Every pooling contract contains a loss clause and most customers skim it. It is usually the clause that determines whether the programme saves you money.
What the number is measured against
Two percent of what? Three options appear in real contracts, and they differ enormously:
- Two percent of the pool size per year. With a 60-unit pool, that is 1.2 units annually. Generous.
- Two percent of trips per year. With 300 trips, that is 6 units annually. Much more generous.
- Two percent of units outstanding at any audit date. Punitive, because it ignores how many cycles produced the loss.
Ours is measured against trips, because trips are what create loss exposure. A pool that sits in your yard does not lose units; a pool that moves does.
What counts as a loss
This is where contracts get slippery. A unit returned damaged beyond repair: is that a loss or is it fair wear? Our answer is that fair wear is ours and avoidable damage is yours, with avoidable defined by examples in the contract rather than by adjective.
| Event | Whose cost, in our contracts |
|---|---|
| Bottle reaches end of service life | Ours — that is the business we are in |
| Cage rusts at the feet over years | Ours |
| Forklift damage to frame | Yours, above the tolerance |
| Unit cut or modified at your site | Yours, at replacement value |
| Unit not returned within 120 days | Counted as a loss against tolerance |
| Unit held full because your customer has not emptied it | Yours, but we will help chase it |
Replacement value is the other half
A two percent tolerance with an inflated replacement value is worse than a one percent tolerance with a fair one. Ask what a replaced unit is invoiced at and compare it with what the same unit costs to buy outright from the same supplier. If the replacement rate is above the purchase price, the clause is a profit centre.
The clause people forget
Audit frequency. If the contract reconciles annually, a unit that disappeared in month two is invoiced eleven months later, by which time nobody can investigate. We reconcile monthly for exactly that reason — small, frequent, investigable, and no surprise at year end.
