380 Million Reusable Crates / Inigo Canalejo (IFCO) US Plastics Pact Winner

https://usplasticspact.org/

https://www.ifco.com/

How has IFCO implemented over 380 million reusable crates? 
How do they get 2.2 Billion uses out of them each year? 
Why is the US Plastics Pact to important? 

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Transcript

Cory Connors: 0:31

Welcome to Sustainable Packaging with Cory Connors. Today's guest is Inigo Canalejo, and he is the VP of IFCO Systems. How are you, sir?

Inigo Canelejo: 0:42

I'm well, thank you, Corey. I'm doing great.

Cory Connors: 0:45

Thank you so much for making time. I apologize if I mispronounce your name, it's, it's a unique name here in America, but I really like it. It's very cool. Thanks, Matt. No worries. You did pretty well. so much. It's

Inigo Canelejo: 0:57

not an easy

Cory Connors: 0:58

one, I know. Yeah. You're, originally from Spain. Is that right? Yep. Or, live there now?

Inigo Canelejo: 1:04

Yes, I'm originally from Spain. I actually lived in the U. S. because I studied in the U. S. I'm a mechanical engineer, and then I did an MBA as well. So I actually studied in Michigan, but I've been living in Spain for a few years now, based in Madrid. Wonderful. And did you go to Michigan State? No, actually, I went to a small engineering school called GMI, General Motors Institute of Technology, now Kettering. And then I actually, I went to University of Michigan for the MBA in Ann Arbor.

Cory Connors: 1:32

some great schools there. It's a, it seems to be a hotbed for packaging and engineering in Michigan, which makes a lot of sense with all their automobile industry and everything. But, excellent. Let's talk a little bit about if co and, you won an award. We'll talk about that soon, but, can you tell us about IFCO and what you do that's sustainable in the packaging industry? Definitely.

Inigo Canelejo: 1:55

I often talk about, IFCO is a quite unique company. we provide reusable packaging as a service and we are a global leader in doing that. so we, when I explained to my friends, Where I work, I say our company doesn't produce anything and doesn't sell anything, right? We provide, packaging as a service as many other companies operate in the service space, but not so often done within packaging. So IFCO is, is based in the, in, its headquarters in Germany, in Munich, and it's over 30 years old. So we actually started, operating a circular economy business model. already many years ago, even when most people had no idea what the circular economy was all about. So we mainly operate in the fresh produce sector. so we provide reusable crates, to our customers who share and reuse them throughout their supply chains. so, a typical flow would be if providing the crates to a grower, let's say for example, a tomato grower. The grower will send it to retail and we will collect the empty crates at retail, send it back to what we call our service centers where we inspect, repair if necessary and sanitize our crates and then issue them back to the next grower. we call it the smart cycle, which is basically a reusable cycle for our packaging, and we own around 380 million of these crates of these boxes that are foldable so that we can optimize reverse logistics to make sure that we use as less space as possible when sending those crates back to the service centers and to the growers.

Cory Connors: 3:36

That's incredible. 380 million reusable crates, and on average, how many turns do you think you get out of one of those crates?

Inigo Canelejo: 3:45

Usually, we have measured that actually through a life cycle analysis, and we estimate that the maximum number of uses is around 120, uses, which is a lot. but we are a bit more conservative in our, let's say, calculations when it comes to, let's say, environmental performance. And we usually take into account between 50 and 70 uses, throughout the life cycle. And again, they are often repaired in order to extend the life cycle of the product as much as possible.

Cory Connors: 4:14

That's incredible. and they're made out of what polypropylene?

Inigo Canelejo: 4:17

Yes, polypropylene, mainly we, the majority of them are made out of polypropylene. We have different types of crates. most of them are used for fresh produce, as I mentioned, different sizes, so that they are fit best for different product categories, not produce categories. But we also have a specific designs, for example, for egg and dairy in the U. S. We have some crates for fish, in Europe, also for meat for bread. So the majority of our volume, let's say, is on fruit and veg, but we started diversifying to different, types of fresh produce already a few years ago because we saw that there was a lot of demand for reasonable, not only in fresh produce, not only in fruit and veg, but also in other categories as well.

Cory Connors: 5:00

that's very impressive. Well done. And, kudos to you and your team there. I feel like reusable packaging is, making a huge surge right now. so we're looking to companies like yours that have been doing this for three decades, for wisdom. And so that's why I was so excited to have you on because, reusable packaging is just, it's coming on hot right now and, people are excited about it and interested in it. but I want to talk to you about your U. S. Plastics Pact award. Congratulations. can you talk about what specifically won there?

Inigo Canelejo: 5:35

Yeah, definitely. So we won the innovation award for the U. S. Plastics Pact this year in 2024 and we're extremely, happy and proud about it. Again, as you said, no, winning an innovation award after 30 year in business is not easy. and I, I have heard that there were a lot of strong contendants as well. So very happy and very proud of what we have been able to achieve. the award itself is for something that, that I think is quite, very much related to what you were saying. I think A reusable packaging and let's say the implementation of the circular economy is becoming a, let's say, a priority for many businesses and many, corporations and industries as well. But it's not an easy one. It's not an easy one to crack. No, there's a lot of challenges around it. and, as you said, I think IFCO is a living example on how you can, how a company can scale up Reusable packaging. I mentioned the 380 million crates that we pull that we manage, but we do that in over 50 countries in the world. And we do over 2. 2 billion uses of those crates every year, right? So again, the scale is very relevant here. It's okay. How can a company scale up a circular economy model in a way that works now that is efficient? And obviously, That is a sustainable as well. So again, very going back to the award. Very proud about the award because one of the main reason why we've gotten the award is because one of our main objectives as a company is to make the use for our customers of reusable packaging. as simple, a single use, right? reusable packaging, inheritably has certain, let's say, activities that are not associated with single use. And that has to do, for example, with the way that you order the way that you manage your stock. Obviously, we need to know where the crates are being used, where they're sent to so that we can go and collect them. So, it let's say requires a certain amount of management, active management of the packaging that obviously one way packaging doesn't require. So it brings a lot of advantages from an operational point of view and efficiency point of view at within the supply chain, but it also comes with certain activities that are usually not there. So of course, we're very conscious of that and we want to make our customers life easier, right? We want to make sure that it's as easy as possible to manage reusable packaging. And therefore, we hope to let's say not only, satisfy our current customers, but also, incentivize, more companies, more customers to make the switch from single use to reusable. So yeah, what was given for a program that we have launched in the U S our vendor management inventory program that basically allows us to. with data allows us to manage stocks for our customers making that let's say part of reusable packaging much simpler and again making it easy for them to manage the stocks to order the crates to declare the crates out when they send them to a retailer. I, I guess just in, in summary to, to make it much easier for them to work with ifco and as an example of reusable packaging.

Cory Connors: 8:47

it's exciting. It's an exciting time in packaging and, innovations on reusable and are really incredible to see how do you set up the, logistics? Do you have, is that the main thing that you as a company does? and what are some lessons that you've learned maybe from mistakes or, some wins that you've had?

Inigo Canelejo: 9:12

Yeah. Yeah. Of course, logistics is a key, part of our business model and our, a specific know how, yeah, we talk about large scale 380 million assets that are, flowing around the supply chain. Of course, we need to control them. We need to make sure that we know where they are. We need to collect them, inspect them and send them back over again. So the logistics pieces is fundamental and it's clearly. a key part of our expertise. again, I mentioned, the crates are foldable. So that obviously makes a, let's say return empty flows more efficient. There are some countries that still operate in some, closed loop circuits with reusable packaging that is not foldable, which brings advantages, of course, for example, with regards to the generation of waste. Because you are replacing one way packaging, so you reduce the amount of waste that is generated, you reduce the amount of, let's say, raw materials and natural resources that are used for packaging. But, your reverse logistics are not optimized because at the end you need to transport a lot of air. So the great thing about folding crates is that you are optimizing transport space. And therefore you can reduce the CO2 emissions associated to that. So that's one key element let's say of our product. In fact, when the company started 30 years ago, the crates initially, were not folded. so this was, this started in Germany with grades that are still being used for the drinks sector, in a very good way. But obviously, when it comes to fruit and veg, the supply chain and the logistics flows are completely different. They are often more, far away, more longer distance. And for example, in Europe, there's a lot of cross country flows as well. between north and south of Europe. So therefore, optimizing logistics from a design point of view is fundamental. And then the other part that is critical is your network. Obviously, in order to manage a pool of reusable packaging, you need to have a large enough network to be able to manage it in a, in an efficient way, let's say, you wouldn't want to be sending RPCs All the way from one country to another or very long distances, because obviously that would have an impact on your steel two emissions as well. So, at Ifco we manage a very large pool, or a very large network of service centers. Which allows us to be close to our customers, to the growers, so that we can deliver on short distance, but also close to our retailers so that we can collect the RPCs in short distance as well. And therefore, reduce empty miles and the associated, CO2 emissions.

Cory Connors: 11:49

That's such a key point that we have to, this has to be a kind of an intimate relationship where you're really close to each other and, and you're, you've got your warehouses and your cleaning facilities and your logistics all dialed in. I've always wondered why the milk crates, the classic, plastic milk crates aren't collapsible. And is that something that you see could happen someday? is that coming?

Inigo Canelejo: 12:15

Yes. definitely we have looked into that and some countries in the world already have that, and yes, with milk, it is true that it's usually not such a long, long, lane, flows. So therefore that, that, that piece of, of transport is usually a bit, shorter. Then for example with fruit and veg, but of course it would still benefit from optimizing truck space and being able to reduce the number of trucks that you need.

Cory Connors: 12:40

And in, in the end of life for the crate, it, it can be recycled.

Inigo Canelejo: 12:48

Correct. And I think that's super important that you mentioned that Corey, because, even often, a lot of people mix recycling and reuse,

Cory Connors: 12:56

although it's,

Inigo Canelejo: 12:57

the hierarchy, the waste hierarchy is very clear, the three R's, reduce, reuse, recycle, but we've all grown up, You know, learning about recycling and how great recycling is and probably that's the best thing that you can do I mean don't get me wrong recycling is really important, but it's a last resort No, you're still managing waste The whole idea behind reuse is that you don't create any waste in the first place, right? So For us, that hierarchy is super important. and although some people are starting to get that, you know where we received the award at the circularity event in Chicago a few weeks ago, and I was so happy. I think there were like 1500 attending attendees. And I was so happy to hear people talking about the difference between reuse and recycling and I was smiling because okay, these people get it, they speak the same language I do, but unfortunately, not everybody does know there's a huge focus on recycling, which is fantastic and very necessary. obviously, recycling rates in the US. Are well below. Let's say, for example, recycling rates in Europe. So definitely there's a lot of space for improvement. But still, I also see the U. S. Is an opportunity to leapfrog, and just, skip the recycling. step altogether and go into reuse. So I was really happy about that. But again, going back to your question, the great thing about our grades is that they are monomaterial. And that means that they're very easy to recycle at the end of their long life cycle. So we would repair every crate whenever it's needed. But sometimes, crates break in a way that cannot be repaired. And the great thing about it is that we can recycle that crate in closed loop. So that is used, the raw material is used to produce a new crate, a brand new crate. So When it comes to, material and product life extension, again, it's almost talking about infinite materials because they never become waste. No, they always go back to becoming a new grade, which is great.

Cory Connors: 14:52

Yeah, polypropylene oftentimes gets a bad rap, and I think it's a lot more recyclable and very reusable than people realize. And so I'm excited to spread the message about what you're doing here. Yeah,

Inigo Canelejo: 15:08

Corey, I think, if you ever get challenged about, the, let's say the properties and the advantages of polypropylene, remember IFCO and use us as an example, because I think it definitely can work really well.

Cory Connors: 15:22

Yeah. I'd like to, get a sample from you so I can make some videos about, the innovation that one and, show people how it works. because I'm seeing it more and more, this reusable. system. it's very exciting.

Inigo Canelejo: 15:35

Yeah. And it's really funny, because a lot of, when, again, now we talk about our company, obviously we're a B2B company. We're not a sort of, let's say consumer facing brand or a consumer facing product, although our crates are displayed at the supermarkets. So when. When I talk to people about what we do and who we are, a lot of people don't know us. Now we're a B2B company and therefore we're not as well known. But then, I explain, okay, what we do and I talk about our product. And I often tell people, actually you're able to see that the supermarket. Right. So when you go and buy your fresh grocery, you will see if go crates being displaced. again, in many well known, supermarkets, I won't name any, because I don't want to, prioritize any brands let's say, but we have very well known, retailers that are using our crates all over the world, also in North America, and then people see them and like, yes, actually, yeah, I noticed, the RPCs, we call them RPCs, reusable packaging containers. I saw them at the supermarket. And then once you see them once, you will always see them. you will all of a sudden see them everywhere because again, no, 380 million, it's quite a lot of crates, quite a lot of RPCs.

Cory Connors: 16:42

It's that's an excellent point. A lot of people don't look for packaging or notice it, whereas, for example, my wife doesn't like to go shopping with me because I take so much time looking at the boxes and the point of purchase displays. Yeah. I advise people look up. Look at the top of the shelf, look down, look underneath the, the different crates and things that are there. It's really cool to see. It's really insightful to witness that, as a consumer and to see how our food and drinks are getting, handled, globally.

Inigo Canelejo: 17:15

Yeah. And that's, yeah, that's a good point that you make. some of our retailers, of course, a big part of what we do is actually helping retailers in improving their on their sustainability. It's a initiatives, right? So implementing, let's say, large scale reusable packaging solution is not so easy. So we're a quick win for many of our retailers. and one of the one of the conversations that we have often with them is, how do consumers perceive this? Because a little bit. most of our conversations are with the retailers because they have a sustainability program. They have objectives to reduce their waste. They have objectives to reduce their CO2 emissions and also food waste, which is another interesting, let's say, advantage of reusable packaging. But of course, at the end, retailers are driven by consumer preferences as well. So, we often talk about that, how can we make, this initiative that you already have in place more visible to consumers? Because again, sometimes, unfortunately, plastic can have a negative, image as well. So some, again, it's maybe because, there's been a lot of, a focus on single use plastics. And the impact that they have on waste and therefore they might have, plastics as a whole might have bad reputation, so there needs to be some education about it. No, there's definitely plastic, can be great if you use it in the right way. No, and that's why. We're such a good example for our retailers to showcase to their customers, to the consumer that they're using something that is reusable, even if it's made out of plastic. And at the end, it has a much stronger, let's say, a value proposition around sustainability. So a lower environmental impact versus one way packaging. But sometimes for consumers, this is a bit counterintuitive. And therefore it requires a little bit of education.

Cory Connors: 19:05

that's an incredible point. We need to explain to people what we're doing and, as a packaging industry and show and that's one of the things I've taken on as, as, as I present on social media, different things, TikTok and LinkedIn and Instagram and show people, look, this is what we're doing. This is, this is reusable. This could, we can do this a hundred times. and then when we're done with it, we recycle it, isn't that cool? and people are often excited or surprised by these, concepts. Keep up the great work, Inigo. I really appreciate this. Anything else you want to tell the audience before we, close this out?

Inigo Canelejo: 19:44

Not just again. first of all, thank people for listening in and for their interest in our company. Again. I'm super excited about the award, but also about the future of reusable packaging. And I'm really proud to showcase, a company like ours that has been able to. to create a business model that is sustainable in, in, in every sense of the world, let's say. And therefore I see a lot of potential for the future as well. And as I mentioned briefly, we're super excited to take part in circularity because I saw, the amount of interest that there is in the U S around, around this topic, and the potential that is there.

Cory Connors: 20:22

Yeah, the US plastics pact is doing great things here and around the world. Really. They're helping work with other plastics packs. but we're looking to Europe. We're looking to Germany and all the countries that you've mentioned for wisdom and say, hey, how does this work? Should we do this? Is this not work? Does this work? And so thank you. And your, coworkers there, fellow countrymen. that are innovating and making this and testing and trying these new things. So well done. We appreciate it. Really great to meet you here. Thank you.

Inigo Canelejo: 20:55

Likewise, Corey. Thanks so much for your time.