Pallet and Container Deposits – Top Things to Consider
Posted: 27 Feb 2012 11:12 AM PST
Container and pallet deposits can be an extremely effective tool in promoting timely return of reusable packaging. Recently there has been a very good discussion about pallet and container deposit charges at the Pallet Security, Returnable Assets Management & Pallet Control group at Linked In.
Here is a quick summary of the reusable packaging deposit issue:
Terry Costigan of Equipment Management Solutions Ltd. cautions the need to have an agreement in place with the retail receiver against over return, so that an overly zealous trading partner does not use the return mechanism as a revenue stream.
Gary Hudson of Returnable Packaging Services Ltd. observes that “Whether a deposit is applied or ownership retained the key steps to successful recovery are (a) clear statement that you intend to recovery your assets (b) take a pro-
Danilo Oliynik of Linpac Materials Handling notes that different companies have different motives and different approaches to asset management. For example, motives may include container loss avoidance, increased efficiencies or revenue generation.
Angus Wolfendale of Foxwood Business Services weighed in with an
Deposits can be used by pool operators for a number of reasons:
• To create a rapid positive cash flow for the pool-
• To ensure the costs of RTP were protected should a customer not return the equipment.
• Believed to be a disincentive to retention, because the customer does not get a refund until they return or onward transfer the RTP.
Deposits are not popular because the customer incurs a significant negative cash flow impact when first entering the pool. This is particularly so for smaller customers, resulting in a competitive disadvantage. Although customers receive subsequent credits, these are offset by the hiring of more replacement RTP.
Once the initial impact of the deposit has been felt, the on-
Customers can also be concerned about getting their deposits back should they choose to exit the pool or if the pool-
Refunds are usually a lessor amount so the customer is charged the net difference to reflect the use of the RTP. A robust administration system is required in order to administer a Deposit & Refund charging system, especially as the Pool Operator is holding its customer’s money and the “client account” in which the funds are held must be fully auditable.
Our Cloud application – “Kontrol” (www.kontrol.com) – enables you to easily manage a deposit and refund system, with customers being able to see the charges they have incurred as and when equipment is transferred between supply-