An average CHEP pallet travels only 40 miles getting backhauled for every 100 miles it's carrying goods.
In 1996 CHEP set out to dramatically expand its pools of pallets, figuring on economies of scale.
The Australian government set up the Commonwealth Handling Equipment Pool, or CHEP, and lent the equipment to manufacturers.
In the U.S. CHEP enlisted hundreds of customers as "participating" distributors, giving them incentives to return pallets on time.
"We took our eye off the ball, " says CHEP USA President Kevin Shuba.
Brambles bought CHEP in 1958 and launched pallet pools in the U.K. in 1975 and in the U.S. in 1990.
The company's pallet business - called CHEP - is the world's largest, and accounts for half of Brambles' operating profits.
CHEP, however, has built a worldwide pool of 240 million pallets, including 75 million in the U.S., that it rents out.
Since 2004 CHEP has provided rent-free pallets to Wal-Mart (retailers use them to ship goods from their warehouses) and some other big customers.
Traditionally Coors and Anheuser-Busch have used their own pallets, but CHEP is trying to convince them that using its rental pool will save money.
Kris Hedstrom, the director of CHEP's Innovation Center, which adjoins the plant, is wearing earplugs, protective glasses and hard plastic shoe covers over his toes.
Every day tens of thousands of CHEP's pallets--painted blue to distinguish them from the generic pallets that are swapped between shippers--are returned to the center.
CHEP's huge supply network means a user will never run short.
John Cory, the president of Allegheny Recycled Products, which retrieves pallets for CHEP, says CHEP not only gets paid by its customers for any lost ones but also usually gets them back eventually.
Traditionally Coors and Anheuser-Busch (nyse: BUD - news - people ) have used their own pallets, but CHEP is trying to convince them that using its rental pool will save money.
Then in 2002 Brambles confessed that CHEP had lost 14 million pallets in Europe and 3 million in the U.S. The news delighted headline writers ("The Unpalatable Truth, " noted the U.K.'s Guardian), but the stock nose-dived.
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