European FMCG Retailers Ports Activity

Part
01
of three
Part
01

European FMCG Retailers Ports Activity: Retailers

While articulated vehicles are predominantly used to carry palletized goods, the type of palletization used by European retailers to move their FMCGs is palletized boxed goods, which are of different trailer types. The general process of how a retailer moves its FMCGs to European ports is generally through trusted third parties who make use of a pooling system. Lidl is a typical example of a European FMCG company making use of this general process with the added advantage of digitization.

Overview

Type of Palletization and Other Logistic Methods

  • The LOGISTER project, which was funded by the European Union's Horizon 2020 research and innovation program, proposed that "the LOGISTAR system should focus on ambient palletized goods."
  • For the movement of FMCGs, European retailers predominantly make use of articulated vehicles to carry palletized goods.
  • The commonly-used type of palletization in the FMCG sector is palletized boxed goods, which are of different trailer types.
  • There are the box trailers with "either barn door or roller shutter opening at the rear, and there may be a tail lift." Another trailer type is the curtain-sided ones that can be loaded from the sides, and they are usually called tautliners.
  • Some FMCG companies interviewed in the LOGISTER project are "in a trial of a longer semi-trailer taking place in the UK." This type of trailer, "which is up to 2m longer than the traditional trailer, allows for 13% more pallets to be loaded, though the legal weight limits are still applied." FCMG companies, such as Nestle and Pladis, make use of this type of trailer and others to load double-height pallets.
  • Other specifics as to how goods are palletized during the logistics process include the use of the double-deck, which is "a tall trailer with smaller wheels that permits up to twice as many pallets on two levels within the trailer."
  • European retailers also move their FMCGs by making use of reefer trailers, which have "chill facilities and can maintain products at various refrigerated temperatures."
  • Some European retailers operate a double-stacked pallet system in transporting. In such instance, "a stackability system ensures only the most appropriate pallets of goods are placed on top of other pallets so that damage does not occur."
  • Many European retailers do not move FMCGs by rail due to the facts that the height of pallets are not compatible with the rail system and "service levels can’t be met or too expensive." In the UK, however, the FMCG sector makes use of rail because of the short distances, and it is "a less cost-effective option than the road."

FMCGs to European Ports

  • For the movement of FMCG to European ports, "delivery date and specific delivery time are usually requested."
  • Some European retailers make use of trusted third parties, like Kuehne + Nagel and GS1 Germany, to move its FMCGs to European ports. Due to the global presence of these third parties and their partnership with pooling partners, "a comprehensive range of storage and handling facilities are at their disposal, ranging from highly automated warehouses with cold chambers working at -25C to multiple outbound pallet configurations management for the varying specifications of different retailers."
  • Using Europe's largest food retailer, Lidl, as an example, the general process of moving FMCGs to European ports have been digitized for "more sustainable and efficient pallet pool contracting and management system."
  • Lidl has partnered with PAKi Logistics for the latter's e-Voucher, which allows for "less waiting time and more flexibility at the dock." Since November 2018, "Lidl offers its suppliers and carriers, in all European distribution centers, the option of digitally managing the pallet transport and rental service through a digital bonus system." The innovative efficiency of this system to the retailer's logistics platforms facilitates the processes at the dock, which allows for more sustainable pallet management.
  • With the PAKi e-Voucher, Lidl operates "an automated 1:1 exchange service to reduce waiting times at its distribution centers, ensuring greater sustainability in the supply chain by lowering inefficient transport."
  • The process involves the retailer issuing "the digital voucher together with a unique code through the PAKi e-Voucher database." The moment the operation is registered and validated by the service provider, "the corresponding amount of pallets will be billed to the beneficiary's online account."
  • Because a unique code is generated, this process is faster and safer for Lidl to move its goods to the ports. The retailer also gets to skip the use of paper orders.
  • The PAKi e-Voucher has a validity period of 12 months from its activation date; and "once accredited in a PAKi account, the account holder can benefit from the range of PAKi Logistics pooling services across Europe." The e-Voucher "can also be transferred to third parties."
  • Lidl has over 10,000 stores and "over 150 product distribution centers in 29 countries, with PAKi Logistics responsible for the physical collection of the pallets from Lidl's central warehouses in Europe."
  • According to Christian Agasse, CEO of PAKi Logistics, "thanks to digital solutions and our network across Europe, shippers and carriers can benefit from more agile, safer, and more sustainable pallet management." Irrespective of the size of the load, "carriers and suppliers can retrieve and deliver PAKi pallets throughout Europe."

Research Strategy

We started our findings by identifying the type of palletization used by European retailers to move their FMCGs. We discovered that the norm in the industry is palletized boxed goods, which are of different trailer types. We, therefore, provided details on how goods are palletized during the logistics process using the different trailer types. We also indicated how two companies, Nestle and Pladis, are leading in the use of these different trailer types.

We found out that the general process of how a retailer moves its FMCGs to European ports is generally through trusted third parties who make use of a pooling system. Using a European FMCG company, Lidl, as an example, we discovered the retail company went a step further by adopting digitization through its partnership with PAKi Logistics. The latter company is "responsible for the physical collection of the pallets from Lidl's central warehouses in Europe," and moving them to the ports, which allows for "less waiting time and more flexibility at the dock."


Part
02
of three
Part
02

European FMCG Retailers Ports Activity: Wholesalers

FMCG wholesalers across Europe swear by palletization when it comes to handling logistics. However, not much research or knowledge building has been done on the nitty-gritties of the palletization procedures that occur during warehousing and transportation.

EXAMPLES OF LOGISTIC OPERATIONS IN EUROPEAN FMCG WHOLESALERS

  • Sian Wholesale is a UK based privately owned company that has been exporting FMCG and Pharmaceuticals across the world for more than 15 years. It claims to be proficient at picking orders that have mixed layers as well as mixed pallets. While carrying out logistical operations, their products are protected using layers, corners and pallet boards.
  • Doiberica, the import/export division of an FMCG company with offices in Spain, employs cross docking operations in places where the items that are being brought in are sorted, consolidated and stored.
  • Alkes trading is an FMCG import and export company that operates across UK, Europe and Asia. It partners with few logistics companies who have their warehouses near the port of Rotterdam in order to make logistics easier. In addition, their primary company base is also located very close to the Port of Rotterdam. Transportation of the products is carried out via air freight, ocean freight, road and rail.

COMMON LOGISTIC PRACTICES

  • With products that have a short shelf life or are highly sensitive to temperature changes, freight forwarders often move the goods from pallets to refrigerated vehicles that can maintain the required temperatures.
  • When handling beverages, FMCG companies often optimize the process of palletization by adding layers of stretch wrap and collation shrink to cans and bottles before stacking them on pallets.

RESEARCH STRATEGY

The team started the research by directly searching for the common logistics methods and procedures involved during shipping and packing, which led us to results where experts from the logistics and supply chain industry indicated how to optimize time and reduce costs rather than talking about the status quo and innovation in logistic methods.

Next, We looked through various market and industry reports in the FMCG logistics sector in Europe, which gave information on market trends and shares. With all this quantitative information from the market reports, we still couldn't deduce the exact operations that went into the logistics of these FMCG products.

Finally, we looked at top FMCG wholesale companies and went to individual company's website to get information about their logistic methods. While we managed to get a sneak peek of what goes, the depth required in the information to better understand their palletization or non-palletized process was unavailable. Some companies' websites didn't provide this macro level information. Any kind of annual report of logistic performance was also missing from these websites. However, a common theme among all these companies was the employment of pallets in their logistic operations.
Part
03
of three
Part
03

European FMCG Retailers Ports Activity: Manufacturers

Introduction

Palletization is used often by European manufacturers to move FMCGs. Specifically wood pallets are an effective way to consolidate and quickly move packages, and facilitate effective fastening of goods for safe domestic and international transport. Pallets have also been used in Europe frequently due to their low cost and ability to be easily standardized and reused. Below is additional data on the various modes of transporting pallets, palletization logistics methods and tools in Europe, and additional data related to how European manufacturers use pallets to move FMCGs.

Types of Pallets & Palletization Standards

  • Pallets used in Europe are produced by several key companies, and are now made from a range of materials; wooden pallets, plastic pallets, corrugated pallets, and metal pallets are all used by manufacturers to transport goods.
  • Pallets have been standardized by dimension internationally, with several standard sizes; 1100mm x 800mm, 1100mm x 900mm, 1100mm x 1100mm, 1100mm x 1400mm, and 1000mm x 1200mm.
  • The most widely used pallet in the world is the L Euro pallet, which is predominately used in Europe. There are 450 – 500 million L Euro pallets in circulation globally.
  • Depending on size of shipping container, pallets are traditionally arranged in Cargo Containing Units in a way that each pallet layer contains between 21-33 pallets.
  • Cargo Containing Units are also referred to as CCU, and can take many forms depending on mode of transport, but typically refer to any container representing a certain amount of goods held together in some way, and the standardization of CCUs are used to speed up and increase efficiency for loading and unloading operations.

Benefits of Palletization

  • Manufacturers benefit from the overall effectiveness of palletization, as pallets are reusable, universal, economic, and can be made with low cost materials.
  • Pallets speed up the process of loading and unloading certain types of goods, specifically those that are rapidly produced and used such as FMCG.
  • Pallets can also have a positive impact on loading and unloading safety due to the ability to standardize procedures around them.
  • Because pallets have global standard sizes, they are useful for transporting across borders, ensuring stable storage and smooth transport by land or sea.

Palletization Rates by Transportation Method

  • The transportation related unitization of goods in the EU has increased, with use of standardized packaging units such as pallets that can easily be transferred between transport vehicles on the rise.
  • Rail and maritime transport specifically have increased in shares of goods that are unitized, in either containers, trailers, or swap bodies. The unitization of road transported goods is stable, remaining at just over 6%.
  • However, pallets are more likely to be transported via road than via maritime transport, but this may shift as logistics companies seek to adhere to guidelines around CO2 regulations by using alternate methods

Logistics Processes and Tools for Palletization

  • Because of the frequency of palletization to move goods in Europe, logistics companies such as SeaRates and Smart Robotics have developed tools to make the palletization process more convenient.
  • SeaRates offers a simulation and planning tool that allows companies to calculate packing parameters based on optimal load and container size.
  • Their tool, the Container Load Calculator, allows users to specify the type of cargo and parameters, and gain insights on best ways to position goods and pallets.
  • Smart Robotics offers the Smart Palletizer, an end-of-line automation solution that mechanizes the palletizing of products.
  • The Smart Palletizer specifically is aimed at FMCG manufacturers, noting that these companies, "typically produce 24/7 and want to produce locally and close to natural resources," but that qualified manpower for loading pallets in these locations is often a problem.

Additional Relevant Data

  • The use of palletization is growing in Europe, with a projected growth of 6% between 2018-2022.
  • Ocean carrying freight forwarders are consolidating, with the number of major ocean carriers for palletized CCUs dropping from 20 to 10 in the past four years.
  • Challenges for freight carrying related to palletization include rolled shipments, equipment shortages, port congestion, and surprise fees due to influx tariffs.

Research Strategy

In order to provide type of palletization and logistic methods used by European manufacturers to move FMCGs, we examined market reports, industry journals and news sources, as well as media on manufacturing, logistics, and transportation trends in Europe. We also explored press and resources from pallet companies as well as logistics companies providing services related to palletization, in order to gain additional relevant insights into the general process of how manufacturers move FMCGs between European ports.




Sources
Sources

From Part 01
Quotes
  • "the LOGISTAR system should focus on ambient palletised goods."
  • "either barn door or roller shutter opening at the rear, and there may be a tail lift."
  • "in a trial of a longer semi-trailer taking place in the UK."
  • "which is up to 2m longer than the traditional trailer allows for 13% more pallets to be loaded, though the legal weight limits are still applied."
  • "a tall trailer with smaller wheels that permits up to twice as many pallets on two levels within the trailer."
  • "chill facilities and can maintain products at various refrigerated temperatures."
  • "service levels can’t be met or too expensive."
  • "a less cost-effective option than the road."
  • "delivery date and specific delivery time are usually requested."
  • "a stackability system ensures only the most appropriate pallets of goods are placed on top of other pallets so that damage does not occur."
Quotes
  • "a comprehensive range of storage and handling facilities are at their disposal, ranging from highly automated warehouses with cold chambers working at -25C to multiple outbound pallet configurations management for the varying specifications of different retailers."
Quotes
  • "warehouse operational efficiency by allowing easy movement of stacked goods using machines or tools, such as forklifts and pallet jacks."
  • "a portable, rigid platform that is flat and can carry the load."
  • "pile up, store, assemble, or transport goods."
Quotes
  • "more sustainable and efficient pallet pool contracting and management system."
  • "less waiting time and more flexibility at the dock."
  • "Lidl offers its suppliers and carriers, in all European distribution centers, the option of digitally managing the pallet transport and rental service through a digital bonus system."
  • "an automated 1:1 exchange service to reduce waiting times at its distribution centers, ensuring greater sustainability in the supply chain by reducing inefficient transport."
  • "the digital voucher together with a unique code through the PAKi e-Voucher database."
  • "the corresponding amount of pallets will be billed to the beneficiary's online account."
  • "once accredited in a PAKi account, the account holder can benefit from the range of PAKi Logistics pooling services across Europe."
  • "can also be transferred to third parties."
  • "thanks to digital solutions and our network across Europe, shippers and carriers can benefit from more agile, safer, and more sustainable pallet management."
  • "over 150 product distribution centers in 29 countries, with PAKi Logistics responsible for the physical collection of the pallets from Lidl's central warehouses in Europe."
  • "carriers and suppliers can retrieve and deliver PAKi pallets throughout Europe."
From Part 02
Quotes
  • "Our experienced warehouse team is adept at picking mixed layer and pallet orders, protecting your products by using layer, corner and pallet board to guarantee that products are delivered safely and securely. We aim to pick, pack and deliver your stock order within 72 hours."
Quotes
  • "Cross docking operations in staging areas where inbound materials are sorted, consolidated and stored until the outbound shipment is complete and ready to ship."
Quotes
  • "Our company is based nearby the Port of Rotterdam, known as the biggest ports of Europe. We work together with some logistic companies that have their warehouses nearby the Port of Rotterdam. Because this logistic advantage we can switch fast for our customers. We can provide our customers with airfreight, oceanfreight and road/rail transport."
Quotes
  • "The freight forwarders use refrigerated vehicles in order to ensure that the fast moving consumer goods with a short shelf life retain their qualities during the forwarding. These vehicles can maintain the temperature necessary during the transport. It is controlled by the experts who travel with the shipments. "
Quotes
  • "In the case of Fast Moving Consumer Goods (FMCG), the requirements of a typical beverage producer were used to optimize the palletization, combining stretch wrap and collation shrink for bottles or cans packaging. "