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Third-Party Takes Hard Look at Container Pools for Meat
Industry Is Now Taking a Close Look at Managing Reusable Containers for Meat Distribution

By Rick LeBlanc
Date Posted: 3/1/2002

With returnable plastic container (RPC) rental becoming a factor in produce distribution, industry is now taking a close look at managing reusable containers for meat distribution.

Reusables for meat and fish have already enjoyed significant acceptance in Europe, where they have achieved 55% penetration in comparison to 27% for vegetables and 22% for produce, according to numbers released by CHEP over a year ago.

Meat distribution will provide a significant new opportunity for RPCs as well as for third-party services, according to some. "There will be as many or more containers used in meat as in produce," said Marty Poetz, a third-party veteran with Tosca Ltd. in Green Bay, Wisconsin.

Tosca is the leader in the field, according to Marty. "We jumped in early. We’ve got a great group of people who are particularly knowledgeable. We tell customers up front we have to take cost out. We give them a better product for less money, and that’s the fun part."

Marty is well known in the pallet industry. Coming out of the poultry business initially, he worked for First National Pallet Rental and RC Systems before moving to Tosca three years ago.

The use of returnables is growing "like gangbusters" in two areas of the meat packing supply chain, according to Marty. The first is distribution from the slaughter house to the case-ready plant. At the case-ready plant, larger pieces of meat are processed into retail cuts, such as steaks and chops, and packaged in modified atmospheric packaging (MAP) for shipment to retail. The second growth area is in the shipment of case-ready products to retail stores.

Shipments from the slaughter house to the case-ready plant typically are in hand-held or bulk containers, noted Marty. Corrugated bulk containers are common, but they are discarded after every trip. "We’ve taken some cost out there," said Marty. "We’re getting swamped with inquiries."

The greatest interest seems to be in distribution from the case-ready plant to retail. "The whole idea of case-ready is to take cost out," Marty said.

RPC advocates argue that reusable containers are better for the environment because they reduce reliance on natural resources. The environmental benefits are important, noted Marty, but they’re not realized "unless you take cost out."

There are other, tangible benefits to retailers in dealing with case-ready meats, he noted.

Retailers increasingly ask, ‘How can we cut costs and improve sanitation?’ Retail meat cutting operations can be unpredictable, Marty pointed out. "There are injuries, inconsistencies, as well as sanitation issues with cutting poultry and meat at the same table."

The answer seems to be the move to case-ready meats. Cutting and packaging meat at the case-ready plant is providing more efficiencies. And MAP packaging is proving to have a shelf life in the 10-day range rather than three days for over-wrapped meats.

"HACCP is driving this," agreed Jim Milligan of Linpac, "and retail cannot find meat cutters. If they can find them, they are too expensive. Stores are like mini-meat processing plants. How do you keep them sanitary?"

"If it is not red you are dead at the meat counter," Marty said.

Another benefit of case-ready meat to retailers is that they only buy cuts that sell at their particular store. When meat cutting is done at retail, some cuts may not sell well, and the store ultimately discounts prices in order to sell them. So case-ready can reduce waste and improve profitability.

Shelf-ready meats also provide advantages to consumers, according to Marty, including improved product quality. "It gives the customer a better quality meat, one that is cut in a temperature controlled environment and FDA inspected."

Containers have been used by the meat packing industry for at least 20 years. For example, major poultry producers used boxes with lids to ship poultry to Kentucky Fried Chicken, Marty recalled. An early entrant in third-party container management for meat was RC Systems; at one time it had significant business in Canada and the U.S. although now it reportedly manages only one meat-related contract with Kroger in Atlanta.

Tosca is a member of the Reusable Pallet and Container Coalition (RPCC), which is looking at container standards for the meat packing industry. The RPCC meat industry standards subcommittee has an impressive list of advisers that included many major retailers, meat processors and internal packaging providers; the panel also is represented by several plastic container manufacturers and Tosca and other third-party container suppliers, such as CHEP, Hays, and IFCO.

The work of the subcommittee is very important to the successful integration of reusable containers in the meat industry, noted Mike Davis of IFCO. "We want to make sure the containers we provide are compatible with the containers supplied by others," he said. "With the RPCC, we are working to come up with a product that will be accepted quicker than was the case in the produce industry. We’ve learned from the way that produce developed that standards will enhance the introduction."

Jim, who chairs the subcommittee, said the group is looking at four major issues, including a one tote concept, nestable versus collapsible containers, footprint size, and metric versus imperial measure. "We are trying to create an environment and guidelines to facilitate people getting comfortable with RPCs," he said.

The first issue the panel has studied is the one tote concept. There has been some support for using existing produce totes for meat, an approach that has been modeled to some extent in Europe, particularly in the Netherlands. "If that (one tote concept) was the case," Jim said, "our job would have been simple." Using the same tote for meat would allow for greater utilization of existing produce containers. However, the concept has been resisted by some trade groups, such as the Produce Marketing Association (PMA) and others, that are concerned about residues on containers and sanitation. "We feel like we really need to look into this issue," said Jim.

Both nestable and collapsible containers offer certain benefits. Collapsible containers provide a very good return ratio for empties as well as better internal cube because the side walls are vertical rather than tapered. Nestables, on the other hand, offer ease of use because assembly and disassembly are not required. They are also easier to clean, typically offer greater stacking strength, and -- with bale arms -- are more flexible. Nestables can be adjusted to three heights, eliminating the need for containers of varying heights and reducing inventory requirements.

Footprint size is another hot topic for the subcommittee table. The two options are a 16x24 (five cases down) and 20x24 (four cases down). "Some retailers like the idea of using a smaller container for several reasons," said Jim. "One is that it may be a display tool." The smaller width allows more products to be displayed in the same shelf space. "Some of the packaging retailers are using may lend itself to a five-down configuration."

The type of internal packaging can make a difference, also. MAP containers can be stacked higher in a deeper container. Over-wrapped meats, on the other hand, are best transported in a wide, shallow tray. "The style of packaging and retail philosophy are important considerations," Jim said.

Both footprints have advantages and disadvantages, noted Michael McCartney of QLM Consulting. "It depends on your supply chain," said Michael who has worked with several major container manufacturers and services providers in recent years, including TKV, Arca, CAPS, IFCO, and Hays, and also has been in the RPCC. "That’s really the key. If your sole supply chain is 600x400, like Wal-Mart, then you are apt to go with a five-down solution. If your existing supply chain is based upon imperial (measure) and corrugated, you’ll probably do a 20x24."

Another footprint issue is internal cube utilization. One major chain, for example, has reduced the amount of internal tray footprints it uses from 27 to four, but two of them work best in a 16x24 footprint and the other two, in a 20x24. Shelf display seems to be the key advantage of the smaller footprint, but contacts indicate that Wal-Mart is the only retailer really looking at shelf display in the RPC. (A Wal-Mart representative declined to participate in an interview for this story.)

Finally, the panel is considering whether the trays should be metric dimensions, like produce RPCs, or imperial measure. "The reasons for choosing metric are not as valid as they were for produce," Jim said. One factor is that wood GMA pallets may be slightly under 48x40, he said, while plastic pallet dimensions are consistent. The metric dimensions of the produce RPCs provided a slight underhang that was designed to protect product during handling. With collapsibles, however, the weight is on the outside edge. Nestable containers, with a slight taper to the wall, do not have that problem.

Another reason for using metric dimensions in produce, Jim noted, was because the containers may be used for international shipments. Meat, on the other hand, is distributed domestically and often regionally. The geographic difference makes metric dimensions less important; it likewise reduces the importance of higher return ratios provided by collapsible containers.

Internal cube utilization has been another factor in the debate over metric and imperial measure. Studies done for the subcommittee by Eric Fredrickson of IPL and Perry Burger of Pactiv indicates that imperial measure RPCs provide 3.2% more internal cube utilization than metric.

"Our goal is to make decisions on these and have interstackability and interworkability with the meat group," Jim said. "We’re trying to get to that point." The panel’s recommendations will be voluntary, he emphasized.

In some respects, it may be easier for the meat industry to switch to reusable containers than produce. Retailers typically are served by one or two major suppliers for categories such as red meat, chicken and pork. The smaller the number of suppliers, the easier it should be to manage reusables. Nonetheless, Jim believes uniformity is important for several reasons, including stackability and cube utilization of trailers. "Chicken, beef and pork have to interstack," he said. Specialty items coming from other suppliers will still have to be incorporated into unit loads, too. A perishable warehouse typically handles produce, meat and often seafood, Jim noted.

Food safety will be a larger factor in the future, Michael noted, making sanitation an increased focus by forward-thinking retailers and meat processors. Speaking recently at a produce conference, he noted that there is an ever-increasing focus on food safety. Third-party sanitation and inspection services would help retailers limit their liability and increase protection for consumers. "My cut at this," he said, "is that we need to move forward on sanitation. I don’t see committees at PMA. I see cost-avoidance mode (by container users), and the best cost-avoidance mode is due diligence."

The move to third-party container management for meat will involve rental pools as well as increased services for washing and sanitation for user companies that own crates. Look for the meat processing industry to be an increased area of activity for third-party container suppliers over the next few years.

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