Talking Points: Imminent Global Disaster, Innovative Racking Repair,a $250 Million Pooling Opportunity and Saving the World One App at a Time

Reusometer

If sustainability wasn’t already at the top of your checklist, consider this headline from the Washington PostThe world has barely a decade to avoid disaster. We need to combat climate change — now. Forget the sustainability rhetoric of one type of packaging system or one type of packaging material over another. Now is the moment for all packaging systems providers and decision makers to really bring their A game. Remember the Packaging Revolution Reusometer? The needle still isn’t moving fast enough.   

Then a bit of good news. There is no tap dancing around the issue that the greenhouse gas footprint of the fast fashion industry is enormous, accounting for about 5% of global emissions. Kudos to Montreal-based Aldo for announcing that it has certified as climate neutral. Here’s how they got there. Arguably related, I just received a note from a university student group in South Africa developing a used clothing swapping or rental app as part of a class project. Maybe we can save the world one app at a time?

Part of the circular economy priority is to repair rather than replace. Congratulations to innovative warehousing racking repair provider, Damotech, for being recognized on Canada’s Fastest Growing Companies list. Aside from offering a cheaper solution than rack upright replacement, one of the attractions of using Damotech products is the ease of install. Damotech has developed a patented installation method, using a special lifting device that allows the repairs to take place with minimal to no unloading of warehouse racks.

What is the cost of third party pool pallets being reused at customer locations? According to a story in Motley Fool, JP Morgan “…estimates that Bramble’s CHEP pallet business can generate an additional US$115 million to US$250 million in revenue from the solution (unauthorized reuse) and save millions more from lower damage rates and replacement costs.”

The story goes on to suggest that one “possible solution is to create an internal closed-loop captive pallet pool that can be reused within a large customer’s store network, according to JP Morgan, although the broker admits that there are no easy or quick-fixes here.”

As equipment pooling expert Gavin Keen notes, “It’s a problem all over the world particularly, in countries with a high level of imports that need to be palletized on arrival…The problem in Europe is not as prevalent as the US, as downstream distribution to store level is invariably in roll cages with the most pallets stopping at the retailer DC, which is the reason why the cycle time in Europe within retail supply chains is around the 30-45 day mark.  

“Cycle time, holding period & flow through ratio are normally the only measure by which poolers can try and ascertain if abuse is occurring if any retailer deviates from the average norm.

“I know retailers historically in the US were given the use of the pallet for 60 days with the pooler reserving the right to charge excess dwell time charges if they exceed this…Retailer advocacy is critical to the survival of any pooling operation.”

It is easy to speculate on the various tactics that poolers and their customers could take to remedy the reuse of rental pallets at retail, including the establishment of closed loop pools by pallet rental provider, retailer or other third party.  Or is there an opportunity to make the model more granular? Could an IoT solution allow rental charges based on actual days in the field, or is the cost of such a cure worse than the disease?

Pallet pricing pressure. Attending the recent Interpal 2018 global wood pallet conference in Minneapolis, it is easy to get the sense that there is significant upward pressure on wood pallet prices. Pallet manufacturers are busy, lumber is currently expensive and scarce, and used pallet cores are at a premium. Having said that, forest management is taking place in a sustainable fashion, with the growth of the timber resource easily exceeding annual harvest, so longer term supply stability seems promising. Stay tuned.

 

Comments

  1. Jim Caston says:

    Rick

    You are the MAN!

    I am sending this to Graham Chipchase along with a plan to make the an additional 1B US$ per year

    Jim Caton

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