While the humble pallet has been a mainstay of transport and supply chains for all industries for as long as almost anybody alive today can remember, a quiet revolution is now underway that could see their role diminish in at least one industry sector.
While nobody would seriously predict an end to palletising in construction and heavy industry, for the food and beverage retail sector the picture is different.
At the recent Australian Institute of Packaging (AIP) National Conference on Queensland’s Gold Coast, representatives of two well-established businesses and competitors in the local pallet business – CHEP and Loscam – found themselves in agreement that companies such as themselves were increasingly having to focus on an area they have had little exposure to until recently – the supermarket shelf.
As retailers in Australia such as Coles and Woolworths move further down the path to requiring shelf-ready packaging (SRP) from their external suppliers, both companies say their role in the retail sector is changing as they are forced to consider the store environment more than the back room storage areas of distribution centres.
“It’s becoming a reality that the traditional pallet companies like us are moving into the packaging chain,” the general manager for business development for Loscam Asia Pacific David Edwards says.
Edwards claim is backed up the director of strategic marketing for CHEP Renee Holbrook, who says that as far as retail is concerned, companies like CHEP and Loscam are no longer just transport and logistics suppliers.
“We are not so much a manufacturer of packaging, but we have always been a service provider to packaging. We see our role in the supply chain as the integrator, and that role is now taking on a new dimension.”
“What we are seeing for us in the display and bottling pallets area is it is coming out of a niche. We have seen it being used with Aldi, but that is growing now outside.”
Both companies say a major area of focus in recent years has been how they can tailor their products and services to meet the needs of the major supermarket chains for easy and effective stocking of products direct in their stores’ aisles.
For Loscam, Edwards says, this has meant an extension of its previous efforts in such areas as supplying crates for bulk fresh produce for the store environment.
“We have been more into supplying display ready units rather than shelf ready to date. Our focus has been on fast moving products, traditionally produce like crates of vegetables,” he says. “But now that trend is moving into other areas like beverages.”
He says that in many ways this trend can be considered part of the natural evolution of palletising and bulk transport.
“The pallet is the simplest form of returnable packaging, and has served us well,” he says. “Then came collapsable and returnable crates (RPCs) and then we started to look at larger crates and bins for vegetables and produce, which could go on a shop floor and which you can replenish with more products in a much shorter period of time.”
Now, he says, the challenge is for new bulk packaging systems to move into the shelf space.
“We are seeing display pallets, designed to be able to go down production lines, and then also move into retail distribution centres and actual stores.”
The benefits of these systems, he says, cover both the warehousing and point-of-sale spaces.
“At back of stores, these really come into their own, but they no have big advancements for store packers as well. Ours, for example, have a foot pedal to lower the wheels so they can easily be moved to the retail space.”
Holbrook says the trend has also forced companies like CHEP to consider a factor that has played little part in their day-to-day business to date – aesthetics.
“It brings aesthetics to the design challenge. We have mainly been palletisers up to now, but now we have to think about the retail space,” she says. “As we design for a piece of packaging that can move from the manufacturer to the consumer, we are adding a brand new role for packaging.
“We have always been about wanting to optimise trucks, optimise plants, and now we are adding merchandising to that. We have to look at the shop floor, which looks very different from the distribution centre.
“In Australia, we are now starting to see some of the European-style fully kitted merchandising units.
“Research from Europe shows that 65 per cent of supply chain costs are in ‘the last mile’ – their term for the shelf space – and we are now trying to help reduce that.”
While the movement of the bulk transport solutions into the retail space is bringing many benefits for retailers, it has nevertheless required some trade-offs, both say.
“Retail infrastructure is different in scale from distribution. It is manual, not automated, it is human scale,” Holbrook says. “That means for companies like CHEP we need scale to be cost effective to make sure we can be competitive and offer flexibility.
“Returnable packaging is also dependent on standard sizes. We have to look at size formats that work in the logistics space, but also to the in-store environment as well.”
She says retailers’ various requirements for such retail-ready systems are not an easy fit for each other.
For example, she says, Woolworth’s stated philosophy for SRP, it’s ‘Five Easys’ – easy to identify; easy to open; easy to shelf; easy to shop; and easy to dispose – did not always lend themselves easily to a single integrated solution.
“Designing for pack strength or for product protection versus the Five Easys is not always considered to be complementary,” she says. “Standards are another area of challenge. From CHEP’s perspective, the traditional pallet was invented in the 1950s, and it was never envisaged to be used on a shop floor.
“But once we design it, we rely on standards to keep it relevant, so we need to ensure the retailers are on the same page in their requirements.
“We are fortunate in Australia that most caps and bottles, for example, are pretty standard, but it can be a problem in other countries and other FMCG segments.”
Nevertheless, Loscam’s Edwards sees the trend towards returnable bulk packaging in the supply chain as only moving further into other areas in the near future.
“The yoghurt sector, for one, is calling out for a solution,” he says. “Cardboard boxes don’t take refrigeration very well, and they can fall apart with high damage to the yoghurt packs.
“So we have invested in developing packaging for that sector with polypropylene base and polycarbonate sides. They are robust, good for temperature control, and are easily assembled and disassembled.”
Further down the track, if the experience of Europe is a guide, cartons may soon make way for returnable bins and pallets in such areas as snack food as well.
“We have also started prototyping around snacks to remove the carton from the supply chain,” he says. “We have been doing trials with Nestlé in Belgium, for example, and we believe this is where the next generation of returnable packaging is moving.”
