Seeking to service retail partners concerned about the merger of IFCO Systems and CHEP operations, a number of top former IFCO employees have formed reLogistics Services, LLC (www.relogistics-services.com). Headquartered in Houston, the company provides reverse logistics and handling services for both reusable containers and pallets.
Led by former IFCO Systems executive Mike Hachtman, reLogistics was created primarily to service Walmart stores that used to be handled by IFCO. According to Hachtman, the new company is an independent entity that is not owned by Brambles. It has almost 400 employees and 33 service locations.
Hachtman explained that it was necessary to start this new company because Walmart has a policy prohibiting pallet poolers from providing direct pallet management services. Since IFCO was acquired by Brambles, the parent company of CHEP, IFCO had to find a solution that would appease one of the largest retailers. For years, CHEP has worked with independent pallet management companies that employ workers at Walmart facilities.
reLogistics has signed an agreement with IFCO to provide white wood cores to the country’s largest pallet recycler for an unspecified amount of time.
Hachtman said, “This company was formed out of necessity…All we really did was change the logo on the polos.” Operations have continued uninterrupted from the customer perspective according to Hachtman.
Hachtman will continue his leadership role as the vice chairman of the Reusable Packaging Association and will assume the chairmanship in January. Hachtman said, “I feel we are at a pivotal moment in the development of the reusable packaging industry.”
He explained that reLogistics was not started to compete with IFCO. Speaking about the merger of IFCO and CHEP operations, Hachtman said, “These two companies will have a unique place in the marketplace for a long time.”
This new company will allow IFCO to have continued access to cores from one of the major sources in the market. Many recyclers continue to report that the IFCO and CHEP merger is causing strain in an already competitive market where #2s are increasingly difficult to obtain. Between IFCO and Rehrig Penn Logistics, middle level recyclers are finding it harder to compete according to multiple recyclers. Sources continue to report that white wood pallets that CHEP used to provide to independent recyclers are now being funneled almost exclusively to IFCO.
Even though the Walmart policy is intended to keep pallet poolers from exerting too much control over its supply chain, it doesn’t really create real competition in the market if CHEP can influence what is done with those pallets due to contractual relationships it has with the third party companies operating the dock sweeps.
Some recyclers feel that the industry was duped by public statements indicating that Brambles’ primary concern was the reusable plastic container (RPC) business not white wood pallets.
Derek Hannum, spokesperson for CHEP, said, “There was never any internal thought that the pallet business was a write off or some kind of drag on the IFCO operation.” He explained that the RPC sectors still remains the largest part of the IFCO operation with the most growth potential. He suggested that the companies would have more to say about the integration of the CHEP and IFCO operations in about 90 days.
It is still unclear how integrated the two companies will become. Hannum said, “The operations and customer base are quite different.”
