Pallet News and Analysis
CHEP signs Rousseau Farming
In a press release, Rousseau Farming announced that they will move from a white wood pallet platform to the CHEP pooling system. Rousseau Farming transports multiple organic vegetables to supermarkets and club stores in the United States and Canada. The CEO and General Manager, Dale Nelson, says “CHEP’s pallets give our product a good ride from the fields to the receivers. Also, we’ve seen improvements in pallet administration, and the pricing is comparable to other alternatives.” Some of the reasons for the switch is improvement in program administration, environmental benefits, and the role CHEP plays in enhancing relationships with trading partners.
In discussions with several companies in multiple market sectors, CHEP quality has improved indicating the asset management strategy implemented by Brambles is starting to pay off. However, the year is young and as seasonal demand surges the proof will be in the damage rate…
Pallet Contamination Wars: The Drama of Pallets
Posted by Andrew Mosqueda on February 18, 2010
You are standing on the edge of the abyss, I yell… “Listen to reason man! Don’t jump into the darkness from which the toxic avenger will contaminate your food!” Okay, maybe movement in the pallet industry is not that dramatic but it sure can seem that way if you stare too long. The wood pallet industry is yelling, “Plastic pallets will burn and release toxins in the air and chemicals will leach into our food and kill us all!” And the plastic pallet industry is saying wait! “Wood pallets pass food-borne pathogens into the supply chain and kill us all!” Okay, maybe it is that dramatic. The USDA has a wealth of information and can be used in ways other than adding fire power to an arsenal against the other guy. There is cost effective ways to protect your business, protect the environment, gain consumer confidence and protect the food supply chain. It is the lack of imagination and the ear deafening scream of aggressive marketing whose result will be the creation of laws designed to put undue pressure on an industry.
A Closer Look
I thought it important to get some perspective on the contamination risk when it comes to pallets. Because of the porous nature of wooden pallets it is more susceptible to contamination from bacterial food-borne pathogens than a plastic pallet. The question is how much risk is there to actual cross contamination from wood pallets. If you only look at product contamination stories of the past year, you would think there is an epidemic of food contamination due to pallets. According to the USDA FSIS website there have been 27 product recalls for a variety of reasons from May 29, 2009 to February 22, 2010. (See Table Below) The majority of the recalls was a result of incorrect processes such as; unsafe practices, mislabeled, unapproved sources, foreign material, no inspection, and under cooked. There were two cases of Salmonella, seven cases of E.coli O157:H7, and one case of Listeria. In all but one of bacterial contamination the source has yet to be determined, and none have been suspected of being contaminated by a wooden or plastic pallet. Aside from the Tylenol recall that suspects pallets to be the root cause of the contamination, there has not been a report of cross contamination causing illness due to pallets.
Lack of Imagination
Millions of dollars are being spent to argue how unsafe the other guy is, rather than arguing the merits of the product and letting the market make its choice. To my knowledge there are no reports that definitively state pallets were a direct cause of contamination. That is, no DecaBDE contamination from plastic pallets, and no food-borne contamination from wood pallets. Every report, as shown below is “To Be Determined”, “Suspected”, and “Possible”, and off that politicians and environmental groups are creating legislation that will cost everyone. Make no mistake; this strategy that iGPS, Brambles, wood and plastic associations are using in the pallet market will financially affect you individually, as sure as a tax increase you did not expect. There is a serious lack of imagination to make the process safer, more available to smaller businesses, and more cost effective.
Get Involved
No one organization or person has the answer, but I believe it has to be grassroots. Individual pallet recyclers from all over the country have unique market perspectives. Problem solutions at a local level that can be used in other regions should be shared. For example, the contamination issue is a hot topic for the pallet industry that could cost the smaller businesses everything. One suggestion is to purchase test strips to check for contamination. The cost would be cents per pallet per load. If the pallet recycler would test a random pallet after loaded, send it with the packing slip and add an unused strip for the end user to check again once delivered, it would eliminate the contamination issue for wooden pallets. Protocols would be in place that will help track potential contamination problems and the industry would be part of the solution. Why wait for a law to tell you what to do? Use your knowledge, think critical, use imagination in the solution and get involved. Contact your associations to not only fight on your behalf at the federal and national level, but to take suggestions from you and implement them.
Read the full analysis at the Gerson Lehrman Group next week!
| Recall Date | Agency | Title | Product | Source of Contamination |
| 1/23/2010 | FSIS | Rhode Island Recall of Salami/Salame Products Due to Possible Salmonella Contamination | Salami | To Be Determined |
| 1/18/2010 | FSIS | California Firm Expands Recall Of Beef Products Due To Possible Adulteration | Beef | Unsafe practices |
| 2/12/2010 | FSIS | California Firm Recalls Frozen Turkey Patty Products Due To Mislabeling And An Undeclared Allergen | Turkey | Mislabeling/process |
| 2/10/2010 | FSIS | New Jersey Firm Recalls Ready-To-Eat Sausage Products That May Contain Foreign Materials | Sausages | Foreign Material/Process |
| 2/10/2010 | FSIS | California Firm Recalls Frozen Cured Pork Patty Mix Due to Mislabeling and an Undeclared Allergen | Pork | Mislabeling/process |
| 2/5/2010 | FSIS | North Carolina Firm Recalls Pork Barbecue Products Due to an Undeclared Allergen | Pork | Mislabeling/process |
| 2/2/2010 | FSIS | Missouri Firm Recalls Fresh Boneless Beef Products Due to Possible E. coli O157:H7 Contamination | Beef | To Be Determined |
| 1/27/2010 | FSIS | New Jersey Firm Recalls Instant Noodle Products Imported from an Unapproved Source | Noodles | Imported from unapproved source/process |
| 1/20/2010 | FSIS | Indiana Firm Recalls Frozen Chicken Pot Pie Products That May Contain Foreign Materials | Chicken | Foreign Material/Process |
| 1/15/2010 | FSIS | New York Firm Recalls Beef Carcass That Contains Prohibited Materials | Beef | Prohibited Material/Process |
| 1/11/2010 | FSIS | Massachusetts Firm Recalls Beef Products Due to Possible E. coli O157:H7 Contamination | Beef | To Be Determined |
| 1/9/2010 | FSIS | California Firm Recalls Pork Skin Products Due to Mislabeling and an Undeclared Allergen | Pork | Mislabeling/process |
| 12/24/2009 | FSIS | Maine Firm Recalls Ham Products for Possible Listeria Contamination | Ham | To Be Determined |
| 12/24/2009 | FSIS | Oklahoma Firm Recalls Beef Products Due To Possible E. Coli O157:H7 Contamination | Beef | non-intact steaks (blade tenderized prior to further processing) |
| 12/4/2009 | FSIS | California Firm Recalls Ground Beef Products Due to Possible Salmonella Contamination | Beef | To Be Determined |
| 11/27/2009 | FSIS | Oklahoma Firm Recalls Frozen Beef Steak Fritter Products That May Contain Foreign Materials | Beef | Foreign Material/Process |
| 11/17/2009 | FSIS | Nebraska Firm Recalls Fresh Ground Beef Products Due To Possible E. coli O157:H7 Contamination | Beef | To Be Determined |
| 11/4/2009 | FSIS | Pennsylvania Firm Recalls Cream of Mushroom Soup Product Due to Mislabeling | Soup | Mislabeling/process |
| 10/28/2009 | FSIS | Iowa Firm Recalls Chili With Beans Product Due To Mislabeling And An Undeclared Allergen | Beans | Mislabeling/process |
| 10/16/2009 | FSIS | Iowa Firm Recalls Chili With Beans Product Due To Mislabeling And An Undeclared Allergen | Poultry | Produced without federal inspection |
| 10/15/2009 | FSIS | Nebraska Firm Recalls Beef Tongues That Contain Prohibited Materials | Beef | Prohibited Material/Process |
| 9/11/2009 | FSIS | California Firm Recalls Beef and Bean Burritos for Possible Listeria Contamination | Beef | To Be Determined |
| 9/8/2009 | FSIS | Pennsylvania Firm Recalls Chunky Grilled Steak with Vegetables Canned Soup | Beef | Under processed/Process |
| 7/12/2009 | FSIS | Illinois Firm Recalls Ground Beef Products Due To Possible E. coli O157:H7 Contamination | Beef | To Be Determined |
| 6/28/2009 | FSIS | Colorado Firm Expands Recall of Beef Products Due To Possible E. coli O157:H7 Contamination | Beef | To Be Determined |
| 6/22/2009 | FSIS | Illinois Firm Recalls Ground Beef Products Due To Possible E. coli O157:H7 Contamination | Beef | To Be Determined |
| 5/29/2009 | FSIS | Illinois Firm Recalls Ground Beef Products That May Contain Foreign Materials | Beef | Foreign Material/Process |
WARNING: CHEP PALLETS ARE NOT FOR SALE…DO SO AT YOUR OWN RISK!
The Pinellas Park Beacon – Tampa Bay Newspapers reports that on January 14, 2010 the owner of D & S Pallets and an employee were arrested for the selling of stolen equipment, namely CHEP pallets. (http://www.tbnweekly.com/pubs/pinellas_park_beacon/content_articles/011410_par-05.txt) In an “undercover” operation with the sheriffs department, D & S Pallet sold CHEP pallets after allegedly refusing to return the pallets to a CHEP asset management representative or a Service Center. What are the lessons learned for the rest of us? First, obviously don’t sell CHEP pallets as CHEP never sells or gives up ownership of their assets. (stringer pallet sale excluded) An observation, you never hear of a company being charged with receiving ”stolen” CHEP pallets. If a pallet company sells CHEP pallets to a company, they are more than likely a CHEP customer and the Big Blue pallets will more than likely end up back into the CHEP supply chain. These days, it seems that Brambles is not in the mood for even the smallest infractions from white wood recyclers…with the constant attacks from iGPS on the wood pallet market. Word of wisdom…do not sell CHEP pallets….either return them…or refuse to collect at your core source.
Western Pallet Association Conference
I had the privilege to speak at the WPA conference this year. My discussion was on the differences between the Rental Pallet vs the white wood pallet markets and how it affects the supply chain. There was a lot of information given from great speakers that are experts in their fields. Among the speakers was representatives from the USDA Forest Department, EPAL, NWPCA and others. There are many changes happening in the pallet world, and one might think it does not affect them. Well, one would be wrong. Like all things everything is connected. When you buy an item, no matter what it is, most do not think how it got to the store. I have written about the supply chain on this blog for almost a year and have covered the different variables in the supply chain. Many of the changes happening in the pallet world is legislative.
The legislative process often means cost to the consumer. For example, there is current legislative phasing out decaBDE, a fire retardant manufactured in the iGPS pallet. There are contamination issues with white wood pallets at Tylenol and Listeria scares in Portland. iGPS is calling for government intervention. If both sides are successful there will be more government regulations, protocols and requirements forcing industry to comply with more expensive alternatives. Those alternatives will trickle down to you and me…hey, trickle down economics…I get it. So here is a simple example, your pallet cost $5.00 per pallet…and you have to get it heat treated at a cost of $1.90 (rental pallet) it would cost the company an extra $950 and instead of paying $2700 per load, you would pay $3650. The same basic concept goes for treating the plastic pallet with a more expensive alternative.
So the main victim of the Contamination War is you! Keep informed. Whether you are a shipping manager, purchasing manager, executive at a warehouse, distribution center or just a consumer…keep informed. You can get more information at www.westernpallet.org.
CHEP vs. iGPS: Contamination Wars
Posted by Andrew Mosqueda on December 22, 2009
iGPS and CHEP USA go head to head with back and forth accusations of pallet safety as fears of food contamination escalates. iGPS has produced a video and report that proves test positive for Listeria and abnormally high counts of bacteria they claim can potentially create health hazards for consumers. They further state there is an unacceptable risk to our nations food supply from wood pallets. (www.igps.com) How and where did iGPS back their statement? Click here to see the video backing their claims.
The testing was done in Portland and does not show any Rental Pallets to be contaminated; there were a couple of obvious factors. In order to conduct a proper test you must determine whether the wooden pallet was delivered contaminated from the pallet dealer, in route, during production, or after unloaded and stored. It was obvious in the video that these pallets were Grade B or number 2 pallets that have already been loaded, transported and set aside for destruction or sell to a local pallet recycler. This is evident as there was shrink-wrap on many of the stacks tested. Typically, used shrink-wrap does not appear on newly delivered pallet loads.
Additionally, much of the contamination looked like it was caked on, and plastic is not resistant to chemicals drying on the surface. Is it the contention of iGPS that their plastic pallet is chemical resistant and that containment cannot not dry on the surface of their pallet?
This report follows a FDA recall of Smoke Nova Salmon due to Listeria bacteria contamination. The packages were sold to retail stores in many areas including, conveniently enough, in Portland where iGPS conducted it’s test. iGPS has answered the deca-bromine issue in plastic pallets with a bacteria issue on wood pallets, proving that in any event the consumer is in danger of being poisoned…according the accusations.
The fact is that there are over 800 million pallets circulating throughout the U.S. every year and if there was a true danger of illnesses specifically due to pallets, either plastic or wood there would be more cases. A trick magicians often use is distraction, which is what the rental pallet companies are doing now. Forget the self-managed pallet programs that have real issues like quality, reorganization pains, and hardball marketing tactics used while battling for market share that the rental pallet industry is currently giving you…fear mongering seems to be the business strategy of the day. My advice, use common sense and use the pallet the is best for your business supply chain.
Posted by Andrew Mosqueda on December 15, 2009
According to The Age, Brambles Value Lost is $2 Billion in the last two months indicating that the company is dangerously close to becoming the target of a takeover. The loss of value in the market has made Brambles more appealing to companies like Toll Holdings, Asciano, and Yanzhou. Toll Holdings and Asciano was considering a bid in 2007 when the Brambles stock was over $9 per share. Brambles stock is now under $7 per share. Of all the companies, Toll appears to have the business infrastructure to absorb the vast Brambles network. Toll is located in over 50 countries, 35,000 employees, 800 sites, and annual revenue of over $6.5au billion. Although, it has been rumored that Yanzhou is positioning to place a takeover bid, Brambles CEO, Tom Gorman, says he has not been approached, according to the Business Spectator (businessspectator.com.au)
Several reports indicate that Brambles will sell RECALL, Brambles document management business, to better defend against a possible takeover. According to the Business Spectator, Tom Gorman says Brambles will not sell RECALL. Either a state of denial or Gorman has a trick up his sleeve that will strengthen Brambles position.The new CEO has taken over a company under siege. In the middle of a global economic downturn Brambles money making division, CHEP has taken hit after hit in terms of rental pallet market share, loss of value in the stock market, complete change in the executive lineup.
In my opinion, CHEP has been operating like it was run by the captain of the Exxon Valdez. There was very little communication to stakeholders causing speculation and panic both internally and in the market. While CHEP still holds 90% of the rental pallet market share, they have nowhere to go but down. iGPS has positioned itself well, fending off the deca-bromine attacks and obtaining market share in the industry that is most effected by contamination from the chemical, the produce sector.
So what is the strategy Gorman will use? Despite speculation, canning the executives who created the current condition is a good start. Will he go back to a “grow at all cost” strategy? This strategy signed up customers who where right for the program or not. This policy caused the write-off of millions of pallets lost in the system. To be clear, it is an accounting error on the part of the rental pallet customer. The pallet does not magically disappear; it just cannot be accounted for.
My suggestion for all the rental pallet companies are to quit using technical and legal strategies to weaken your opponent, create a good product and program then present it. The company that does that… wins the day.
CHEP USA: Is Shuba Next to Go?
Posted by Andrew Mosqueda on December 11, 2009
According to the Austrailia based newspaper The Age (theage.com.au), CHEP Asia-Pacific group president Craig Van Der Laan has left the organization and that the America’s group president Kevin Shuba is next to go. If Mr. Shuba resigns it will take the number of executives to exit CHEP to nine in the last 18 months. Changes in personnel follow setbacks in the Wal-Mart relationship, failure to execute the Blue-Step pallet, the largest reorganization in recent CHEP history, huge investments to repair the mismanagement of CHEP pallet inventory and the recent loss of large accounts to iGPS.
While CHEP is reorganizing will iGPS take this opportunity to seize more market share? Large accounts like Pepsico, The California Giant, and as of yesterday Dole Fresh have dealt a huge blow to CHEP’s account base in the produce sector. Neither iGPS nor PECO has made significant impact in the produce market until recently. Talking with large produce companies in the Central Valley, they believe that CHEP is the only viable solution because neither iGPS nor PECO has the inventory to meet demand during high level. With the Dole account, iGPS has made a statement that they are able and ready to take on the Blue pallet giant CHEP USA. This could mark the beginning of reducing CHEP’s 90 percent market share of all Rental Pallet business in the U.S.
Where is PECO pallets? What is their strategy to take advantage of the apparent weakened position of CHEP USA? A couple of wins include Kroger and Georgia Pacific but no major blows. PECO has differences in how they charge their customers, but the only difference in inventory is the size and color of the paint. Has iGPS weathered the deca-bromine issues related to contaminated produce stored in coolers? If so, it is a head to head battle for market share. With every account iGPS obtains enables them to grow their inventory. Brambles/CHEP executives must be contemplating these issues and with Kevin Shuba gone, a new fresh perspective may be just what the doctor ordered.
