External pallet management drives up costs
In view of the increasingly erratic escalation of freight costs hand in hand with a continued high demand for transport capacities, retailers are looking for possibilities to compensate.
The German logistics market has seldom faced as many negative influences at one time as is currently the case. The price for diesel rose at the end of May by one third compared to the annual average. At the same time, logistics companies have had to get to grips with the new legally permissible working and driving hours regulations for drivers.
The industry and retailers are aware of the problems and are ready to accept so-called “diesel floaters” included in price agreements with their forwarders. But all these do is compensate for rising fuel prices, not however for the explosive cost increases due to tolls, energy prices or productivity losses resulting from new EU working hours rules. Only a small minority of logistics and transport companies will be able to absorb these massive cost hikes through price adjustments. It is therefore understandable that retailers who are directly or indirectly affected are looking around for ways to compensate.
External pallet management drives up costs
Pallet providers engaged by the consignee
The offer by pallet providers to assume pallet management activities for central and regional retail warehouses free of charge would seem to come at just the right time. What is unclear, however, is who is left to pick up the tab for releasing the pallets and the additional administrative burden. Supplier or forwarder? In the natural course of things, those who stand to benefit, in other words the consignees themselves.
If the supply chain participants have an agreement regarding pallet exchange, then it is likely they will also have defined provisions regulating the rights and duties of all exchange partners. If the forwarder is unable to exchange pallets back-to-back at the unloading point because the consignee draws on a third-party “pooling management” system, and the pallet stock is also not balanced out later without impacting costs, the forwarder cannot be expected to exchange with the consignor. If the consignee refuses to exchange pallets directly, it is the responsibility of the supplier who has placed the order to ensure that the consignee fulfils its duty to exchange as per agreement. If the pool principle is to be upheld without any of the parties having an unfair disadvantage, the only feasible option for the forwarder in such cases is if the supplier compensates costs on exchange.
External pallet management drives up costs
Delayed pallet exchanges add to costs
Delayed pallet exchanges produce additional costs at the depots of the pallet providers in the form of a release charge for used exchange pallets. Added to this are costs for special tours. Separate invoicing, made necessary because a consignor uses one forwarder to deliver both to exchange partners and to consignees who use pallet providers, pushes up administrative costs. What’s more, sorting and the subsequent sale of white pallets brings down the already mediocre quality of exchange pallets to a level unacceptable to food manufacturers.
In a letter to concerned retailers dated April 2008, the brand association also criticized the additional costs for the industry and forwarders as well as the poor pallet quality. DACHSER favours continuing with the present pallet exchange arrangement. In the company’s view, this time-tested model guarantees all transport chain participants a fair and transparent reconciliation of interests and the most cost-efficient way of transporting and assuring the quality of re-usable pallets. With consignors who supply retail warehouses that practise delayed, non-gratuitous exchange via pallet providers, the company concludes a separate incremental costs agreement.
overview eLetter 03/2008
