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16


PALLET NETWORKS Europe on a pallet


Born in the UK, Europe is now becoming a major focus for the pallet delivery networks. With the overnight pallet delivery concept well established in this country, many of the leading operators now have ambitious plans to extend their empires to the Continent.


Palletforce plots European course Michael Conroy


European expansion will come for Palletforce – it’s just a question of how and when, says Michael Conroy. Equally important, says the chief executive officer of one of the UK’s largest and fastest growing pallet networks “is that it’s done in such a way that it adds value for our members but at the same time we’re not distracted from maintaining the high standards of our UK network.” At the moment, international business accounts for around 3% of Palletforce’s total turnover, but it has the potential to be very much more, Michael Conroy explains. “We do already have a service to Europe provided by our members. But I’ve been travelling the UK talking to them about how we develop that further.”


Palletforce has identified a


number of different ways of moving the international side of the business forward – to buy an existing operation, to partner with like-minded companies or strike a relationship with an existing ‘Tier 1’ European player. But having developed what is in his estimation one of the best UK domestic operations, Michael Conroy is very anxious to ensure that any European product Palletforce develops is also best in class.


“A number of other pallet operators have dipped their toes in the market in Europe by developing networks within some of the European countries, but what I want to do is to develop the links between them. Yes, we could go and set up the equivalent of Palletforce in, say, the German domestic market, but I would to ask, what would be in it for our members?” No pallet network has yet cracked Europe, in his opinion. “There are big organisations


there, but it’s not the same concept. And to a large extent, it’s also a question of culture; all countries have a slightly different outlook.”


Palletforce has in fact been advertising for a European development manager to begin to take some of its ideas forward. But there is no way that Palletforce is going to rush into setting up a European operation, simply for the sake of it. It will take the same measured approach


as that which has


underpinned its expansion in the UK market.


Conroy has in fact had requests to licence Palletforce in foreign countries. So far, he has not accepted any such offer, but there is no fundamental reason why that couldn’t be done. “Our IT system (which Palletforce has just spent a considerable sum of money in


perfecting)


is transferable, we could use the same forklift trucks and we would work to the same business rules. So we could if we wanted to – but it’s not at the top of our agenda.” Suffice to say, the European operation “will not be a three to six months’ affair. Realistically, it’s a one to three year project. We don’t need to be the first in the market, but we want to be the best in the market.” However, the UK pallet market will at some point approach saturation, and Palletforce’s own member hauliers are keen to have a European product to offer their customers. “If we get just a few pallets from each member, if you multiply that by a hundred depots, that’s good business. But we don’t want to go to market until we are sure that the concept works, and we still have to have a lot of discussions with our members.”


Whatever shape the future


European network takes, there would be a day-definite and an economy service, backed up by the same information and tracking


service available in the UK.


Palletforce already does have some international operators among its members and one important


question will be


how it integrates its existing international traffic into the new offering.


Meanwhile, Michael Conroy has got plenty of work to do in the UK. While there is talk of the domestic pallet market reaching saturation, that day is still quite some way off, he believes. For a start, the pallet networks are still winning business off the 3PLs; indeed, some of the 3PLs are handing some of their business to the pallet operators. “We have a £30m hub, our members have 5,500 employees and warehousing all over the country. In terms of capacity, we would wipe the floor with any 3PL. The question is, how do we harness that capacity?” Even the biggest and best of the 3PLs cannot be everywhere in the country whereas the pallet networks, by definition, are. Palletforce’s IT system is first-class and, being a hub and spoke network, it can achieve vehicle fill rates that 3PLs or own account operations can only dream of. “So more companies are looking at the pallet networks instead of running their own fleets and they’re also moving smaller quantities, which again helps us. So there’s a lot of market share that can be gained from the 3PLs.”


The underlying strength of the market is reflected in Palletforce’s own traffic which has increased from 5,500 to 9,000 pallets a night since it moved from Fradley Park near


currently


Lichfield to the present hub at Burton-upon-Trent two years ago. The pallet networks have flourished despite – or partly because of – the recession. “This is one of the real success stories of the logistics industry. Before the networks came along, there were huge amounts of empty running, very low vehicle fill rates – but we achieve around 82% at the moment.”


The pallet networks as a whole grew until the 2008/09 recession, which caused a blip across the sector for around 6-9 months. Since then, growth has resumed and Palletforce itself has been powering ahead at around 20- 22% over the past couple of years. At 16.4%, it doesn’t have the biggest market share in the UK, but it is gaining steadily. As a company, Palletforce puts a lot of emphasis on staff training and development. Burton-upon-Trent is a high unemployment area, “but there’s a very good work ethic here; people understand what we’re trying to achieve,” says Conroy. This is reflected in the hub’s RoSPA Gold award – 934 days since a serious accident, and counting. But safety, as they say, is no accident. “At any one time, on any night, we’ll have 40 artics and 55 forklift trucks here. So you have to be completely on top of it.”


There is no skills shortage in the area, he continues, but Palletforce does inculcate its values among its workforce, constantly grading them and reinforcing the all-important message that ‘every pallet counts’. “Each pallet may only be £50-60 to us, but to our customers it could be worth £150,000 or more. I’m not saying we’re perfect, but if you get your quality right, you will get your volume.”


Michael Conroy, is CEO of Palletforce, the UK’s leading palletised distribution network with a combined turnover of around £60m and more than 4,500 people. Appointed as CEO in 2008, after leading a management buyout of parcels firm ANC Group and its subsequent sale to FedEx


- where he was MD


of the SCS division - he has been responsible for leading Palletforce through a time of rapid growth during a deep recession – including managing a £30million investment to open Europe’s biggest distribution hub, at Burton-upon-Trent, in Staffordshire and overseeing a £1million investment in IT


infrastructure.


This investment – the biggest the company has ever made in its IT – in developing the bespoke Alliance system from scratch has been a huge success within


the business and has


also been externally recognised with a place on the shortlist for a prestigious Motor Transport Award for the Best Use of Technology.


Under his leadership, Palletforce has gained three international quality standards ISO 9001, OHSAS 18001 and ISO 14001, and two coveted ROSPA Gold Awards from The Royal Society for the Prevention of Accidents – the only pallet network to achieve this.


ISSUE 4 2011


Michael Conroy: Spearheadiing IT investment


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