Brambles has dismissed market concerns over its business, despite losing a major pallet supply contract in the United States to
Brambles has dismissed market concerns over its business, despite losing a major pallet supply contract in the United States to a rival promising to “revolutionise” supply chain operations.
Brambles has confirmed the loss of a contract supplying beverage giant PepsiCo, which was using CHEP pallets for its Quaker, Tropicana and Gatorade business units.
From April 1 PepsiCo will begin converting those pallets to new supplier iGPS, which markets a plastic pallet with radio frequency identification (RFID) tracking.
Some analysts suggest CHEP’s wooden pallets could struggle to compete against the plastic alternative, claimed to be fire-retardant with a lower burn index than wood pallets.
“iGPS pallets are fully edge-rackable and 20-27lbs (about 9-12kg) lighter than the average wood pooled pallet. If an iGPS pallet should become damaged, it will be remolded into new ones, making its useful life indefinite,” the company said in announcing the PepsiCo deal.
“The iGPS pallet is more uniform in size (48×40) and is significantly more durable and hygienic than the typical multi-use wood pallet. The composition of the plastic pallet will improve the level of product integrity and will increase durability while reducing susceptibility to damage. Additionally, each iGPS pallet contains a unique RFID/barcode tag allowing for individual asset tracking through your own supply chain if desired.”
Bob Moore, CEO of iGPS, says the company shares PepsiCo’s “absolute commitment to quality, innovation and sustainability”.
“PepsiCo’s Quaker, Gatorade and Tropicana Business Units are world-class enterprises and we are extremely pleased with the confidence they have demonstrated in iGPS,” he says.
Responding to a sharp decline in its share price yesterday, Brambles says in a statement the contract does not impact CHEP’s other business with PepsiCo in the US and around the world.
The lost contract represents just 0.7 percent of Brambles’ annual sales revenue, the company says.
“[The contract] is immaterial, particularly as Brambles continues to win new business that far exceeds any contract losses,” it says.
“The CHEP business model remains robust, and CHEP is continuing to win significant new business, through both converting customers from white wood and winning customers from competitors.”