Brambles has renewed its vows to one of the world’s largest logistics contractors, after the relationship with Walmart was reportedly
Brambles has renewed its vows to one of the world’s largest logistics contractors, after the relationship with Walmart was reportedly headed for divorce.
The Australian-based parent of pallets supplier CHEP says it will continue to participate in the United States retail giant’s supply chain through a new deal, but it will come at a cost.
Brambles says the new agreement will see Walmart’s third-party service providers inspect and quality sort CHEP pallets at the service providers’ facilities or, in some cases, at Walmart distribution centres.
Pallets meeting CHEP’s quality criteria will be available for reissue directly to CHEP manufacturer customers, which Brambles says maintains the supply chain benefits of so-called total pallet management (TPM).
CHEP pallets requiring repair will continue to be processed at CHEP service centres before being re-issued to CHEP manufacturer customers.
The centres are or will be located in close proximity to the Walmart service provider facilities in order to minimise transportation costs to CHEP and the overall supply chain, according to the announcement.
Brambles says there is no impact on sales revenue or issue volumes due to savings in not having to inspect and sort empty pallets and reducing transport costs by optimising its service centre network.
But the company is up for about US$30 million before tax due to the transition to the new arrangement, and about US$5 million each year due to the loss of income from the sale of white wood pallets that were previously being collected from the Walmart DCs and the loss of fees associated from the sale of the pallets
Brambles CEO Mike Ihlein says the relationship between Walmart and CHEP is a “very important one for both companies”.
“I am pleased that together we have been able to develop a solution that maintains the benefits of total pallet management for the overall supply chain,” he says.