Things continue to look up for the pallet pooling businesses of the Faber Halbertsma Group (FHG). This will mark the first year that revenue from pooling will overtake sales of new and recycled pallets for the Netherlands-based pallet company, according to Christophe Mathé, managing director of IPP Logipal in France.
The company has several facilities for manufacturing new pallets and recycling pallets, with sales of new and recycled pallets generating about $240 million (U.S.) annually.
One key factor in FHG’s success in pooling has been the use of a pooling model that is different from other providers of pallet pool services in the European market.
"The difference in our pool compared to others is that we are very persistent in that we want to sort, and repair if necessary, our pallets once in each total cycle before bringing them back to the customer," explained Ingrid Faber, who heads up FHG’s pooling activities. An inspection once per trip, she noted, ensures that slight damage, such as a protruding nail, is fixed in a timely fashion.
Other pallet rental companies in Europe typically practice an exchange pooling program. For example, 20 rental pallets are delivered under load by the shipper, and 20 rental pallets are returned empty from the receiver. Pallet users are required to identify and remove damaged pallets from circulation. The result is that damaged pallets are more likely to be left in circulation. The IPP Logipal approach, Ingrid said, ensures superior quality control.
Another indicator of IPP Logipal’s rapid expansion, the company recently moved into larger offices for its French headquarters.
Christophe explained plans for IPP Logipal’s continued growth. It is a leanly run company with mostly young employees. Two notable clients are Pepsi (1 million trips annually) and Danone (2 million trips annually). IPP Logipal has a goal of utilizing its rental pallets for four trips annually, an ambitious goal by North American standards.
FHG’s history spans a century in the Netherlands. It has grown organically as well as through mergers and acquisitions. It has nine pallet manufacturing and repair plants in the Netherlands as well as Germany, Belgium and France. New pallet production totals 18 million units per year with recycling accounting for another 1.5 million pallets. The company also trades or brokers about 1 million pallets annually.
PRS and IPP Logipal
FHG pallet pools serve chemical and electronics industries as well as consumer goods. Its pooling activities now make it the second largest pallet pool provider in Europe, Ingrid indicated.
The company first entered the pallet pooling arena with the creation of the Pallet Return System (PRS) in 1997, which was initially established to serve the chemical industry. The service offered customers the novel concept of pallet rental and a solution to the strict European waste reduction regulations. This approach also provided a lower cost per trip than pallet purchase as well as an environmentally friendly program based on pallet re-use.
The Group extended its pallet pooling activity in 1998 through the purchase of a pool from Philips, the international electronics business. With this acquisition came the International Pallet Pool (IPP) brand.
In 2000 the group acquired Logipal, a French grocery industry pallet pool. The Group’s electronics and fast-moving consumer goods (FMCG) pooling businesses were brought together under one brand: IPP Logipal.
Growth has been steady. In 2005 IPP Logipal established business in the United Kingdom and Ireland, building on a presence that already spans much of Europe.
PRS is active in 20 European countries, renting over 6 million pallets annually. It has a very large market share in the polyethylene and polypropylene industry. This large market share, Ingrid said, makes it the slower growing part of the business relative to the rapidly expanding IPP Logipal in the FMCG sector. Also noteworthy: about one-third of the PRS pallet trips involve exports of products out of the European market area, which results in a steady influx of new pallets into the pool.
PRS is headquartered in the Netherlands and employs about 50 people. It has a network of select, high quality new pallets producers and repair depots. PRS says it can provide delivery within 24 hours. For organizing the collection and retrieval of empty pallets back to PRS depots, it has an infrastructure of call centers across Europe. Converters are approached in their own language, and PRS collects pallets within five working days.
The PRS pallet is available in four sizes and is recognizable by its green board-ends, the PRS © logo, and the marking, ‘Property PRS.’ Surprisingly for a major pallet manufacturer, only about one-third of the pallets required for the PRS and IPP Logipal pallet pools are manufactured or repaired by FHG operations.
By way of example, Ingrid noted a Dutch chemical company that ships goods to Italy. Rather than shipping empty pallets back to the Netherlands, FHG uses a pallet recycling company in Italy to retrieve and repair the pallets for re-issue to other pool customers in that country so the pallets stay in the system.
Grass Roots Beginning
IPP Logipal has many similarities to grass roots pallet logistics initiatives in the U.S. A group of pallet companies banding together to create their own pallet logistics solution in the face of a rental giant is a familiar story in North America. Companies such as PRANA, PECO, PALNET (Premier Asset Logistics Network LLC) and others have been formed by regional pallet companies to offer national pallet logistics solutions.
This trend has also been an important footnote in the evolution of the French pallet industry. In 1993, representatives of 41 pallet companies from France met in Angers. The meeting was hosted by Jean de Vulliod, who at that time was the president of Codix France, a French pallet equipment company, to look at the possibility of a cooperative response to the threat of a dominant rental competitor. The companies represented at the meeting accounted for over 60% of French pallet production, and some 25 of those companies wrote checks to form a company that would be called Logipal in 1994. Its mission was to develop pallet logistics and to regroup pallet manufacturers and recyclers with a common objective and to apply new methods of management.
After two years of study, they were ready to launch their first pallet management activities at the end of 1995, choosing a brick color for their pallet system. The company grew quickly, but lack of financing limited progress.
Unable to obtain financing, the group decided to sell in 2000 to the Netherlands-based Faber Halbertsma Group, which was represented in France through its Francepal pallet manufacturing subsidiary, and its manager, Christophe Mathé. Christophe subsequently left Francepal to take over the reigns of Logipal.
Today the company is successful across a variety of industries ranging from food products to office equipment. According to news reports, IPP Logipal grew sales by 30% in 2005 and is hoping for a 40% increase this year.
The company has commitments for 2.5 million trips in the United Kingdom and Ireland and has earmarked an 85 million Euro investment to build its United Kingdom pool over the next five years. In the United Kingdom, the grocery industry is dominated by rental — especially CHEP — for deliveries to grocery distribution centers. In France, rental reportedly accounts for a little better than half the market with EPAL pallets accounting for most of the non-rental activity.
One key prong in IPP Logipal’s approach to improve cycle time, Christophe explained, is through pick-up of small lots of pallets at retail outlets rather than waiting for them to accumulate at the customer’s distribution center. This is the common practice for IPP Logipal in France. Ingrid noted that the retrieval practice is different in the Netherlands, where pallets are emptied at the distribution center, and products are delivered to retail outlets on 400mm x 600mm wheeled steel dollies.
While IPP Logipal has been growing rapidly, its competition has also enjoyed success. CHEP maintains its leadership in the European market, reportedly posting a European pallet rental revenue increase of 7% in 2005 while increasing profits by 17%. The other competitor, LPR, finished 2005 with sales of 79 million euros, up 13% from 2004 based on 30 million trips.
IPP Logipal offers block-style rental pallets in two half-pallet sizes (600 x 800mm and 600 x 1000mm) and two full pallet metric sizes (800 x 1200mm and 1000 x 1200mm). It also offers sidewall pallets in full footprints.
"Our main focus is on expanding pooling," Ingrid said of FHG’s approach to the future. "If we expand our manufacturing operations, it would probably be to support pallet pooling, which is our main growth area."
For more information on the Faber Halbertsma Group or its pooling operations, visit www.ipplogipal.com.
