According to the latest statistics from Future Market Insights, logistics trends (2022) make things clear - the pooling of packaging, especially pallets - is on the rise. By 2032, the global pallet pooling market is projected to grow at a 6.1 percent CAGR to more than $12.9 billion. What is the reason for the growth in demand for this type of logistics service?
Warehouse operators opt for pallet pooling because it saves time and resources in repairing, maintaining, and sorting these carriers. Moreover, by pooling the same types of pallets in supply chains, you can save significantly on storage and transportation costs.
Indeed, experienced logistics managers are aware of the advantages of this service. However, when deciding on a packaging circuit, you need to find answers to questions that often arise. Who repairs the pallets and picks them up? At what point do you see an increase in savings? How do pooling companies handle logistics? What can convince business partners to cooperate in pallet pooling? These are just some of the many questions we try to answer for our customers.
In this article, we will highlight the essence of pooling and discuss the most common concerns associated with the transition to package pooling.
What is pooling packaging?
Pooling packaging means reusing packaging and putting it back into circulation. We take the empty packaging from your customers and deliver it back to you in the quantity you expect and at the agreed time. The goal is also to ensure that the packaging is in working order and ready for subsequent use in the next cycle.
When is pooling most often applicable? There are two main reasons for pooling:
- 1. You own a sizable pool of packaging and would like someone to manage its circulation, collect it from your customers, and prepare it for reuse.
- 2. You don't have your own packaging, but you want a pooling company to provide you with a complete service - from delivering the media to transporting, repairing, sorting, and delivering it to your customers.
We can help your business grow more sustainably so that you don't have to invest in constantly buying new packaging and can reuse your load carriers.
We carry out the entire process - from delivering the pallets or other media - to their recovery, preservation, and redelivery into circulation.
Would you like to know more? In the article Pooling in Logistics - Discover the Benefits, you will find information on why pooling is a sustainable logistics solution. And now, we're going to discuss the most common concerns of logistics managers. Let's start with the most important issue.
What can convince me that pooling is profitable?
The undeniable trend is that all of Europe is moving towards sustainability, with financial savings behind it. It is worth discovering that you are building your company's brand by choosing sustainability. So, the fact that you start to look after and recycle your transport media pays off.
For example, if you have 800,000 media per year, it costs you tens of millions to buy and sell. If you recoup 30% of this and put the media back into circulation, you will undoubtedly find that your company is making a real contribution to sustainability.
Example of savings resulting from pallet recovery in the pooling process:
- The customer buys 800,000 pallets annually by the time they start working with Rotom (2Return).
- Price of 1 new pallet - £10
- Our costs:
- Pooling £2.52
- Repair £3.08
- 50% of the pallets are returned to the customer without repair.
- You will see each assumption of recovery result of 10%, 20%, and 30% in the savings field.
Model summary of savings by implementing pooling depending on the number of pallets recovered.
As the table above shows, already with the recovery of 30% of the pallets shipped, we can achieve 18% savings, which, with this scale of pallets used, is a substantial amount of more than € 1,4 million per year. If we recover 50%, the savings will increase to 30%, or nearly €2,3 million a year.
Is the quality of the pallets you get from return customers adequate?
Many companies are concerned about the quality of the pallets coming back from the market and whether they will suit the production lines. A key point in the pooling process is that right from the start of the contract, we commit to supplying pallets 100% fit for use in the production lines.
We are committed to supplying pallets that are 100% fit for use on production lines.
From the very beginning, we establish instructions for all parties involved in the work, based on technical drawings, which clearly define what the pallet should look like and what condition it should be in in order to work on the production lines of the target customers.
For example, one of our clients from the construction industry initially had doubts about using pooling. This was due to previous bad experiences. The company had tried to use recycled pallets on their production lines, but an essential point - pallet preparation - had been overlooked. The people who repaired the carriers were not qualified and did not take the associated responsibility. The result was that these pallets did not perform well. Why? Because the process was not carried out with a professional pooling company that takes responsibility for ensuring that the returned carriers are 100% fit for purpose.
How do you overcome the administrative problems associated with pooling?
One of our customers' concerns is whether they will have more work to do with preparing reports, reporting where dispatches have taken place, etc., when they start working with a pooling company. Such concerns are unnecessary.
In order to determine the benefits of pooling and prepare a simulation accordingly, we only need pallet drawings, shipping locations, and an assessment of the quality of the available carriers. Then we show the customer step by step what savings they will get if the pooling company recovers 10%, 20% 100% of the pallet pool for the customer. We also show the benefits of less work for the companies because by selling the transport carriers, they do not have to worry about anything concerning their handling.
What measures need to be taken to make the simulation as accurate as possible? Transparency and close cooperation between the pooling company, the client's sales department, and the client's contractors are essential. It is important that companies are not afraid to talk to the pooling company because if they do not show accurate data, our offer will be incomplete and will not show the whole picture.
Can you handle the logistical side of large organisations?
One common customer concern is how to service the logistics side of the business. Companies are concerned about whether pooling companies like Rotom (2Return) can generate a significant carrier return, along with repair and maintenance services for companies with dozens or hundreds of locations.
Pooling for large companies is profitable when they can collect 50% of pallets from the market and more so that the financial result for the company is profitable. Customers often ask our specialists how long it takes a pooling company to collect several hundred thousand pallets from the market.
We understand that, in this case, the logistics is essential. That's why at the beginning of our cooperation, we perform test collections for a period of 3 to 6 months. After this time, the company can determine whether the collection process is smooth and fast. We know that the more pick-up points there are, the denser the pooling network is, which means lower transport costs and a larger pallet pool. Rotom currently has 3 locations in the UK, 26 in Europe and is constantly increasing the number of sites. What distinguishes us as a reliable pooling company is the fact that we perform pooling not only for standard pallets (e.g. Euro) but also for customers who have their own non-standard pallets.
How to convince the client's contractors to want to work in pooling?
One of the sensitive topics we raise with customers is the issue of encouraging customers' counterparties to cooperate in packaging pooling. This is due to the fear of losing business partners.
To this end, we inform our customers' counterparties in detail: what we do, who we are, and what the pooling process looks like. All of this is included in the sales material that we pass on to the client's sales department. The next step is for the client to have a "sensitive" conversation with their customer network. This is a sensitive moment, from our client to the end customers. The goal is always to show the benefits of pooling. It is essential to talk to your customers matter-of-factly; for example, one customer was hesitant about pooling because he thought it would require him to take on additional responsibilities. However, after a few months he was convinced to go for pooling because he had less work to do in terms of pallet management.
It is important to have concrete arguments showing the benefit of switching to package pooling.
- No problem with accounting for the sale of your own pallets - the pooling company buys the pallets, so it removes the problem of accounting for this type of transport medium at the end of the year, moreover, the client still receives money for it.
- It is possible to buy any type of pallet, even non-standard ones. Regardless of whether any elements of the pallets are damaged - logistics specialists will initially assess the condition of the carriers and, prepare a valuation, then collect it. The result? The customer increases their storage space.
Work with an experienced logistics partner
If you are interested in the topic of pooling, it shows that you want to develop your company in a sustainable way. This promotes savings and better management of logistic carriers. Rotom, together with its partner 2Return, has been carrying out pooling for many years for many companies all over Europe. Please fill in the form below and contact us if you have any further questions and would like a realistic offer for your company. Our specialists will be happy to advise you on the right solution for your supply chain.
