Yet the bulk of Chinese grocery retailing relies on traditional manual methods of handling and distribution — and the Chinese government estimates total logistics costs at 18% of gross domestic product, almost double the ratio in many western countries.

Against this backdrop, CHEP is working with leading Chinese and international manufacturers and retailers to make the supply chain more efficient, reduce costs and improve sustainability by increasing palletisation.

Since CHEP’s entry into China in 2006, one of its key partners has been leading British retailing group Tesco, which today has 97 hypermarkets in China, employing more than 26,000 people and serving more than 4.1 million customers each week.

Since early 2011, several leading manufacturers have been working with Tesco and CHEP on delivering goods on CHEP pallets into Tesco’s new Jiashan Green Logistics Centre near Shanghai through a series of pilots.

The state-of-the-art facility handles all grocery and non-food products for all of Tesco’s Chinese stores, housing a fast-track lane for palletised suppliers and a CHEP Total Pallet Management centre for on-site pallet management and maintenance.

Early pilots illustrate that palletisation can lead to significantly lower labour costs, a 40% reduction in total truck trip times and less product damage. Safety risks will also be reduced, while lead times through the entire supply chain can be a full day, or 30%, less.

It’s a key step in CHEP’s growth story. CHEP’s pool of pallets in China now exceeds 2.25 million and the facilitation of flows between manufacturers and retailers is gathering pace as the supply chain rapidly develops.