22


Issue 1 2013


Networks set their sights on European expansion


Is there no stopping the march of the pallet networks? Once regarded as a UK domestic phenomenon, many have turned their attention to repeating the trick in other European countries, or indeed across the Continent. But Europe could prove to be a much tougher nut to crack.


///PALLETS


France and Poland to the fore as Pall-Ex pushes on into Europe


Pall-Ex’s European expansion is forging ahead, though not quite in the way that was expected, says managing director, Adrian Russell. A year ago, Turkey looked to be the next target country but plans to launch in France and Poland have moved ahead more rapidly than expected, and it is these two countries that are set to join the network by end end of the first quarter of 2013. “France and Poland came to


the fore and it turned out that we could bring them to fruition much faster than we anticipated, so we’ve concentrated on them for the time being,” he told FBJ. Master licences have been


signed for both countries, haulier members are being recruited and central hub sites identified – Łódź in the case of Poland and just south of Orleans in France. “We’re really pleased – France is a major coup for us, and it’s one of Europe’s major economies” says Adrian Russell. Pall-Ex was in fact approached


by a major French operator and having a principal in place meant that it was able to jump the queue. “We’re very excited – our partner is very well established financially and structurally.” The goal is to offer a 24-hour service, although Russell accepts that this might a little ambitious right from the off; France is a large country, with a similar population and industrial base to the UK but spread over about twice the territory. “We’’ll probably start with a certain number of members and then add a second and maybe a third layer. At the moment we’re doing some modelling to see what can be achieved.”


way’,” Russell explains. “But we are still pleased with progress and Turkey remains a major aspiration for us.” A sense of urgency has come


Pall-Ex won’t be quite the first


pallet operator to set up in France – Palletways is already established – but it will be among the first wave. There


are


Denmark, Sweden and Norway, at least to begin with. That would help Pall-Ex


many parallels


between Poland and France – similar geography, population and industry and again the aim there is to have the network running by the end of the first quarter of 2013. “The aim is to cover the whole of the territory from day one, but the service level may vary.” But eventually nationwide, 24-hour coverage


should be possible.


Service expectations are increasing across Europe, and while the UK may have set the standard, other countries are now catching up fast, Russell believes. Developments in Benelux,


Scandinavia and – another surprise, perhaps – Bulgaria have also moved ahead briskly and it’s likely that one of these three countries will be the next addition to the network aſter France and Poland. Germany is also somewhere in the pipeline although


the pallet acknowledges that this


industry already


well-served, highly competitive market is a tough nut to crack. Scandinavia will most likely start off as a single network covering


maintain its target of opening three new national networks every year. “It’s a question of resources,” says Russell. “We can only bat on so many fronts.” Setting up a network is a long and arduous process and, in reality, “you only get one stab at it.” Get it wrong, and your reputation will suffer in the country concerned and it could be several years before you can make another attempt.


into the pallet networks’ expansion plans, recession notwithstanding. “There’s a certain opportunity to get these networks established - before the competition gets there. Hence our demanding expansion timetable,” Russell explains. Even with several European economies on the floor, there has been growth and the nightly pallet throughputs of Pall-Ex Italia is well into four figures now. “In fact,” points out Russell,


Pall-Ex Italia’s week-on-week growth in its first 18 months matched Pall-Ex UK’s when it started back in the boom years of the mid-1990s, so it’s very respectable for just three years, especially in a difficult economy.” The fact that there are now four pallet networks in Italy now is a testament to the strength of the concept, he believes. The Iberian and Romanian


networks are also performing as expected. The other strand to Pall-Ex’s


Adrian Russell As for Turkey, the Pall-Ex team


have identified a number of principals and will soon begin to draw up a shortlist, but contact has also already started with the 100 or so potential member partners. “It’s happened in a slightly ‘back to front’


international development are movements between, as opposed to within countries. Pall-Ex has associations with international forwarder Schenker and east European and Baltics specialist Delamode; the latter is also its master licensee in Romania. Business between the UK and


the Continent has long been a feature of the Pall-Ex operation but increasingly trunking links are building up between all the


countries where it operates domestic networks, says Russell. “What we’re finding is that, as our brand presence grows, it gives us the ability to pursue business in mainland Europe.” The Pall-Ex name has gone down well in all the countries in


the network and the re-branding and new livery has helped to further enhance it. In fact, the new colour scheme was specially tested to ensure that it was visible to motorists flashing past at high speeds on the autobahns and autostradas of Europe.


Pall-Ex Romania off to flying start


Pall-Ex says its Romanian membership has grown to 20 hauliers and pallet volumes have continued to increase during the first full year of operation for its network there. It became the first ever palletised freight network in Eastern Europe on its launch in December 2011. The operator says it has had a month-on-month increase in pallet volumes, with growth exceeding 400% by


the end of 2012. It also reports a significant increase in demand for premium services. Pall-Ex Romania CEO, Danor


Ionescu, said: “Pall-Ex Romania launched in challenging conditions, with much of Europe experiencing a prolonged period of


extreme winter weather.


Despite that, we pushed forward and helped to get the network off to a strong start.”


Pallet networks fill gap in the market


Pallet road networks are an established feature of the UK and European logistics industry - they offer cost advantages for clients who do not wish to, or could not offer


such a comprehensive,


nationwide pallet delivery service cost effectively, writes Crimson & Co consultant, Laurie King. In addition, more of the companies


parcel have been


recently struggling to profitably accommodate this


segment of


traffic in their networks – and even more so as mergers of parcel companies continues. Their cost advantage comes


from consolidating multiple clients’ pallet deliveries onto the


same vehicles by using a hub and spoke distribution network. Pallets are collected in one part of the country and brought to a local depot where they are consolidated into full vehicle loads to be trunked, oſten at night, to a central hub. There, the pallets are then transhipped and sorted for onward delivery in full vehicle loads to the nationwide local delivery depots where deliveries are then made to the regional area/ final customers - again benefiting from using fuller vehicle loads made up of multiple deliveries to that area. The pallet companies get better vehicle utilisation and hence lower unit costs.


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