In the complex world of supply chain sustainability, financial returns are often measured in half-decades. Solar panels might take seven years to pay back; a new distribution centre might take four. However, a quiet revolution is happening in the humble world of packaging that defies these standard timelines, EastFruit notes. The transition from single-use cardboard and wood to a pooled fleet of Reusable Plastic Crates (RPCs) is currently offering one of the fastest returns on investment in the logistics sector, especially in the countries with expensive wood and cardboard.
E.g. according to the team working on the Horticultural component of the joined FAO/EBRD Agri-food Climate and Environmental Sustainability (ACES) Initiative, for the countries of Central Asia investments into the system of reusable foldable crates could be extremely profitable and offer a payback period of just 1 year, assuming everything goes perfectly. However, even in the countries of Eastern Europe and SEMED region these returns may not be much longer.
For an average supermarket chain operating 150 stores and handling roughly 110,000 tonnes of produce annually, the reliance on disposable packaging is a financial hemorrhage. The “throwaway” model consumes approximately 5,000 tonnes of packaging material a year – cardboard that collapses under humidity, wood that splinters and gets infected, and low-grade plastic that ends up in landfills. FAO fresh produce logistics expert Fedir Rybalko estimates that by investing approximately $2.81 million to acquire a fleet of 770,000 durable, foldable crates and washing infrastructure, a retailer can arrest this waste immediately.
The economics are undeniable. Even accounting for washing and logistics costs, the net annual benefit ranges between $3.9 and $4.4 million. This isn’t just about saving the cost of buying boxes, it’s about “shrink.” Reusable crates protect produce far better than cardboard, stuck up better, provide better ventilation and could be used to pick produce directly into them, decreasing chances of produce damage and time before it reaches consumers. “My 15 years of experience introducing these solutions in different countries suggests that it could reduce produce loss by an estimated 2 percentage points”, says Mr Rybalko.
Also read: Georgian retail chains can save $2.2 million on bananas alone by switching to pooling!
That preservation of inventory alone is worth over $2 million annually. When you combine the elimination of waste disposal fees with the operational speed of standardized crates, the Internal Rate of Return (IRR) soars above 40%. For decision-makers paralyzing over where to start their green transition, the answer is clear: start with the crates. It pays for itself before the fiscal year is out.
It is, of course, easier said than done. According to FAO Economist and horticultural component coordinator Andriy Yarmak, many efforts of introducing foldable crates into fresh produce logistics fail because they require: close coordination between supermarket chains, traders, farmers and crates operator; they require software modifications for all market participants because the packaging becomes an asset instead of a cost; and they receive significant resistance from the fresh produce department managers and so on. The implementation of these pooling systems yields advantages for all stakeholders, including farmers, traders, supermarkets, and the nation’s ecological well-being.
“Pooling of foldable crates is a perfect example of circular economy, helping improve ecological and economic sustainability”, concludes Andriy Yarmak.
EastFruit has posted detailed history of pooling systems’ introduction and functioning in several regions of the world: the EU, Ukraine and Turkey.
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