Deposit Systems Promote Recycling and Reusable Pallet Return
Deposits are a powerful motivator for container return
Deposit systems have made a clear difference in promoting recycling, as can be seen in bottle bill states. Deposits can also be very effective in promoting the return of reusable pallets and containers. Financial incentives can help shape human behavior in a way that promotes container return. In spite of proven effectiveness, however, there remains significant resistance to the expansion of these programs from beverage companies, retailers, and others.
Take the case of bottle deposits. The first recorded deposits schemes date back to the end of the 18th Century. Bottle deposits used to work very effective for beverage containers, but in the 1960s, industry undertook a dramatic shift from refillable soft drink ‘deposit’ bottles to ‘no-deposit, no-return, one-way’ bottles and cans. Sixty percent of beer market share was in single-use packaging by 1970, while one-way containers had grown from just 5 percent in 1960 to 47 percent of the soft drink market during that same period.
Currently, ten U.S. states and all Canadian provinces have deposit schemes for various beverage containers. They have proven to be extremely effective in keeping the return of empty containers at top of mind, and as a result, helping to achieve high recycling rates for containers involved in the deposit program. In some jurisdictions, the scope of containers recovered has continued to expand, such as through British Columbia’s Return-It program.
In spite of this success, there remains significant opposition to bottle bills. Campaigns to encourage recycling through rewards prizes and initiatives seem to have had modest success at best. While the used aluminum container recovery rate is 80 percent in British Columbia, for example, it is only 67 percent nationally in the U.S.
Reusable Pallet and Container Deposits
Not surprisingly, deposits can be very effective in helping promote the return of reusable pallets and containers also. When containers are not returned and a trading partner is faced with paying for the missing assets, however, hard feelings or lost contracts can result. For this reason, many businesses choose to forgo the use of deposits as it can result in damaged relationships with customers. Ironically, customers who regularly lose reusable packaging in some cases have been found to be not particularly profitable when the cost of packaging replacement is built into the customer’s pricing.
In spite of concern by many businesses about the use of a pallet or container deposit, the concept is used successfully by some businesses. There are two main reasons that a deposit system is employed. One of these has to do with generating revenue to pay for the cost of the reusables. The other has to do with motivating the customer to return them to the owner.
One professional in the reusable packaging arena, Gary Hudson of Returnable Packaging Services Ltd. observes that “Whether a deposit is applied or ownership retained the key steps to successful recovery are (a) clear statement that you intend to recover your assets (b) take a proactive approach to recover those assets and (c) measure and share the recovery performance with individual customer collection points.”
If a deposit system is employed, it is essential to have an effective management system, including accurate information about pallet and container movement, as well as adequate training and oversight. A reconciliation of transactions should take place on a regular basis to communicate amounts owing for pallets not returned, to ensure that any discrepancies do not get too far out of hand.
Bottom line, deposits can be used effectively while maintaining happy, loyal customers. In large part, it comes down to how you sell the program to customers, and work with them in managing it.