(Adds details, background, CEO comment)
June 30 (Reuters) - Australia's Brambles Ltd (BXB) said on Thursday it would not invest in the plastic pallet pool for customers who supply to U.S.-based big box retailer Costco Wholesale Corp COST.O , as the companies failed to agree on pricing and commercial terms.
Brambles, which owns and rents crates and pallets globally to fast-moving consumer goods companies, has been under investor scrutiny for its proposal to build a plastic pool for its U.S. customers, including retailing giant Walmart WMT.N .
Costco in 2019 announced plans to migrate all pallets used in its supply chains to plastic pallets over time from wood. Brambles said last year it would invest in Costco's move to plastic pallets only if return on capital invested (ROCI) was over 15%.
However, in light of current market volatility, a conversion to plastic pallets was deemed "commercially prohibitive" by Costco's suppliers and, without adequate cost recovery, dilutive to Brambles' ROCI, Brambles said in a statement.
The Australian supply chain logistics firm has reaped benefits from a current crunch in container availability amid a pandemic-fuelled boom in e-commerce activity.
"Costco remains a highly valued retail partner in North America and we will continue to work closely with them as they assess the viability of other options to convert to a plastic pallet pool," said Chief Executive Officer Graham Chipchase.
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