A Journey Through The World Supply Chain With IFCO Systems
Founded in 1992, IFCO was the first pioneer to reintroduce a reusable packaging system for the entire fresh product supply chain, from producer to retailer. They are now the clear market leader in the world, with operations in more than 50 countries across five continents and subsidiaries in 30 countries. Their services are used by 320 of the world’s largest retail companies and over 14,000 growers and food producers. How did they grow from niche service providers to global supply chain leaders? I sat down with CEO Wolfgang Orgeldinger at FruitLogistica in Berlin to find out.
It starts with a pool of 314 million plastic containers
These containers account for 1.7 billion roundtrips per year, from one end of the supply chain to the other and back. The system is simple: first, a newly cleaned and sanitized container is sent to a grower or packer; the product is then packed and shipped to a distribution center, where it is distributed to retail outlets; the product is then sold and the container is returned to a service center where it is cleaned. Round trip complete.
The prime products are fresh fruit and vegetables, but IFCO also transports significant volumes of meat, eggs, seafood, and bread. Most containers stay in a regional pool: for example, containers will complete roundtrips for transporting cabbage in Germany, oranges in Spain, or leafed salad in Holland. But they are also used for southern hemisphere imports, bringing kiwis from New Zealand, grapes and apples from South America, and oranges from Argentina. If you ever wondered where your bananas came from, there is a good chance they came from Central America in an IFCO container.
Regional pools are flexible and scalable: you could have a specific pool for continents like North America and Europe, or scale down to a country level for Japan, Argentina, or Chile; or you could hyper-localize the pool down to a city level, for integration with vertical farms in an urban food system. To give an example, Mr. Orgeldinger cited the city of Sao Paolo, where 90% of fresh produce is grown within 100km of the city center. IFCO’s pool of containers in this region only moves within that circumference.
The operation of these pools is much more sustainable than transporting fresh products with single-use packaging.
To begin with, the containers are designed to be sturdy: each container is used for up to 120 round trips before it reaches the end of its life cycle. Small damage is repaired at servicing centers; if the container is beyond repair, the material is ground down and turned into new packaging. IFCO is the only company directly recycling its own crates to make new ones; this is possible because their crates are made out of one material and can be ground directly into the production process. This cradle to cradle system helps IFCO reduce CO2 emissions by 60%, consume 80% less energy and use up to 80% less water in its operations when compared to using single-use packaging.
But why use plastic at all? The answer is to reduce food waste. When you transport fresh products, you have to account for humidity and plastic is the best material to reduce this problem. With IFCO’s containers, the damage and spoil rates of fresh products is 90% less compared to a single-use container. A further innovation in the IFCO system is that it is totally modular: they design containers in two footprint specifications: 60X40 cm and 30X40 cm. Each footprint stacks perfectly to maximize space and reduce the likelihood of a fall. Finally, each container includes a ventilation system that extends the lifespan of the food in transit and on the shelf.
Given all the advantages of their product versus single-use packaging, it’s no wonder that customers are flocking to IFCO’s sustainable solution. ‘Customers come because the system reduces costs,’ says Mr. Orgeldinger. If you look at the cost-saving across the entire supply chain, from field to retail store, and account for all packaging related costs, all handling costs, and product damage, IFCO can save up to 27% of the total cost. Given the growing momentum of environmental concerns among consumers and suppliers, IFCO is well primed to lead the supply chain into the future. Let’s take a look at how else IFCO is innovating to help growers, producers and businesses save money and save the environment: it starts with technology.
Innovation in packaging: Apps, AI, and integration with vertical farms.
You might wonder how much technology can be packed into a plastic box. But it’s more about the technology that surrounds the box itself. Remember that pool of 314 million plastic containers? They are tagged and the new generation is readable by your smartphone. IFCO is developing a new app that enables smartphone users to identify and count all containers on a pallet. The new technology will first be rolled out in service centers and trialed in order to improve the AI algorithm. They will then provide this service to customers, enabling all participants in a given pool to act more efficiently.
Another new app enables customers to do all transactions with IFCO via their smartphone. This is an industry first, enabling growers who rely on mobile technology to participate in the supply chain more efficiently. Other technical innovations that were mentioned by Mr. Orgeldinger included integrating IFD and GPS-based systems and blockchain solutions into their producer to retailer model. But I was most interested to find out about how IFCO could integrate with innovations in other fields, like the transition of fresh food production to hyper-local vertical farms.
Vertical farms offer IFCO containers a shorter roundtrip journey
Mr. Orgeldinger told me that vertical farming is the most interesting solution for feeding the growing population who live in large urban areas. Modular, reusable plastic containers are perfect for transporting fresh produce across short distances and there is significant scope for integrating IFCO’s packaging with the shorter supply chains that are enabled by vertical farming. This is scaling down from continent to country to city, creating a whole new set of container pools for IFCO to fill. Both IFCO and the vertical farms they choose to work with will play a significant role in the sustainability of urban areas going forward. We will be watching this space closely.
Find out more about IFCO at https://www.ifco.com/