Every grape, every tomato, every melon you see in the supermarket is a survivor. Its glossy sheen and fragrant scent conceal the treacherous journey it had to make, probably over seas, across thousands of miles by boat and by truck, to get from where it was grown to your hometown.
The journey begins on a farm, where the fruit is plucked and put into a box. From the farm, the box is sent to a distribution centre to be sorted, and from there, it’s delivered to a store for its contents to be displayed and sold. A lot depends on the quality of that box – more than the average person has probably thought to consider. Many retailers still get their produce delivered in single-use packaging, which are hotbeds of mould and bacteria that cause produce to spoil and threaten consumers with infection.
Single-use packaging is also not specifically designed for the fruit and vegetables it carries; it falls apart in transit; it doesn’t stack properly; it is too unsightly to display in stores; its overproduction is a preventable strain on the environment and places unnecessary financial burden on the companies that use it.
Enter Wolfgang Orgeldinger, CEO of IFCO – the world’s leading supplier of Reusable Plastic Containers (RPCs) – who, for the past six years, has been on a campaign to spread the gospel of RPCs and eliminate the scourge of single-use produce packaging with promises of freshness, financial savings and environmental sustainability.
“We help to sell our clients’ products. Our research shows that when grocery shoppers see produce displayed in an RPC, they have a feeling that it is a fresher, higher-quality product,” Wolfgang says. “It allows retailers and producers of food to do a better job, be more efficient, sell more and also contribute to the health of our planet.”
A miracle product
To the untrained eye, there may seem to be nothing remarkable about IFCO containers. They look like plastic crates of various colours and sizes, each perforated by a unique constellation of ventilation holes, with handles for carrying and a collapsibility feature.
To someone who does not work in the produce or logistics field, they might even seem disposable – something you might find convenient while moving from one apartment to another or carrying art supplies from your car to your classroom. To those who use them, however, they are the backbone of an unimaginably expansive supply chain that allows millions of people around the world to enjoy fruits, vegetables, meat, fish and eggs at affordable prices.
According to external research commissioned by IFCO, fruits and vegetables packaged in its RPCs remain firmer, show less mould and have fresher vines and stems. Moreover, a higher percentage of produce remains marketable compared to those in single-use containers, gaining an additional four days of shelf life that, in turn, puts more profits into the retailer’s bottom line and reduces food waste.
“Our reusable plastic containers help to deliver a superior product because they have better ventilation features and protect the product against damage.”
“Consumers are becoming more concerned about product quality and freshness,” Wolfgang says. “Our RPCs help to deliver a superior product because they have better ventilation features and protect the product against damage. Compared to disposable packaging alternatives, RPCs produce up to 60% less CO₂ and 86% less solid waste, and they require 64% less energy and 80% less water to use and produce. They also reduce produce damage by more than 96%, cutting down on food waste.”
IFCO’s calculations show that its RPCs can be used about 100 times before they begin to fall apart. This means they can spend months in circulation, serving multiple companies in their lifetime. And because IFCO uses only a single material – polypropylene (PP5) – for its RPCs, when containers are damaged or too old, they are ground into granules, which are then reused to make new containers. This process of creating new RPCs from old ones is unique to IFCO; it’s the only firm of its kind with a closed recycling loop.
“We keep track of all the material we use, and since it’s all food-grade, we can reuse all of our broken containers to build new ones,” Wolfgang says. “It’s really a system of reuse and share.”
This re-usability can save IFCO’s customers up to 27% on their total supply chain cost, Wolfgang says. These savings serve as the foundation for IFCO’s long-lasting relationships with its customers.
“We typically concentrate on partnering with industry leaders and then working together with them almost in symbiosis,” he says. “And since we are all in an industry where costs are a major factor in every decision, these collaborations reduce costs to the benefit of all parties. This encourages us to develop long-term relationships. We’ve always been able to fix issues as they come up.”
To Wolfgang, singing the praises of RPCs never gets old. He joined IFCO in 2000 as CIO and Executive Vice President for e-logistics, then spent 12 years as COO. He has been CEO for the past six years. He describes his experience of working his way up the ladder as the “perfect preparation” for the projects he is undertaking now and for the challenges the company faces. “Those years really helped me to understand the business in and out, in all aspects,” he says.
Since taking the top job, his primary objective has been to grow the value of the company. He went about this with a multi-pronged approach, with the first prong being geographical.
“During my time as CEO, our business saw double-digit revenue growth. I implemented a number of greenfield market entries – for example, in China, Russia, Romania, Poland, Hungary, Czech Republic and Slovakia,” Wolfgang says.
“I was also able to expand the business through a number of successful acquisitions. We acquired a company in Chile, which is now IFCO Chile and a company in Columbia, now IFCO Columbia. In addition, through purchasing shares from other shareholders, we now have full ownership of IFCO Japan, compared to the 30% we had before.”
This geographic expansion has allowed IFCO to create an unmatched RPC sharing and logistics network that has benefited its customers in more ways than one. “We operate our business on five continents, we have more than 30 subsidiaries around the world and we service customers in more than 50 countries. That is unique,” Wolfgang says.
“During my time as CEO, our business saw double-digit revenue growth. I implemented a number of greenfield market entries – for example, in China, Russia, Romania, Poland, Hungary, Czech Republic, and Slovakia.”
“Not only can we support our customers in the country where they operate, we can also support their imports of fruits and vegetables. We have subsidiaries, for example, in Latin America, which help southern-hemisphere countries import to Europe, and so on.”
In addition to the acquisitions, IFCO has also grown organically as a result of the company’s development of new applications for RPCs, such as containers designed specifically for meat, bread and fish. “The geographic expansion contributed a lot, but interestingly enough, the most significant factor was actually growth with current customers. This is obviously a low hanging fruit; we already have these relationships. We just need to collaborate closely with our customers to increase the penetration of the various applications of RPCs,” Wolfgang says.
This growth has placed IFCO in an extremely advantageous position relative to the competition, which Wolfgang says is heating up, not because there is any solution better than RPCs, but because of the ever-shrinking number of potential customers.
“We are seeing more and more retail consolidation, so we are dealing with fewer and fewer partners. This can create some dependency, which empowers customers to dictate their terms,” he says. But given the strength of IFCO’s global network, Wolfgang sees this “more as an opportunity than a challenge”.
“We have by far the densest network, including 89 service centres where we sanitise our RPCs. We operate a pool of 314 million containers, and we work together with more than 320 retailers around the world. More than half of the top 10 retailers globally are IFCO customers. We support more than 14,000 growers and producers around the world.
I think we have the best know-how, the best expertise, and unmatched capabilities in the industry,” he says. This leaves IFCO poised to capitalise on two key trends. The first is the rising number of modern retail outlets in emerging markets, which are under even more stress than established brands to save costs along their supply chains.
Another trend is automation, which retailers are gradually introducing to their supply chains. One such retailer is SOK Corporation, the largest retailer in Finland, which operates one of the world’s first fully automated warehouses for fresh foods. Half of the country’s groceries flow through their facility near Helsinki – a volume that cannot be handled by human workers alone. Automation is the only way to meet demand.
Every month, the SOK facility uses more than a million RPCs, which are designed with this purpose in mind. Their interlocking design ensures that they can be stacked several metres high without tilting or falling, which would damage the produce. After an initial quality control check performed by a human early on in the process, the produce-filled RPCs move through the system automatically – at a metre per second.
Scanners read their barcodes, and conveyor lines and elevators transport the fresh produce to pallets or roll cages. The sales units are then moved individually to the outfeed to be loaded onto trucks.
Single-use containers are not as ideal for this level of automation. Due to their non-standard dimensions and less sturdy construction, they can only be used in automated processes if additional resources are deployed. IFCO RPCs have sufficient durability and ventilation to be SOK’s container of choice over the past decade.
This is why, even with rising competition and a shrinking pool of clients, Wolfgang maintains, “We still see tremendous opportunity in all markets where we operate. The share of these reusable plastic containers has still not reached a level where we wouldn’t have growth opportunities.”
Keeping food safe
In its 28 years of existence, IFCO has never been linked to a food contamination incident. This is a considerable feat when taking into account the amount of time fresh foods spend in their RPCs as they travel across the world. It is all the more impressive considering the number of times each RPC is reused to store and transport successive shipments of food, and considering the ubiquity of food-borne diseases.
The goal of keeping each RPC pathogen-free is built into its design. Each RPC is made of food-grade polypropylene with a smooth finish, which promotes effective cleaning and sanitising. It is flexible, which prevents it from growing brittle over time and from developing microcracks to which pathogens could cling.
Moreover, the cleaning and sanitising of IFCO’s millions of RPCs is carried out using a scientifically-tested process in state-of-the-art facilities, which targets and destroys all human- and plant-based pathogens, including viruses and bacteria, using a specially-designed software known as SmartGuardianTM. The software monitors and records critical sanitation parameters, including water pressure and water temperature, as well as sanitiser and detergent concentrations.
These parameters vary by container. RPCs that are designed to carry fruits and vegetables are at higher risk of containing pest control substances, while containers designed for meat or fish are more likely to contain traces of food that has spoiled. These require distinct washing temperatures and detergent levels.
Fortunately, if SmartGuardianTM detects that any of these parameters have reached warning levels, it shuts down the sanitisation process until the system
is back on track to ensure complete sterilisation.
Tests carried out by an independent laboratory in November found that no viruses or bacteria remained on IFCO’s containers after going through the SmartGuardianTM sanitisation process. “Every process is standardised – even the equipment,” Wolfgang says.
“Every process is standardised – even the equipment.”
A passionate team
But even with a powerful tool like SmartGuardianTM in his arsenal, Wolfgang says his greatest asset is the team of 1,100 people who work under him to keep fresh produce moving around the world.
“We have many people who have an industry background, so they understand our customers’ challenges, speak the language of the customer, and know the ins and outs of the supply chain for fresh products,” Wolfgang says. “Our employees are really passionate about the business, and most of them have been with the company for many years. That’s why we have a very low turnover rate. Most people stay with the company for the long-term, and I think that really distinguishes us as a company.”
To maximise the environmental awareness of the organisation, all of IFCO’s employees are trained in sustainable business practices. You are unlikely to see disposable cups and cutlery or single-use plastic bottles on IFCO premises, and its staff try to avoid long-distance business trips and unnecessary printing.
“We have many people who have an industry background, so they understand our customers’ challenges, speak the language of the customer, and know the ins and outs of the supply chain for fresh products.”
Under the company’s social engagement policy, each employee even gets three paid days every year to volunteer at a local organisation. Popular choices are food banks, which IFCO already has links with through its donations of 300,000 RPCs, helping food banks around the world improve their pick-up and delivery processes.
When IFCO launched its new website in November 2019, the purpose was not just to announce company news and market its products. It also serves as an educational information hub to stimulate discussion among visitors about previously unseen aspects of produce management.
For example, the CEO Insights section serves as a platform for Wolfgang to share his personal experiences and insights about shelf life, automation and digitalisation – topics where his expertise might be valuable to executives of other companies that are trying to meet their business and sustainability goals.
IFCO’s own magazine goes even further with practical how-to articles on topics such as preventing loss and theft across a supply chain, incorporating the “uberisation” of food into a business model, and harnessing digital technologies to improve agriculture.
Digitalisation – the use of sensors to monitor crop nutrients, cellular or satellite technologies to track shipments, and digital surveillance to avoid theft – is of particular importance to Wolfgang. In May 2019, he wrote an article explaining why supply chain managers consider it to be beneficial rather than disruptive and why IFCO has created multiple data collection tools to allow clients to supply their systems with the data they need as they get increasingly digitalised.
“The data we collect helps us to understand our customers, so we can come up with better ways to serve them. Through meaningful innovations, we support their continuous efforts to be more efficient. We have developed such tools to save our customers both time and money, and to help integrate their business flow,” he writes.
“The data we collect helps us to understand our customers, so we can come up with better ways to serve them. Through meaningful innovations, we support their continuous efforts to be more efficient.”
“Equally as important, collecting and storing data increases transparency in our wash processes and beyond. Automation and digitalisation help our customers in the food industry meet strict regulations, consistently provide high quality products and strongly focus on product safety.”
- IFCO was founded in 1992.
- Wolfgang joined IFCO in 2000 as CIO and Executive Vice President for e-logistics, then spent 12 years as COO. He has been CEO since 2013.
- IFCO RPCs deliver a dramatic reduction in food waste – there’s 96% less damage to fresh produce packed in a plastic crate compared to single-use packaging.
- In June 2019, Australia-based Brambles sold IFCO for US$2.51 billion to investment company Triton and the Abu Dhabi Investment Authority (ADIA), making IFCO an independent company “able to act flexibly and in an agile manner”.
- IFCO had revenues of more than US$1.1 billion, with growth of 8% in the 2018 financial year.
- IFCO’s properties include 314 million RPCs, 32 subsidiaries, and 89 service facilities in more than 50 countries, serving more than 320 retail clients and 14,000 producers.
- IFCO facilities have an annual wash capacity of two billion units and a production capacity in excess of 66 million units.
- IFCO RPCs are used in 1.7 billion shipments annually.
The data IFCO collects has an infinite number of potential applications. As an example, in February 2019, the company released an app called MyIFCOTM recollect. A part of a suite of digital solutions called MyIFCOTM, the app uses image recognition software to scan a stack of RPCs and determine exactly how many are in the stack. Given that these stacks are often several metres high, this tool relieves workers of the burden of the painstaking task of counting them individually or alternatively, paying the price for inaccurate estimations.
For clients trying to return RPCs to IFCO after they have been used, the app manages the entire process from start to finish; it indicates how many pallets have been scanned, how many RPCs are needed for a full truckload and lets users schedule a convenient pick-up.
“Currently, in most cases, an employee must assess RPC types, count various sizes and models manually, and register these pool numbers, along with the area in square metres needed for logistics transport,” Wolfgang says. “MyIFCOTM recollect ensures secure counting. In particular, it helps distinguish between different sizes of IFCO RPCs in the stacks. This will increase efficiency at other steps of the supply chain as well.”
With this laser-like attention to detail and desire to make every step of supply chain management as humanly, mechanically and digitally efficient as possible, it is no surprise that under Wolfgang’s strong leadership, IFCO’s annual revenue has topped US$1 billion over the last several years, with no sign of slowing.
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