24 Continued from page 37


service for its customers rather than pursuing volume for volume’s sake, Buchanan points out. “Yes, there has been a big push by


some of the other networks to create a model of the UK networks in other European countries, but that has been motivated primarily by a desire for volume. We’re not spending millions putting a Palletline flag in every place on the map, nor are we willing to spend £5m a year funding losses on a European operation. Europe is not a big ego trip for us.” Rather than take that approach, the Palletline European service exists primarily to provide a link to and from all the main European countries for its UK-based members, and the approach taken varies from country to country. “For example, in Germany we


have partnered with ILN, which is essentially another pallet network” - though one that is subtly different from the UK model. ILN does not have a central hub but instead consists of a network of regional consolidation services. “But try and do the same thing in the Mediterranean countries and you’ll find that overnight delivery networks are practically unheard of.” Palletline began redeveloping


its European strategy early in 2010, working closely with member companies DSV, C S Ellis and Europa Worldwide Logistics, all of whom have well-established knowledge and experience of the challenges presented by European distribution. The European service makes


full use of subsidiary company Palletline London as the organisation’s European ‘gateway’, which allows European hauliers to access the Palletline network, rather than use their own vehicles for small consignment deliveries across the UK. However, where member companies running European links have traffic coming into the Birmingham hub and the linking member company has too, it may be more cost effective to route consignments directly through there – in line with Palletline’s ‘least road miles’ policy. The European service is designed


to resemble the UK operation as far as possible, with electronic proofs of delivery and IT systems all managed centrally. Ultimately European links will be


developed to and from Palletline’s growing network of UK regional hubs. Another company with impeccable European credentials is German- owned Dachser, which become one of the latest recruits to the Palletways UK network, when it bought existing member Leach in Rochdale a couple of years ago, although the situation is complicated by the fact that Dachser UK was already a member of the rival


Issue 2 2012


UK Pallets system. This is something that will need to be resolved in time, says Kevin Buchanan, as ‘one member, one network’ is one of Palletline’s golden rules. “The situation with Dachser is a transitional one. Sooner or later, they will have to make a decision and they know that. Obviously, I hope they will choose us but ultimately it’s up to them.” Pallet networks are not keen on


members with divided loyalties partly


because of the fierce


competition in the sector but also because of fears of ‘leakage’ or technology and other vital know- how. That said, with contraction and mergers in the haulage industry, it is becoming increasingly hard to find good quality independent hauliers in some areas of the country. As companies take each other over, the problem of conflicts of interest is unlikely to go away soon.


“


it is becoming increasingly hard to find


good quality independent hauliers ”


Meanwhile, Palletline is continuing to expand its operation in the UK. In some ways, its German partner ILN has provided the inspiration for its network development. The German operation is not a hub-and-spoke operation, but is based on a network of regional hubs with services criss- crossing the country between them. While Palletline will not emulate this approach, it has decided that its future expansion will best be served by a network of regional hubs. It already has these in London and Manchester and, most recently central Scotland, in addition to the Birmingham central hub, and it will probably add another on the east coast (most likely somewhere between Yorkshire and Cambridgeshire) and one more in the south-west (Bristol or Cardiff). Buchanan explains the thinking:


“When we invented pallet networks 20 years ago we had the advantage of not having competitors, but now pallets have become very much a commodity market. We have to find different ways of doing things, we’ve got to somehow recapture margins.” Regional hubs allow freight to be consolidated more locally and help cut out dead mileage and over-long routings. Moreover, they can be based at a member company’s premises and would be used during the night hours when it would otherwise be lying idle – so the member gains useful extra revenue and the network a hub for a competitive rate.


///PALLETS


Palletways all set to conquer Europe


Managing director of Palletways UK, Martyn Young says that his network is the only one that has taken the original British model and put it into Europe. “We have the same IT systems, the same code of practice, whether it’s in Iberia, Italy, Benelux and, from last year, Germany.” Meanwhile, Palletways continues


to hit new volume records and has just hired a new MD for its German operations, Thomas Hoffman. Martyn Young continues: “We


are now doing a two-day door- to-door palletised freight service between the UK and Germany, which we’re marketing as a ‘Premium Plus’ product. It really is as quick as you can move a pallet and it will be interesting to see how much business migrates from our other services.” It will be around 50% more expensive than the three-day Premium service but only the express parcels operators will be able to match its delivery times consistently across both countries with daily services. The express carriers however tend


to be much more limited in the maximum weight they can move whereas Palletways averages around 500kg a pallet. “In fact, we have benchmarked the service against


the European express


integrators, and we suspect that will be the main competition” Young adds. Palletways has ambitions for similar Premium Plus services for other trade lanes including UK/ Italy, or UK/Iberia but it is very early days for the concept, Martyn Young says. “We do need to see that we’ve priced it correctly.” But he is convinced that the market will warm to the new offering with its pre-alerts and consistent daily departures. “It’s not a freight- forwarding type service. Your pallet will move, regardless of how much traffic there is.” The start-up of Palletways


in Germany has gone well, he continues - the network there is now 40-strong and service levels are good. “Prior to starting it, we decided to send in our team rather


than ‘master licensing’ the concept. The challenge was that it was a very new idea in Germany – UK hauliers know all about pallet networks, you can talk to them and they ask all the right questions, whereas in Germany, while there networks such as trailer-swap systems, it is very different.” That said, the quality of the oſten family-owned, second generation businesses in Germany is second to none.” Whether or not the UK pallet


concept can be replicated elsewhere is oſten a controversial topic in the pallet world. Martyn Young points out that though that different considerations apply, depending on the network ownership model. “It would be more difficult for a member-owned network to achieve what we have, but our model is very different from theirs.” And while the new Palletways network will have to win its business from established domestic German freight networks and with forwarders and groupage operators on the cross-border legs,


“a lot of people will be watching us with expectation and concern,” says Martyn Young. Palletways will let the new


German venture bed down before considering the next phase of its European expansion, possibly from the end of the year. France, Poland and Romania are all possibilities, although ultimately it will be a decision for the Palletways board. “But we certainly want to continue our drive into Europe.” While much of the interest has understandably been on the European developments, Palletways still continues to invest more of its cash in the UK than anywhere else.


It has just spent


£¾m on a system that allows people to see pictures of their pallets passing through the hub through a web portal – much more realistic than punching in a tracking number and receiving a message. Crucially, it allows users to check the condition of their goods as they move through the system.


Palletforce moves to next stage in Europe


Palletforce has moved on to the next stage of its European expansion plan with the appointment of John Mckail as European development director. His task will be to enhance the


European services already offered by the palletised distribution network as it opens up new markets and routes. He brings over 25 years operational and commercial experience in forwarding, trade development and logistics, much of it in mainland Europe. Palletforce chief executive


officer, Michael Conroy explained: “Palletforce has become a recognisable international brand and we are responding to demand from our members, to further expand across Europe.” John Mckail added: “Palletforce has a diverse member base with growing European requirements.


There are only a handful of competitors offering day-definite, European export and import services. We see a gap in the market to expand our current services and to increase our offering to more countries.” And Palletforce’s sales and


marketing director, Dave Holland said: “We have an existing European service which does deliver and now we’re looking to enhance it further


and look to the wider world.” He explained that the European


service has been marketed primarily as a service to existing Palletforce members and, initially, the member-owned network would research the market and find out what members, and their customers wanted in terms of services and pricing. Dave Holland envisaged that the main thrust of the development


would be in the western European countries where Palletforce already offers a service but did not rule out expansion into other countries, including Eastern Europe. “There’s no reason, fundamentally, why shipping a pallet to or from Birmingham should be any different from shipping one to Dusseldorf, or Paris,” he told FBJ. “We want to take the mystery out of what some see as a complicated process.” With the Government


encouraging UK firms to export and with a large market in Europe, the potential for a European pallet service was significant, he added. The European service would,


like its UK counterpart, offer day- definite delivery and electronic PoDs, he predicted, “but basically, it will be whatever the customer wants.”


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