Pallets and containers: A CHEP off the old block

More than a decade after entering the North American market, CHEP continues to be the leader in pallet pooling.

Latest News

UPS inks major renewable natural gas deal with Clean Energy
Manhattan Associates partners with robotics companies, automation provider and consultant
DOE recognizes Better Buildings Initiative partners
Zebra Technologies to acquire Profitect Inc.
Making the Case for Lift Truck/MRO, Maintain and sustain your operations
More News

Latest Resource

Is It Time For a New Network Strategy?
A successful supply chain network design gives companies a competitive advantage, pinpoints ways to significantly reduce costs, improves service levels, reduces overall cycle times, streamlines all processes and systems used, and more.
All Resources
By ·

When it comes to pallets, Big Blue doesn’t stand for IBM. It stands for , maker of the distinctive blue 48- x 40-inch wooden block pallet you’ve probably seen on the shelves at your local Home Depot, on the floor at a Wal-Mart or loaded up on the back dock of your grocery store.

With a pool of about 65 million pallets in North America, CHEP is the 600-pound gorilla of the pallet pooling market. While hard numbers are difficult to come by in the pallet market, Derek Hannum, CHEP’s director of marketing, estimates that the company has a 90% share of the pooled market and that it may represent 20% of all pallet usage.

Given its dominance in the market, who is a candidate to jump into the CHEP pallet pool, and how do you work with CHEP?

The short answer is that participation in the CHEP pool is primarily determined by a manufacturer’s end customers. That’s because CHEP needs to be able to recover its assets from the distribution center or retail store that receives the blue pallets. Many of the country’s best-known big box retailers, grocery chains and club stores accept CHEP pallets. However, in recent years, some manufacturers have begun asking their suppliers to ship raw materials, parts and components to them on CHEP pallets.

“In the U.S., manufacturers of fast-moving consumer packaged goods, including the food service and beverage channels, represent the vast percentage of our business,” says Hannum. “We are more pervasive in other industries in Europe and Australia.”

Part of the reason for that is that CHEP has been in the market for a longer period in Europe and Australia, and part of it is that the supply chains outside of the U.S. are less complex. There are fewer major retailers, and shorter hauls to get pallets back to a CHEP repair and logistics depot. For instance, while CHEP’s production is concentrated in the Midwest, the consumption of CHEP pallets is primarily in the west, east and south, where most of the population lives.

The No. 1 reason for participating in a pool: Retailers – especially those that may store product on shelves in their stores or on the floor on a pallet – want a higher quality and consistent pallet for both aesthetics and safety reasons.

How then does it work, and what does it cost?

While a CHEP customer can call or send in a fax to place an order, a customer can interact with CHEP online, either through EDI (electronic data interchange), standing orders or through CHEP’s Web portal, known as Portfolio Plus.

Typically, CHEP requires orders for full truckload quantities of 580 pallets. While large users of CHEP pallets may negotiated a flat per pallet rate, more typically CHEP charges a fixed issue fee to order the pallets plus a daily rental fee. And, like any other rental fee, the price is based on how long you keep the pallet in your facility. The clock stops ticking not when the pallet arrives at your end customer, but rather when you report to CHEP that the pallet left your dock.

“We do have some customers that have been with us for a long time, and we have a consistent usage history,” says Hannum. “They get a flat rate and pay only so much per pallet.”

The challenge for CHEP is keeping track and retrieving its assets. That’s one of the reasons that the participation of end users – retailers and distributors – is important to the CHEP pool. “Once a manufacturer ships a pallet, they’re done with it,” says Hannum. “The pool works because retailers and distributors have agreed to help us get them home. They get to use the pallet for free, but are also responsible for keeping track of the pallets, which is their stake in the game.”

Currently, there are 20,000 to 30,000 active receiving locations in North America.

How much then does participation cost? While the cost may vary based on the amount of pallets you use and how long you hang on to a pallet, CHEP estimates the price at between $4.75 to $6.00 per trip. “From a financial standpoint, our profitability is driven by asset utilization, and so is the cost to our customers,” says Hannum. “The faster the pallet turns, the better it is for us and the customer.”


Reader survey: From wood to plastic to pallet pools, our readers tell us what’s important in pallets.

Pallets: Pallet pooling for the other guys
Upstart PECO Pallet brings competition to the pallet pooling market

Pallets and containers: The plastic pool alternative
iGPS offers pallets users an alternative to wood

Reusable containers: Putting a cap on your container needs
CAPS does for reusable containers what CHEP does for pallets

 


About the Author

Bob Trebilcock
Bob Trebilcock, editorial director, has covered materials handling, technology, logistics and supply chain topics for nearly 30 years. In addition to Supply Chain Management Review, he is also Executive Editor of Modern Materials Handling. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484.

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.


Article Topics

All Topics
Latest Whitepaper
Is It Time For a New Network Strategy?
A successful supply chain network design gives companies a competitive advantage, pinpoints ways to significantly reduce costs, improves service levels, reduces overall cycle times, streamlines all processes and systems used, and more.
Download Today!
From the May 2019 Logistics Management Magazine
May is our Technology Issue, and we’ve devoted the majority of our pages this month to the evolution of the technology toolbox that’s now within our grasp.
The Digital Supply Chain Takes Shape
Top 30 U.S. Ports 2019: Trade tensions determine where cargo goes next
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly newsletter!
Latest Webcast
Technology Roundtable: Are you ready for what’s next?
In this webcast LM's group editorial director Michael Levans gathers four top supply chain management technology analysts to discuss how some of the hottest software and technologies is helping logistics and supply chain management professionals streamline their operations to meet the pressing demands of digital commerce and manage through the tightest labor market in a generation.
Register Today!
EDITORS' PICKS
35th Annual Salary Survey: Compensation matters more than ever
While job satisfaction remains the primary reason for today’s logistics managers to stay with one...
2019 Rate Outlook: Pressure Builds
In 2019, the world economy will enter a third straight year of broad-based growth, but many...

2019 Transportation Management Systems (TMS) Market Update: Keeping pace with the times
The transportation management systems market is growing right along with the number of challenges...
The Logistics News that Shaped 2018
Every year at this time, group news editor Jeff Berman combs through the mountain of news that was...
фиат добло

вывоз строительного мусора в киеве

читать далее