CHEP leads in sustainable supply chain solutions. It operates one of the largest circular economy businesses in the world. This is done through its pallet and container pooling services. The company’s clever “share and reuse” model has changed how goods travel in global supply chains. This approach brings economic and environmental benefits to businesses everywhere.
CHEP uses smart tracking technology and a vast network to improve visibility. They focus on sustainability and enhance customer satisfaction with reusable assets. Their full-service offering combines hardware, software, operations, and business processes. This helps companies improve their supply chains. They use technology and insights to boost performance.
We are not affiliated with CHEP company. Any mention of its name or brand is made solely for the purpose of objective analysis. The opinions presented reflect the author’s personal experience. The use of trademarks and/or logos (if any) is solely for the purpose of criticism and analysis as permitted by Fair Use legislation.
We are not affiliated with Repackify company. Any mention of its name or brand is made solely for the purpose of objective analysis. The opinions presented reflect the author’s personal experience. The use of trademarks and/or logos (if any) is solely for the purpose of criticism and analysis as permitted by Fair Use legislation.
Company Overview and History
CHEP stands for Commonwealth Handling Equipment Pool. It was set up in Australia after World War II. The Australian government created the Allied Materials Handling Standing Committee. Its job is to manage defense supplies effectively during the war. American forces left Australia after the war. They left behind a lot of materials handling equipment at their bases. The Australian government joined this asset base with current infrastructure. This created the Commonwealth Handling Equipment Pool, or CHEP.
In 1958, the Australian government chose to privatize the equipment-handling industry. They ordered the sale of CHEP. Brambles, a business formed in 1875 with experience in materials handling, acquired CHEP. Under Brambles, CHEP grew quickly. In just a few years, it ran the biggest pool of pallets and containers in the Southern Hemisphere. It also had the largest fleet of forklift trucks in Australia.
The company kept growing globally in the 1980s and 1990s. It launched equipment-pooling operations in 14 countries. These included places in Asia-Pacific, Europe, South Africa, Canada, and the USA. CHEP made a big change by introducing the four-way entry wood block pallet. This innovation improved efficiency in materials handling.
Today, CHEP is part of Brambles Limited. It leads globally in managed, returnable, and reusable packaging. CHEP serves over 300,000 customers around the world.
Business Model and Services
The Pooling System
CHEP’s circular business model is centered on the concept of “share and reuse,” which they call “pooling.” CHEP’s model is different from traditional supply chains. Companies rent pallets, IBCs (Intermediate Bulk Containers), and industrial containers from CHEP. They choose renting over buying and owning.
The pooling system works through a closed-loop process:
- CHEP provides ready-to-use pallets to manufacturers and growers. They help with the movement of goods through the supply chain.
- When manufacturers and growers get CHEP equipment, they load their products. Then, they ship them through the supply chain on a CHEP pallet.
- At the end of the supply chain, the retailer or distributor unloads the goods. Then, they return the empty CHEP pallets to the nearest CHEP service center.
- CHEP checks and fixes all returned pallets as needed. This ensures they meet quality standards.
- These pallets are then made ready for use again, and the cycle continues
This model lets customers focus on their main business instead of pallet management. CHEP says, “We manage admin tasks, retrieval, and quality checks for pallets in a closed-loop system.” This lets you concentrate on your main business.”
Core Services and Benefits
CHEP provides various services, not just pallet pooling. One of these is Total Pallet Management (TPM). TPM improves transport activities and equipment moves in the network. The benefits of TPM include:
- Reducing empty hauls between specific manufacturers and retailers
- Improving communication and coordination between customers and CHEP
- Promoting on-time delivery and supply
- Reducing daily inventory carried
- Minimizing administration associated with pallets
Manufacturers, distributors, and retailers must handle their pallets, even when not in use. After use, several costs come with buying a pallet. These include retrieval, quality checks, storage, and upkeep. CHEP’s pooling model solves these issues. It lets organizations rent pallets and only pay for the time their goods are in transit.
Global Operations and Scale
CHEP has established an impressive global footprint over its decades of operation. The company works in about 49 countries. Its main operations are in North America, Europe, and Asia-Pacific.
CHEP’s network encompasses:
- Approximately 7,500+ employees worldwide
- A pool of approximately 300 million pallets and containers
- Support for more than 500,000 customer touch-points across 49 countries
- 7 total offices globally
This extensive network gives CHEP unparalleled scale in the industry. This scale helps CHEP provide reliable service, even when it’s busy or demand spikes. As CHEP states, “With CHEP, you can be confident that you’ll get the equipment you need, when and where you need it”.
Financial Performance
CHEP is a subsidiary of Brambles Limited. Its financial performance is mainly reported under Brambles. Brambles had strong financial results in fiscal year 2024. Their performance was impressive in all regions.
The FY24 results presentation highlighted several key achievements:
- Price grew by 7%. In-year price realization was 3%. This shows our commercial discipline in recovering the cost-to-serve.
- Structural improvements in asset productivity show a capex to sales ratio of 13%. This is about 10 percentage points lower than FY23.
- IPEP (Irrecoverable Pooling Equipment Provision) reduction of US$105 million compared to FY23
- Underlying Profit of US$1,262 million, up 17% versus FY23
- Profit margin improved by 1.8 percentage points compared to FY23. This shows ongoing operating leverage.
- Free Cash Flow before dividends of US$883 million, up US$385 million versus FY23
By segment in FY24:
- CHEP Americas: US$3,610.3 million (7% increase at actual FX, 6% at constant FX)
- CHEP EMEA (Europe, Middle East, Africa): US$2,391.8 million (9% increase at actual FX, 7% at constant FX)
- CHEP Asia-Pacific: US$543.3 million (6% increase at actual FX, 9% at constant FX)
In the first half of FY25, ending December 2024, Brambles saw volume growth. They also achieved operating leverage and generated free cash flow. Sales revenue rose by 4%. This included a 2% growth in volume. New business wins and steady volumes helped boost these results. Price realization of 2% was in line with cost-to-serve increases.
Underlying Profit rose by 10%. This increase came from better productivity linked to Brambles’ “Shaping Our Future” transformation. Key factors were a big drop in uncompensated losses (IPEP) and smart cost management. This helped to keep service costs down.
Brambles has raised its Free Cash Flow forecast for FY25 by US$100 million. This change shows strong performance and better asset efficiency.
Digital Innovation and Technology
CHEP is embracing digital transformation to enhance supply chain visibility and efficiency. CHEP partnered with BXB Digital, another Brambles company, to create digital solutions. These solutions use Internet of Things (IoT) technology. They help improve the efficiency of customers’ supply chains.
Track and Trace Technology
CHEP has added track and trace devices to its reusable pallets and containers. This is happening now in Southern Europe. The goal is to improve visibility for the platforms and the products they carry. The built-in sensor devices collect information such as:
- Location of CHEP pallets and containers as they move through the supply chain
- Condition of the pallets and containers
- Product quality conditions, such as temperature
This technology helps CHEP control and secure its key customers: the FMCG producers. It also protects pallets from being lost or removed from the circular system.
Eleven retailers and distributors joined the first trials. They came from Spain, France, Italy, and Portugal. They helped find inefficiencies and sources of asset loss in their supply chains. New trials are set to grow in Greece and Belgium. This could lead to broader use.
Connected Pallets and IoT
Mike Bowie, Digital Lead at CHEP Europe, says the pallet is being reimagined. It’s now a connected asset that can generate valuable data for the supply chain. “Multiplying that visibility across millions of assets unlocks a new layer of intelligence.”This can solve major logistics issues like waste, loss, inefficiency, and confusion.”
The connected pallet concept changes how we use technology. Now, we don’t just protect against liability. We use data to solve key business challenges. These include quality, cost, efficiency, and sustainability.
Sustainability Initiatives
Circular Economy Leader
CHEP’s business model is sustainable. Sharing and reusing products cut down on waste and save resources. CHEP’s parent company, Brambles, is committed to sustainability. Brambles was named the 2nd most sustainable company in the world due to this commitment. Corporate Knights ranked it on their 2024 Global 100 list.
The annual ranking was revealed at the World Economic Forum in Davos. It evaluated 6,733 public companies that earn over $1 billion. The assessment focused on their social and environmental effects, revenue, and investments. This was Brambles’ fourth year in a row on the list. The company is still moving up in the rankings.
Environmental Benefits and Achievements
Brambles released its 2024 Sustainability Review. It reports on key progress and achievements in Environmental, Social, and Governance areas. Key sustainability accomplishments highlighted in the review include:
- We support the growth of 1.7 million trees. This is in addition to the 2.6 million trees from forestry certification programs. We also ensure 100% sustainable sourcing.
- Use post-consumer waste more. Upcycled and recycled content should make up 42% of all plastic purchased.
- Reduce greenhouse gas emissions by 15% from the FY20 baseline across all scopes (1, 2, and 3). Also, keep operations carbon neutral for Scope 1 and 2.
- Increase customer participation in collaboration projects by 37.2% (491 customers).
The tangible environmental benefits of CHEP’s model are substantial. CHEP’s pallet pooling service has saved customers 2.4 million metric tonnes of CO2. That’s like the emissions from 454,500 homes.
Leadership and Recent Developments
CHEP’s parent company, Brambles Limited, is led by CEO Graham Chipchase. In July 2024, CHEP named David Cuenca as the new CEO for CHEP North America. He replaces Xavier Garijo, who left after just six months.
The official announcement said Garijo left “due to cultural differences.” Brambles CEO Graham Chipchase said, “We value the energy and skills Xavier brought to the role.” However, we have agreed that a different leader is better suited for the future.”
David Cuenca was the CEO of CHEP Europe. He has a lot of global pooling experience. He has been with Brambles since 2000. Cuenca shared his thoughts on the new role: “I am excited to lead the CHEP North America team. We will focus on growth and unlock value for our customers. This will come through exceptional service and operational excellence.”
Customers and Industries Served
CHEP works with more than 300,000 partners worldwide. These include small owner-operators and large multinational companies from different industries. The company primarily serves:
- Fast-moving consumer goods (e.g., dry food, grocery, health and personal care)
- Fresh produce
- Beverage
- Retail
- General manufacturing industries
CHEP works with many global companies. These include Procter & Gamble, Sysco, Kellogg’s, Kraft, Nestlé, Ford, and GM. Big companies trust CHEP for key parts of their supply chain. This shows CHEP’s strong reputation for being reliable and efficient.
Success Stories
CHEP’s solutions have addressed specific supply chain challenges across various industries. A gardening products provider heavily used time-limited promotions. However, delays in products and materials from supply chain issues hurt their sales. CHEP’s solution boosted visibility. This allowed promotions to begin sooner and more consistently. As a result, sales increased significantly.
An automotive giant faced trouble keeping its reusable containers available for key suppliers. So, they chose costly disposable packaging. This choice harmed their sustainability goals. CHEP’s insights helped locate empty containers and optimize the flow.
Customer testimonials also demonstrate the value of CHEP’s track and trace solutions. Jürgen Dietz, Logistics Director at DIA Group, said, “CHEP’s track and trace solution helps us manage assets and improves security.”” Alex Tello, Head of Pallets at Carreras, noted, “Our project clearly shows all our distribution flows. This improves our control and management of pallets.””
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