From a recycling industry standpoint, it is worthwhile to understand the basics of pallet rental logistics and RPC (reusable plastic container) rental logistics in terms of the various roles, and potentially business opportunities that are represented. Moreover, consumers and other supply chain participants may be interested in the basics of how the logistics of rental programs works for these reusable assets.
The basic premise of such programs is that either pallets or RPCs are offered on a per-trip rental basis to the product shipper, sometimes referred to as the emitter. For example, the manufacturer of a breakfast cereal might choose to arrange into a contract to rent pallets from companies such as CHEP, iGPS or PECO for shipment to its suppliers. There are several selling points to the rental model versus ownership. For example, while a high quality pallet might cost up to $60 to purchase, rental for the use of the pallet is much more inexpensive. Additionally, the pallet user is absolved of much of the responsibility for managing the logistics of pallet return, as well as elimination of capital outlay, repair requirements and non-peak season storage, although there may be limitations to which clients the emitter is authorized to ship product.
The availability of a better quality pallet offers important benefits in terms of more efficient function in automated storage and material handling systems, as well as reduced potential for product damage or injury.
The Rental Cycle
Simply put, the rental company, having acquired its pool of reusable pallets or RPCs, makes these available to its customers, the emitters. The emitters, having entered into a contract with the rental company, order pallets or RPCs as needed for their production or shipment requirements. Once shipped, the emitter then reports quantities and destinations to the rental company, which then arranges to pick up those pallets or containers from the consignee.
Those empty pallets and RPCs are typically picked up in full load quantities from consignees, where they are returned to a rental company depot for any necessary reprocessing and reissue to other emitters.
In the case of a rental pallet depot, incoming pallets are sorted, and then cleaned or repaired as necessary before being readied for release to another customer. Pallet sorting will help segregate foreign, soiled or damaged pallets, as well as different types of pallets in the case that the rental company offers more than one model. This process may be highly automated or with manual steps in the process, depending upon throughput volumes. In more automated systems, sorting systems may include inline or lift assist systems, and repair may also take place at work stations with automated infeed and takeway features, as well as being equipped with automated painting stations.
Likewise in the case of RPC depots, the process may be highly automated or contain significant components of manual handling, depending upon volume. Taking the case of an IFCO Systems depot in its North American RPC network, the depot will typically receive pallets of collapsed RPCs from retail customers. Upon arrival, RPCs will be manually depalletized and sorted, before being fed into the washing system. The washing system involves various steps, including washing, the introduction of detergents to loosen any debris, and finally the addition of organic sanitizers. Because RPCs may have direct food contact, very strict controls are maintained in accordance with general HACCP requirements, as well as specific requirements of the U.S. FDA and AIB. From AIB it continues to be ranked as `superior.` IFCO plants are monitored by external auditors as well as daily through its own internal monitoring program.
Business Opportunities within Pallet and RPC Rental Supply Chains
Business opportunities typically include depot operations, especially with respect to pallet rental, where pallet companies and other logistics providers offer sorting, repair and transportation services. Because RPCs are in an early growth stage, the amount of RPC depots operating is still very limited. Case in point, IFCO operates currently from only five depots in the U.S., but this will continue to expand as the market grows.