The launch was delayed in early 2010 because of an NWPCA lawsuit. The pallet design software settlement was announced later in 2010, including a year delay requirement in its launch, as well as other requirements around distancing itself from PDS, the pallet design software originally designed at Virginia Tech for NWPCA.

In spite of the grossly misleading headline, here are three added details of note pertaining to the story.

• IKEA uses 10 million pallets per year
• They anticipate cutting transport costs by 140 million euros annually at a cost of 90 million euros for paper and forklifts (Not sure exactly what is being said here – if they are offsetting annual costs?)
• IPP Logipal anticipates a rapid increase in its EasyPal paper pallet business in Europe.

You can read the entire Bloomberg report here.

One of the key things to consider when reading the Bloomberg report is that IKEA is a global company that doesn’t believe in the economics or ergonomics of manually destuffing floor loaded ocean containers. As such, a low profile, easily customized footprint, such as offered by Optiledge or paper pallets, is critical. Many other global supply chains simply palletize onto wood pallets at the time of destuffing, or double the unit load onto a conventional wood pallet, due to the lack of compatible rack storage.

Most recently the Costco block pallet push comes to mind. This of course was the catalyst that really got the PluSolutions initiative into full gear. No doubt it played a part in the PECO Pallet expansion into Mexico and Canada.

Other game changers that come to mind include the WalMart decision championed several years ago by Bruce Peterson, vice president of WalMart perishable at that time, to embrace reusable plastic containers for transport packaging. Peterson was a champion for RPCs, but more recently WalMart has been sending mixed signals, even as the technology is more fully embraced by Kroger, Loblaw and other leading retailers.

I recall one potential “game changer” I covered several years ago, the Home Depot slipsheet initiative to take pallets out of inbound transportation. Slipsheet remains an important approach to unitization for many goods, but it never really seemed to get off the ground at Home Depot to the extent anticipated. The need for specialized forklift attachments not only at supplier and retail locations, as well as at intermediate handling points translated into too big of a challenge, according to Home Depot people I conversed with in the years that followed.

So here we are with IKEA. Is this the first of a trend or a one-off? One major constraint is the need to upgrade facility racking throughout the supply chain in order to use the lighter unit load base, which suggests that it will remain a specialized solution, rather than a major trend. Having said that, IKEA is a major retailer, and can impact the market. In the IKEA pallet conversion interview, Ewe Schmidt talks about almost 650,000 pallet storage locations in Europe. If these are being turned 15 or 20 times per year, that seems like a nice piece of business for paper pallet and Optiledge sales. It is also welcomed I assume by racking suppliers involved in the facility upgrades.

What do you think – game changer or one off? Please “Speak Your Mind” below.

To view a copy of the Complaint, filed in the District Court of Dallas County, Texas, click here.
To read a copy of the NWPCA release in question, click here.

Subsequent to the NWPCA release, iGPS sent a response to its customers, in which it blamed NWPCA for “dishonest and reckless” assertions.”

Based on your reading of the Complaint and the NWCPA press release, do you believe that NWPCA indeed suggested or otherwise implied that iGPS was the cause of the butter contamination?

The rationale behind the formation of this new pool is at least in part to address some of the key issues with the legacy white wood pool – quality problems and pallet style. Increasingly, pallet users are requesting block style pallets, and the continued development of automated warehousing is putting a larger emphasis on better quality pallets.

PIMS (the founding acronym for Pallet Information Management System) hopes to harness an infrastructure of over  5,000-plus U.S. pallet businesses who already service the largest informal pallet pool in the world – the current white wood system. These entrepreneurs service the U.S. pallet market through manufacture, collection, repair and recycling.

PIMS borrows elements of other international cooperative pools, including EPAL and CPC. For example, like both pools, it is a not-for-profit organization, budgeted on a break-even basis. As in EPAL, pallet manufacturers and repairers will be required to join the program, and participate in 3rd party quality audits. And like for CPC, there would be a pallet management component to the pool management system, with the tracking system provided by PIMS. As in CPC, the Board would be a collaboration between pallet service providers and pallet users.

PIMS says that it seeks to create a system that organizes the wood pallet industry – manufacturers and recyclers, harnessing the power of the effective, efficient industry pool that is already a tremendously powerful resource to end users. PIMS’ objective is to maintain the independence of each participating pallet company, while establishing a collaborative framework with national reach to serve the needs of even the largest end users, distribution centers and retailers. It is designed to:

• Streamline the flow of pallets within a customer’s network
• Standardize and coordinate a program to contain system-­‐wide costs
• Eliminate inefficiencies in pallet handling
• Provide a timely and consistent replenishment program
• Provide system-­‐wide inventory control, forecasting and planning of pallet movement
• Turn the essential pallet from a perceived liability into a genuine asset for customers

For more information, visit www.pimspallet.com.

Related Posts

• Costco’s New Years Resolution: No More Stringer Pallets
• When Was the First Europallet Introduced?
• EPAL Promotes Quality Standards
• U.K. Demand for EPAL Pallets Continues to Grow
• EPAL New Inspector Training
• EPAL Looks to Global Expansion
• CPC’s Belinda Junkin Wins Award
• CPC: Effective Pallet Management
• Canadian Pallet Council Selects Aptify

But what does it all mean? What it means is that CHEP is simply trying to mitigate the spin control of their opposition which co-opts any sort of news around food safety and manages through smoke and mirrors to portray it as a triumph of (RFID tagged) plastic over wood. Good on CHEP for getting a leg up this time.

Of course with iGPS, we have come to expect misleading sensationalism, and the recent effort did not disappoint.

Excerpt from the release:

In a floor statement on the bill, Senator Sherrod Brown addressed the importance of safe and clean pallets as a critical component of a safer food transport system. “It would ensure further study by the FDA on enhanced safe and sanitary methods for the transportation of foods, and we must ensure this includes an examination of the pallets on which our food is shipped. At home you don’t use the same cutting board for chicken that you use for vegetables, or at least you should not, because of potential food safety problems. It is the same thing with these wooden pallets because they can collect — especially wooden pallets — way more bacteria than you can imagine,” said Senator Sherrod Brown.

So by the same token, can we presume that when the Senator or Bob Moore go to the Food Lion, they use two different vehicles, because they don’t want the bag of fresh veggies to go in the same trunk as the bag of chicken and beef? The transport package, like the grocery bag, is a secondary package. Can someone introduce a pallet press release propaganda act? Please.

Funds advised by Apax Partners (”Apax”), including Island International,  have agreed to sell their majority stake in IFCO Systems to  Brambles Limited for EUR 13.50 per share. Apax acquired the stake in IFCO Systems in November 2003 through the purchase of shares listed on the Frankfurt Stock Exchange and announced a voluntary public offer to the remaining free float shareholders in early 2004 for EUR 2.75 per share.

Share price has more than doubled in the last 12 months.

Since acquiring its majority stake, Apax has worked closely with the management and fully supported the company’s growth strategy. During Apax Funds’ ownership, IFCO Systems significantly expanded its customer base in Europe and the United States and entered the South American market. IFCO Systems acquired the RPC business of CHEP in the US and the RPC business of Steco in Europe in 2006 and 2008.

After  acquisition by Apax Funds in 2003, IFCO’s turnover grew by an average of 10% per year and its EBITDA rose by an average of 15% per year. Despite significant capital investments to support this growth, the company’s debt levels always remained modest and currently are at levels of approximately 2x EBITDA. Under Apax Funds’ ownership, the number of employees at IFCO Systems increased by 28%.

“Our successful investment in IFCO Systems demonstrates the extensive expertise of Apax Partners in the Business Services area and our team’s ability to identify companies with strong potential and promote their long-term growth,”  said Ralf Gruss, Partner at Apax Partners. “This is a prime example of Apax successfully partnering with a strong management team in one of our core industry sectors.  IFCO is a leading player in the eco-friendly reusable packaging sector and Brambles is the ideal partner to maximize and develop its future potential.”

“For seven years, Apax was a loyal and long-term investor, which the entire management team enjoyed working with to optimize the growth of IFCO. We look forward to a continuation of IFCO´s growth story,” added Karl Pohler, CEO of IFCO Systems

IFCO Systems is one of the world’s leading business service providers for reusable packaging containers (RPC) and pallet management services. The IFCO products replace the traditional cardboard and wood containers that are used to transport fruit and vegetables, with environmentally friendly plastic crates that can each be used up to 100 times.

Brambles Limited has announced its proposed acquisition of IFCO Systems NV for an enterprise value of €923 million1 (US$1,255 million). IFCO is a leading provider of pooled reusable plastic containers (RPCs) to the food supply chain worldwide and of pallet services in the USA.

Highlights of the proposed transaction include:

• Agreement to acquire 95.9% of IFCO, followed by a minority buy-out process
• Earnings per share accretive from the point of ownership2
• Acquisition enterprise value of 7.2 times Brambles’ pro forma EBITDA forecast for IFCO for the year ending 30 June 2011
• Transaction funded with approximately 50% equity and 50% debt
• IFCO senior executive management contracted until June 2014
• Subject to regulatory approvals

Brambles CEO Tom Gorman said: “The purchase of IFCO represents a unique opportunity for Brambles to enhance its position as a leading pooling solutions provider and acquire operations with a strong growth profile.

“IFCO is a natural fit with Brambles’ existing RPC and pallet businesses and will allow us to continue to deliver on our strategy of diversifying our revenue base by product platform, geography and customer type.

“Brambles will combine IFCO’s and CHEP’s RPC businesses over time, creating a global RPC business with a broad base in Europe from which to pursue growth and a strong position in the fast-growing RPC sector in the Americas.

“IFCO’s operations servicing the non-pooled ’white wood’ pallet sector in the USA will complement CHEP’s existing pallet pooling operations, allowing Brambles to broaden its customer service offering, target the small-to-medium sized enterprise sector more effectively and improve asset control.”

Completion of the transaction is subject to merger control clearance in the USA and certain European countries in addition to customary conditions precedent. Brambles anticipates clearance occurring within nine months.

Given these timing considerations, Brambles is not currently forecasting any contribution from IFCO to its sales revenue or statutory operating profit3 for the financial year ending 30 June 2011. On a pro forma basis, Brambles estimates the acquisition would be approximately 5% earnings per share accretive2 for the financial year ending 30 June 2011.

Transaction considerations

Brambles has entered into binding agreements to acquire 95.9% of IFCO for €13.50 a share, comprising 93.4% from Apax Partners and 2.5% from other parties. This price translates to an equity value for IFCO of €696 million and an enterprise value of €923 million, including net debt of €227 million. Brambles will retain all IFCO cash flows generated from 1 July 2010. The final purchase price per share will increase by 12% per annum from 1 November 2010 until transaction completion.Brambles will retain all IFCO cash flows generated from 1 July 2010.

1. The final purchase price per share will increase by 12% per annum from 1 November 2010 until transaction completion.
2. Refer Appendix ii.
3. Guidance excludes estimated transaction expenses, treated as Significant items, from the proposed acquisition.

What do you think this means for the future of the industry. Please post your thoughts below, or give me a call at +1 604 999-2567.

My goal personally is to maintain the spirit of the blog by focusing on pallets as well as analysis, and differentiating it from www.packagingrevolution.net. Having said that, good analysis takes time. If you are interested in receiving more frequent updates through the Reusable Packaging News email newsletter, you can let me know by clicking here.