The great crate debate

Current EU waste policy discussions about the relative priority given to packaging reduction, reuse and recycling sound at times as unworldly as theological debate about the Holy Trinity or eurocratic deliberations over bendy bananas.

But in fact, there is nothing abstruse or theoretical about it. The presumption that reuse should always take precedence over recycling has given valuable support to policies and initiatives around Europe, not least the love affair between UK food retail and returnable plastics.

The corrugated board industry is understandably eager to claw back some of this business from returnable transit packaging (RTP). Bob McLellan, chief executive of DS Smith Packaging, tries to be even-handed: "There are certain supply chains that both systems will be better for." He adds: "RTP plastics have a value, but they're not as flexible as corrugated board."

That flexibility means that a board case or tray can be customised to suit the size, shape and number of individual consumer packs in each traded unit. Increasingly, it is also designed to facilitate shelf-loading in-store and have a merchandising role.

The chilled foods sector knows what it is like to be squeezed inside someone else's returnable tray. In a literal sense, this can be a problem, says secretary general of the Chilled Foods Association (CFA) Kaarin Goodburn, with tubs having to slot in on their side in order to maximise unit loads. But that is just one of the headaches triggered by RTP.

Just over 10 years ago, when retailers were pressuring the sector to convert to RTP, one CFA member put an estimated seven-figure price tag on the process across its different sites, Goodburn recalls. This included everything from investment in equipment and storage space to logistics management, additional road trips, rental and other direct pool management costs.

Many of those are repeat, rather than one-off, costs. Most significantly, daily rental fees of around 70p per unit levied by retailers on their suppliers are estimated to cover initial costs and start earning revenue for the chain owning them after just three trips.

According to plastic RTP system supplier Linpac Allibert, this allows one anonymous retailer to earn an eight-figure sum every year just from crate rental to its own suppliers. Even so, commercial director Danilo Oliynik argues that the economics still "stack up" for suppliers in RTP's favour.

Green fancy dress

Food manufacturers will have their own view on the economics. But Andrew Barnetson, the Confederation of Paper Industries's (CPI) corrugated sector manager, is concerned about the way in which the supermarkets' business decisions in this area are characteristically kitted out in 'green' fancy dress. "I'd suggest that retailers will always opt for plastics, sometimes just for commercial reasons, even where corrugated might make better environmental sense," he says.

Even now, the assumption that returnables are, by definition, more environmentally sustainable than recycled and recyclable packaging is commonplace. A recent case study on the Envirowise website spelled out how Sainsbury "saved" around 50,000t a year of board by investing in 15M RTP units.

As part of its 2006 Food Industry Sustainability Strategy (FISS), the Department for Environment, Food and Rural Affairs (DEFRA) highlighted a similar example from Tesco. The retailer's "effective and environmentally friendly" crates, it said, "saved 69,000t of cardboard packaging" annually.

Of course, it may be that detailed impact analysis does indeed come out in support of RTP, at least in certain supply chains and closed loop systems. But any such argument needs to be evidence-based. It needs to take into account 'pluses' on the board side, notably the 84% recycling rate claimed for corrugated, as well as 'minuses' for RTP, such as washing and logistics inefficiencies.

The CFA's Goodburn, who participated in FISS while the initiative was still active, says that DEFRA considered a full comparative analysis but decided against it for cost reasons. Now, she argues, with the Carbon Trust's PAS 2050 specification available, an authoritative study should be undertaken on this basis.

In fact, Linpac Allibert has moved quickly to pre-empt any such industry-wide project, by commissioning a study (on the Carbon Trust's recommendation) from Sustain, due to be published in January 2009. "We have undertaken a carbon footprint analysis based on PAS 2050," says Oliynik. "You won't be surprised to hear that it comes down very favourably on the side of RTP."

The report's conclusions are emphatic, ascribing to RTP a "60% lower carbon footprint than single-trip corrugated". Oliynik will give away little about the study ahead of publication, but says that it was based on assumptions of 92 repeat trips over a period of five years. If it proves to be as comprehensive as Linpac claims, the report could play a significant part in bolstering RTP's position.

The rewards of returnables

In terms of logistics, the arguments are not all on the side of returnables. Unsurprisingly, the retailers' insistence on their own dedicated RTP formats simplifies their own logistics while making those of suppliers more complex.

It is not only that food manufacturers have to cope with different sizes and shapes for each retail customer, and pack product into spaces that were not designed around it. Barnetson at the CPI also points to instances of product entering the UK in acceptable corrugated containers and being repacked into RTP units at the regional distribution centre. Those units then require multiple road trips to deliver what was a single truck-load of product, he suggests.

Of course, there are other benefits of RTP. McLellan at DS Smith admits: "It's often more robust, so you don't need to worry about stacking heights. But then, if you ensure it's fit-for-purpose, there is no reason why corrugated couldn't do the same."

Questions such as crate hygiene and washing requirements are often overlooked - possibly because retailers typically never see this process, expecting suppliers to pay for the washing of returnables, as well as for the privilege of using them.

"We've carried out our own checks on whether the trays and crates are properly washed," says McLellan. "With a corrugated box, you know what to expect."

The CPI's Barnetson notes that the water used in virgin and recycled board production is increasingly recirculated. He wonders whether the same is possible with the systems, presumably requiring aggressive washing agents, used to clean RTP.

For his part, Oliynik at Linpac Allibert queries whether the 84% recycling rate for corrugated reported by the CPI is really that high. With a side-swipe at the relative vulnerability of corrugated, he says: "I'd be surprised if that were the real rate, given the amount of breakage and spoilage that occurs, with waste inevitably ending up in a dumpster." He also points to the "problem" of corrugated material prices for recycling, which by November 2008 were at less than a quarter the level of only a few months earlier.

But one of the strongest cards that the corrugated sector has to play is in shelf-ready packaging (SRP). There is an environmental sustainability aspect to this, notably in the ability of suppliers to make net materials savings by integrating the design of the primary and secondary pack.

What is more likely to interest retailers, though, is SRP's potential for protecting product in transit, optimising shelf space, merchandising product effectively and, critically, reducing the labour required for shelf replenishment.

Linpac Allibert, which recently consolidated its UK production and is busy developing in-house asset and logistics management, admits that RTP faces severe challenges in meeting retailer requirements for shelf-ready formats. "The problem is that you need conflicting attributes," says Oliynik. "It must be attractive to the shopper and not intrude into the shopping experience. But at the same time, it needs to be robust enough for transit."

Returnables generally play badly in a branded environment, as witnessed by the disappearance of returnable glass from the on-trade. Oliynik admits that, when he first moved into the plastics sector, he was struck by just how "industrial" RTP can look.

"We're trying to address these issues," he says. He cites an example of a new format for the chilled foods sector. "We're developing trays which occupy a 3D volume in the supply chain, but which collapse to a shelf-ready format while still holding the contents." Linpac is also looking at shelf-loading formats for bulkier items such as edible oils.

Retailers no doubt have their own reasons for using RTP to maximise standardisation and rental income in certain sectors, while preferring the merchandising and shelf-loading cost benefits of corrugated SRP in others.

As the grip of the Climate Change Bill tightens, we are likely to see claim and counter-claim about the environmental sustainability of the two systems. In at least some product categories, decisions to use - or retain - one or the other will be taken despite, rather than because of, that evidence. FM