RETAIL VIEW: RPCs steadily gaining more market share
- by Tim Linden | March 23, 2008
On the one hand, proponents of reusable plastic containers for the produce industry have to be happy with the close to 50 percent growth over the past several years. On the other hand, RPCs still only account for 7-8 percent of the market, which is difficult to fathom if you believe the advantages touted by those same proponents.
Fred Heptinstall, president of the Reusable Pallet & Container Coalition and president of IFCO's RPC management services division, rattled off the advantages of RPCs in staccato fashion and declared that switching from corrugated should be a "no-brainer."
"If you look at what happens throughout the supply chain, RPCs allow for increased efficiencies. If you ask what packing delivers the better quality, RPCs deliver. And if you ask which packing is sustainable, RPCs deliver," he said.
Citing the statistics, Mr. Heptinstall said that a few years ago, it was largely accepted that about 5-5.5 percent of produce shipped was in RPCs, led largely by shipments to Wal-Mart. Today, he said, more and more retailers are at least considering this option, and volume has jumped to the aforementioned 7-8 percent level. "That's a 50 percent growth, and we could double in the next five years - and I don't think that's a stretch. Just look what they have done in Europe."
The IFCO executive said that European retailers have more than a decade head start on U.S. retailers, and that many of them are receiving 80-100 percent of their fresh produce in reusable plastic containers. Mr. Heptinstall listed a number of different retailers in Western Europe with those lofty figures.
And make no mistake about it: Retailers are the driving force behind the growth and potential of RPCs. "The retailer decides what type of container he'd like. If he asks for an RPC, the shippers will give it to him."
The retailer, after all, is receiving most of the economic benefit. Mr. Heptinstall said that the variety of RPCs, as well as their economic viability, have improved tremendously since they were first introduced to the U.S. produce industry more than a decade ago. "Originally we had four sizes, and the cost was significantly higher than corrugate. Now the industry [with four different manufacturers in produce] has 14 different sizes and the rental fee has come down at least 15 percent while at the same time corrugate has had significant increases [in price]."
Mr. Heptinstall said that a shipper ordering a load of RPCs is likely to pay a very similar price to what he or she would pay when ordering the same number of corrugated containers. "Depending upon the order and the size of the container, he might pay quite a bit less and he might pay a little bit more, but it is probably going to be very close."
He said that shippers can reap benefits by using an RPC and stated that better quality arrivals with less damage to the product are most likely the best advantage to a shipper. Once the RPC gets into the supply chain and moves from shipper to retail distribution center to the store level, then back to the distribution center and then enters the recovery program, Mr. Heptinstall said that the economic advantages are obvious. He said that corrugated containers must be bundled and then recycled with some of them -- the waxed boxes -- ending up in landfills. RPCs, on the other hand, are returned to the manufacturer, where they are sanitized and used again for as long as seven years, according to coalition research.
And, again according to coalition research, compared to corrugated containers, the RPC has a 33-39 percent positive effect on the use of natural resources. He said that this is calculated by comparing the number of corrugated containers that are needed to equal the lifespan of one RPC, and the resulting inputs needed for recycling or reusing the comparative containers.
To better reflect the scope of the industry, the coalition is in the process of changing its name to the Reusable Packaging Association. Mr. Heptinstall said that the change has occurred internally, but the new name will be formally introduced to the food industry at the Food Marketing Institute-United Fresh Produce Association expositions and conventions in Las Vegas in May.
The use of reusable plastic containers is growing in many different industries including meat, deli and dairy, he said. It is also gaining favor in closed-end uses such as between the field and the processing facility. In these instances, the user keeps control of his or her reusable plastic containers and does not put them in commerce.
When they are in commerce, Mr. Heptinstall said that the container industry has structured its resources and recovery system to work together. In virtually every market, either one of the manufacturers or an independent third party collects all the containers, regardless of brand, from participating retailers, sorts those containers and ships them back to the various manufacturers. Each manufacturer prepares its own containers for reuse and reinsertion into the system. Of course, the speed at which this is done can create more efficiencies and feeds into the economic viability of RPCs.
Besides its other advantages, Mr. Heptinstall said that the RPC industry will soon be releasing a study concerning the viability of equipping RPCs with a permanent and writable radio frequency identification chip that will allow for that technology to be used efficiently in the produce industry. In fact, he said that the research shows that the technology already exists; the hurdle is merely the retailer's desire to implement RFID within its own systems.
While Mr. Heptinstall acknowledged that the words "reusable" and "returnable" tend to be used interchangeably when talking about plastic containers and their ability to be used again and again, he prefers the former. "We want to distinguish ourselves from recyclable. They are not just returnable (as corrugated could also claim), but reusable."
He emphasized that RPCs are used over and over again for the same basic cost as corrugated with a much smaller carbon footprint and their use results in money savings throughout the distribution chain. Again, a "no-brainer," in his estimation.