Tackling Supply Chain Challenges With Reusable Transport Packaging

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Tackling Supply Chain Challenges With Reusable Transport Packaging

Tackling Supply Chain Challenges With Reusable Transport Packaging

By Jenny McTaggart - 09/11/2020

Right now, it’s hip to be square or, better yet, rectangular. Reusable plastic containers (RPCs) and other suitably shaped transport packaging are poised for dynamic growth in the years ahead, thanks to the industry’s heightened focus on sustainability, along with a number of other trends pointing toward the need for more resilient supply chains.

Key Takeaways

  • Reusable transport packaging is growing in popularity, thanks to higher interest in sustainability and, particularly amid the COVID-19 pandemic, sanitation, among other trends.
  • Design functionality and technology are driving supply-chain innovations in transport packaging.
  • A huge growth area for reusable packaging providers is in e-commerce, particularly in regard to transporting orders for curbside pickup.

The Reusable Packaging Association (RPA), based in Tampa, Florida, recently released its first-ever “State of the Industry” report to get a better handle on the growth and potential of the market. The report estimates that global reusable transport packaging is currently an approximately $100 billion business. Pallets represent 62% of the market, with rigid containers, crates, totes, boxes and RPCs (as a group) accounting for 30%

A vast majority of respondents to the survey — 85% — said that they expect the demand for reusable packaging products and services to increase in the next 12 months. It should be noted that the survey was conducted early in 2020, before COVID-19 had reached pandemic proportions. However, experts say that the novel coronavirus’s impact on grocery retailing has only accelerated the movement.

“The grocery retail industry is really being inundated, or shaken up, and changing rapidly as a result of the pandemic,” notes Tim Debus, president and CEO of RPA. “This is accelerating trends that were already there, including a focus on long-term supply-chain strategies, as well as words like ‘resiliency,’ ‘digitalization’ and ‘visibility.’ Then you’ve got this acceleration in the use of technology for e-commerce. I think reusable packaging will play a solid role in all this.”

Reusable transport packaging has long been appreciated for its sturdy features and precise measurements, which make it an ideal supply-chain tool, along with the obvious fact that reusing materials can save money and precious resources in the long term.

Today, design functionality and technology are fueling supply-chain innovations in transport packaging, observes Debus. “One example is the design of an RPC that looks like a wooden crate, like what Walmart is using,” he says.

“Just the appearance of a plastic crate can change the perspective of how a supermarket wants to retail their products at the point of sale, and what image they want to convey.”

Another example of functional design is a crate for fresh eggs in which one side folds down to allow direct access into the container, says Debus. “That replaces a system in which workers were taking a knife and cutting into the cardboard box to rip off the side,” he explains, “so not only does it save labor and create a better interface with the consumer, but it’s also protecting the egg cartons better.”

Rigid and Ready for Use

Two leading RPC providers, IFCO and Tosca, are on the cutting edge of packaging innovation, as they work with grocery suppliers and retailers to solve some of the industry’s most nagging problems, ranging from shrink to labor costs.

Tampa-based IFCO Systems U.S. manages the pooling of RPCs for about 30 North American retail chains, including Walmart, Kroger, Loblaws, Harris Teeter, H-E-B, Raley’s, Stater Bros. and Wegmans, according to Bryan Tate, VP of product and category development at IFCO Systems U.S.

Like Debus, Tate says that he has seen renewed interest in reusable packaging since COVID-19 began.

“The idea of transporting things in a clean, freshly sanitized container has probably never been more popular than it is right now,” he notes.

“Then, with more consumers eating at home and buying fresh foods — produce in particular — we saw an uptick almost immediately. Another thing we saw with retailers trying to keep people fed and keep food on their shelves, is that the sight of damaged products, or boxes busted up, with food spilled on the ground, hits at a different heartstring now. So we’re starting to see more grocery companies really pay attention to their food waste numbers and what specifically can be done within their supply chains to help eliminate that. Rigid, strong containers have definitely solved that problem at their stores.”

Because RPCs are rigid, designers of the containers are able to punch holes in their sides to allow for increased ventilation, which allows for better airflow, observes Tate. “We’ve done supply-chain testing and cooling testing, and we can typically get fresh produce cooled anywhere from 12% to 25% faster,” he says. “So, between not getting banged up and getting cooled faster, you’ll usually find that damage gets reduced anywhere from 4% to 5% in the supply chain.”

In addition, IFCO’s solutions can help reduce labor costs inside a store by 50%, according to Tate.

While fresh produce is IFCO’s primary focus, the company also provides solutions for case-ready meat and eggs. “We even have some initiatives that have taken us to center store, so we have some irons in the fire over there,” he says.

A huge growth area for IFCO and other RPC providers is in e-commerce, particularly in regard to transporting orders for curbside pickup. “Retailers have a lot of work to do around setting up their e-commerce platforms, such as how they want to offer the service to their customers, and all the back-end work,” notes Tate. “But a lot of times, the box they put the order in is the last thing they think about. So we’re there, ready and waiting, and have the solution in place to help them.”

For now, retailers are mostly using IFCO’s standard-size crates to transport orders, although the company does have some designs specifically tailored for curbside. The in-store shoppers place components of online orders into IFCO’s crates and can then stack them if needed. The containers have the same length and width as the standard crates, but their heights range from 8 to 33 centimeters. “Some of our retailer customers have optimized their software so that based on what a consumer orders, it tells the in-store shopper how many RPCs they need to pick the order,” observes Tate.

He says that technology and data analysis are being incorporated into “everything we do now” at IFCO, noting, “You can take what may seem like a boring plastic box, and if you put the right tech in it, it becomes an amazing device to help retailers understand their supply chains better.”

Another area related to technology and e-commerce — automation — will likely be another growth driver for RPCs, especially since the containers are durable and highly precise in specifications, predicts Tate.

IFCO's 6425N is one of its larger RPCs that can be used for curbside delivery.
IFCO's 6425N is one of its larger RPCs that can be used for curbside delivery.

Eventually, reusable containers will likely end up becoming a more prominent part of at-home delivery, according to Tate and others in the industry, although for now, American consumers are still warming up to the idea of paying deposits and returning containers.

“It’s kind of a cultural shift,” acknowledges Tate. “We have a lot of business in Europe, and culturally, over there it’s pretty common that you take a reusable container and pay a deposit.”

Winning Over Wegmans

In common with IFCO, Atlanta-based Tosca has continued to see increased adoption of reusable packaging, observes Jon Kalin, chief commercial officer. “Reusable packaging outperforms single-use alternatives like corrugated and foam every day when it comes to cost savings,” he maintains. “For example, our egg RPCs can reduce shrink by 50%, and our case-ready meat RPCs are proven to reduce transportation costs by 25%.” He also observes that the “clear environmental benefit” of reusable packaging is becoming more and more attractive in the U.S. market.

With all of these obvious advantages, perhaps it’s no surprise that Tosca has been quite busy coming up with new solutions for its retail partners. Early this year, the supplier launched a seafood RPC as an alternative to EPS foam. “Foam is not recyclable and is expensive to produce, so eliminating foam from the seafood supply chain is both a major sustainability win, as well as a cost-savings benefit,” says Kalin. “Initial reaction from retailers and suppliers has been overwhelmingly positive.”

Wegmans is now shipping most of its salmon products using Tosca's new seafood RPC.
Wegmans is now shipping most of its salmon products using Tosca's new seafood RPC.

Rochester, New York-based Wegmans Food Markets revealed in June that it’s using the new RPCs to ship most of its salmon products. At the time of the announcement, Jason Wadsworth, Wegmans’ category merchant, packaging and sustainability, noted: “We have been looking for a way out of EPS for a while, and thanks to Tosca’s new seafood RPCs, we improve our approach to sustainability. It isn’t every day that you get to make a sustainability change that doubles as a cost-saving change as well.”

Wegmans is also using Tosca’s latest packaging solutions for its case-ready meat supply chain.

Tosca has even introduced a poultry RPC, which is now “gaining traction as the first reusable option for transporting poultry,” notes Kalin. The waterproof solution eliminates the use of one-way corrugated packaging in the poultry supply chain, while providing sustainability and protection for wet, heavy poultry.

Like IFCO, Tosca is hearing a lot more buzz around e-commerce programs from its retail customers. Tosca got a leg up on the competition when, at the end of 2019, it acquired Polymer Logistics, a European company that had already created an e-commerce solution that helped several major retailers in Europe. Tosca has now introduced the e-commerce container, known as a reusable grocery tote, to the U.S. market.

“The crate is specifically designed with e-commerce fulfillment in mind and is built to increase efficiency and protection for orders,” notes Kalin. “The containers facilitate the in-store fulfillment process with bag hooks on the top rim, ergonomic handholds, and a solid base to contain spilled liquid. Most grocery stores were not built with the space to operate as a fulfillment center, so Tosca’s reusable grocery totes are strong enough to stack, easy to clean, and conveniently nestled or folded when empty.”

The Polymer Logistics acquisition has also given Tosca in-house R&D and manufacturing capability, allowing the company to offer custom solutions to its customers, he adds: “We can help both retailers and suppliers address supply-chain challenges associated with perishable products.”