned by Prince George’s County police not to take returnable containers without appropriate permission of the container owners, with no effect.

In an interview with PackagingRevolution.net, investigator Jim Rood stressed that the recycler in question was visited on at least two previous occasions and asked to stop taking the stolen pallets and containers, before legal action was taken. The companies involved just want the thefts to stop, he said.

Between the bakery, beverage and milk industries, Jim estimates theft to be in the range of $500 million per year in the U.S. For police departments already stretched to the limit, it is often hard to get the issue of container theft on their radar screen. He knows this full well, having retired several months ago from the Baltimore police department before setting up his P.I. business. His goal is to help make police departments and prosecutors aware of the issue – as well as consumers. Ultimately, he stated, it is the consumer who must pay.

The practice of accepting clearly marked, good condition containers, grinding them, and ultimately selling them back to processors producing the same containers, he says is wrong. He is recommending to his clients that they put controls in place to ensure that the containers they buy are not composed of resin derived from stolen containers.

Container Theft Is Crime, Not Entrepreneurial Activity

One important outcome of the indictments will be to help bring change to a widespread belief that gathering pallets and containers is an entrepreneurial activity and not theft. This activity can be entrepreneurial if the containers are removed from private property with permission, but otherwise it is stealing.

“There is a real penalty,” stated Delegate Doyle Niemann of the Maryland House of Representatives “It’s a crime, and you get treated as a criminal.” Delegate Niemann, who also works in the state’s attorney’s office, was the lead prosecutor when the investigation began in May.

To the extent that the prosecution is successful, this may well influence other groups or reusable container and pallet users around the country to launch their own investigations, as well as hopefully dissuade “plastic pickers” and recycling companies from misappropriating and illegally buying and grinding reusables.

There have been other celebrated cases in the reusable packaging community, such as the one involving a California plastic recycler in 2005, with anecdotal evidence that the operation was somewhat successful in curbing theft, at least for a period of time. The US Postal Service case also received a lot of coverage with its “Case of the Pilfered Pallets.” USPS has aggressively pursued and charged those involved in theft, but even recently, USPS told me that they still have a considerable plastic pallet loss challenge.

Reusable Asset Management Requires a Balanced Approach

Aggressive investigative efforts can help reduce the demand for stolen containers, but it is also important to eliminate the potential supply of containers available for theft. Such a balanced approach includes such components as a robust inventory control and tracking system, appropriate employee and trading partner behaviors with respect to asset custody retention, and physical asset safeguarding, such as through maintaining the “lock up” of reusables until they are retrieved. For small retail locations, restaurants, and the like, this is easier said than done, but none the less part of the challenge.

The reusable packaging community can celebrate the great work done in Maryland to help deter pallet and container theft. It sends a clear message that pallet and container theft is just that. It is not, however, a signal that users of reusable packaging can rely on successful litigation alone to prevent their inventories of reusable packaging from dwindling. Jim believes that in his area, 30% of container loss is due to student theft or other forms of mismanagement. A balanced approach can help eliminate inventory shortfalls, including the deterrence of theft before it gets out of hand.