Returnable containers simplify supply chain
Returnable Produce Container (RPC) pool is breaking ground by eliminating packaging waste, reducing produce handling, and saving retailers money.
By Sonja Randall -- Modern Materials Handling, 11/1/1998
To a grocery retailer entering a produce cooler first thing in the morning it's common to see collapsed corrugated cardboard boxes of fruit and vegetables. Hopefully not a lot of the product is damaged and discarded. And hopefully a lot of time isn't consumed in cleaning the mess.Until recently there were no packaging alternatives for retailers in the produce industry. But now those retailers can look to a returnable produce container (RPC) pool, based on the same idea as returnable pallet pools.
The International Food Container Organization (IFCO US) and Chep USA are two organizations offering the RPC service. Over 100 growers/shippers in North America have partnered with these companies and a significant number of additional retailers are conducting trials of the RPCs.
Change takes time. And although the RPC pool has been in existence for nearly two years, it's taken that long for the concept to catch on. But according to Brian Beattie, vice president of new business and marketing at Chep USA, the service will take off even faster in the next few years.
"Returnable containers will dominate the grocery industry in the future," adds Ken Rogers, president of IFCO US. "This is going to be a major supply chain business."
The RPC service costs roughly the same as corrugated cardboard, reports Beattie. However, there are additional benefits to users.
Product handling is reduced with the RPC system because produce is packed directly into containers where it remains until purchased by the general public. Reduced handling eliminates product damage possibilities.
Additionally, retailers have to dispose of empty corrugated cardboard boxes, an inconvenience that is eliminated with RPCs. Returnable containers are collapsible. When empty, they occupy less space.
The RPC service currently accounts for less than 5% of the containers used to move fresh fruits and vegetables. Fresh case movements each year account for a $2.8 billion industry, with more room for growth.
Six states and 200 local governments in the U.S. currently require businesses to recycle. With landfill bans on corrugated materials, alternative packaging is quickly becoming an environment friendly service.
"There's no waste," says Rogers. "If we get a damaged container, we grind it up and make a new one."
Trials underway
Apio, Inc., one of the grower/ shipper/packers who recently tested the Chep RPC system for eight weeks, was more than satisfied with the experiment.
"We found product damage practically eliminated during the distribution process all the way to the store," says Marshall Sherman, operations manager at Apio.
The RPC pool system begins at a container depot. RPCs are issued from the nearest supplier location to the grower/shipper/packer, the party who rents the containers from the pool provider.
After containers are packed with produce, they are shipped to a retailer. RPC containers are designed for display in the retail grocery store. This assures that produce is handled only once.
When containers are emptied, they are returned to a depot where every RPC is sanitized, inspected, and repaired before it's reused. Container flows are monitored with a computer tracking system providing a weekly detailed listing of account activity.
A number of Canadian produce industry associations initiated field studies to choose which RPC's should be the industry's standard. Collapsible containers were found to be more efficient due to straight sides, which allows more room for product; higher nesting ratio, meaning less room for disassembled containers; and their ability to be cross-stacked, allowing for a more stable load.
Because the containers were easier to pack quickly and uniformly, less time was wasted making decisions on what would fit, thereby expediting produce through the chain.
But RPCs are not making inroads without a fight. Opposition is forming from the corrugated cardboard industry. Corrugated suppliers lowered their prices and now the industry proposes that the RPC transaction should be a taxable process. Retailers do not have to pay a tax with corrugated cardboard because it's a business-to-business transaction. According to Rogers, the corrugated cardboard industry argues that because RPCs are leased, it should be considered a taxable transaction.
Rogers argues against placing such a constraint on RPCs. "If RPCs are there to help with the landfill problem, it doesn't make sense to put a tax on them."
Both Rogers and Beattie agree that further work is still needed to identify and quantify the benefits to growers and retailers.
"Some of the main retailers are going to continue to test and understand the economics of utilizing RPCs," says Beattie. "As they learn more, they will learn the value of RPCs from economical and environmental standpoints."
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