In mid-August IFCO Systems N.V. will begin a new pallet rental pool in Canada that gives companies another choice besides the top two players in the Canadian market — the Canadian Pallet Council (CPC) and Chep.
IFCO, through its subsidiary PalEx, is launching a pool of pallets that are identical in specification to the CPC pallet except they will be painted green. (The CPC is an industry cooperative that facilitates the exchange of pallets between CPC members.)
The rental pool is part of a new initiative the company is calling the Flex Pallet System, a program that allows pallet-using businesses the option of either renting or buying pallets.
IFCO hinted the new program may be expanded to the U.S. A news release issued by the company noted the “potential to extend (the Flex Pallet System) throughout North America.” It has been rumored in the pallet industry for some time that PalEx might take on Chep, which operates the largest pallet pool in the U.S.
The IFCO Flex Pallet System, which is being marketed in Canada to grocery and consumer goods manufacturers and distributors, gives customers the option of owning pallets, renting them, or any combination of the two. When demand increases, a company has the option to buy more pallets or rent them at competitive rates. If conditions change and the company no longer requires a large inventory of pallets, it can sell them to IFCO at a guaranteed price.
IFCO apparently intends to compete against Chep on both price and service. “We are bringing change into the Canadian pallet market — change that we think is long overdue,” said Brian Northwood, regional director for IFCO’s Canadian operations. “We can offer the customer a more cost-efficient alternative than our largest competitor.”
“We don’t just supply pallets,” Brian added. “The mission of IFCO-PalEx in Canada is to meet the supply chain management needs of each customer, in the most cost effective way possible. Without question, the Flex Pallet System is going to make it easy for the customer because there’s no need to sort and segregate pallets, no hassles with exchanges, and no burden of administration. We’re offering a lot of compelling reasons to switch.”
IFCO’s new program seeks to eliminate the major issues associated with the CPC system. With the Flex Pallet System, there are no pallet exchanges, so customers simply ship one-way. IFCO retrieves the pallets by way of a “dock sweep” system at major distribution points. All pallets return to a central depot that functions as a clearinghouse and repair center. After inspection and repairs, pallets are deployed for the next trip. The customer’s pallet costs are predictable, with “per trip” fees consistent with activity-based budgeting.
“Before we designed the system,” said Brian, “we asked our prospective customers to tell us what they were looking for. We were hearing that customers want one-way shipping, a strong central depot system to police the quality, competitive prices and flexible ownership-rental options. The Flex Pallet System is all this and more.”
IFCO expects to convert many CPC members to the new Flex Pallet System. To help ease the transition, IFCO will accept the customer’s CPC branded pallets and rebrand them in the distinctive green IFCO Flex color.
IFCO is installing machines with the capacity in Canada to handle over 35 million pallets a year and repair over 7 million pallets.
IFCO has 10 facilities across Canada, including state-of-the-art pallet recycling operations. Its mega-facility in Toronto is one of the largest in the world.
PalEx recently completed its merger and initial public offering with IFCO, a worldwide provider of supply chain systems. IFCO is North America’s largest pallet manufacturer and recycler.
PalEx first entered the Canadian pallet market in a big way in September 1998 when it purchased Superior Management Group, the leading CPC pallet rental company. With the acquisition, PalEx became the owner of 1.6 million pallets, leased primarily to CPC members and comprising 16% of the total CPC pallet pool. PalEx has continued to provide a total pallet management solution for CPC members, including purchase, rental, repairs, recycling, and logistics functions.
IFCO owns and manages the leading multi-trip container pool in Europe, primarily serving the logistical needs of the produce industry. It also has returnable packaging and logistics systems in the U.S., Asia, and Latin America.
