Not quite sure which side BG is on with this one..second article...

Not quite sure which side BG is on with this one..second article within a week or so???


ROBERT GOTTLIEBSEN
Brambles' logistical nightmare
When Mark Rowsthorn and Paul Little jointly managed Toll Holdings they had many discussions about whether Toll should bid for Brambles. Later when Rowsthorn took the stevedoring assets and formed Asciano he bought a slab of Brambles shares, perhaps thinking that Toll was about to act.
Brambles shares fell and Asciano lost heavily. More recently there has been widespread speculation that Toll might again be looking at Brambles. I must emphasise that I am not privy to Paul Little’s Brambles plans, if there are any, but if Toll makes a move on Brambles in the next year or two it will be a dangerous exercise.
Brambles’ CHEP pallet business is based on wooden pallets that are not vastly different from those that set the company in motion back in the 1940s. However, for the first time Brambles' wooden pallets are being seriously challenged by a new generation of plastic pallets. GE tried to challenge Brambles with plastic pallets in the 1990s but pulled out. Then in 2002 Brambles' then American chief Bob Moore fell out with the then Brambles chief executive CK Chow. Moore resigned and was paid a large sum to sign a four year non-compete deal which ended in 2006.
During those four years Bob Moore worked with European plastic makers to develop a pallet that they believe in time will take a substantial market share from wood.
Moore is now managing a US group called Intelligent Global Pooling Systems or iGPS. He has attracted around him some senior Brambles people including former Brambles CEO John Fletcher who has joined the board after his retirement from Coles. The main attraction of plastics is that the plastic pallet is much better suited to handling by robots, and the damage to the bottom layer of foodstuffs is eliminated.
However, a plastic pallet costs about $60 and a CHEP pallet about $20, though the plastic pallet lasts longer and requires less maintenance. All the iGPS pallets have radio identification tags embedded in them to enable shippers and receivers to track and trace shipments in real time. However, Brambles is fighting back and is undertaking a series of measures to curb the growth of plastics and claw back the market share that has been lost.
Brambles has started a $US77 million upgrade of its pallets over the next two years and made a $US99 million provision for scrapping pallets that have seen better days. The war between the two companies will be vigorous and the safest course for Toll is to see which one wins and then, if it likes, buy them.
The world is studded with examples of companies that were too slow to adapt to new technologies but there are also many who went too early. It will take a long time to break the pallet pool – if it can be done at all.