Palletways builds from the bottom up 24


Palletways’ ambition is to take its model and build it “brick by brick” in all the major economies of Europe, says Martyn Young, managing director of the UK Member Network. “It is the same practices and member agreements, the same IT system, in Italy, Iberia, Benelux and, from last year, Germany,” he told FBJ in an interview at the network’s new northern hub near Leeds. Not only does exporting the Palletways model to other


countries build the business there, but it also “presents the opportunity to move freight in-between all those countries too,” he explains. Interestingly, “95% of Palletways’


members sent at least one international shipment in October – whereas three years ago it would have been almost nothing.” With the UK market becoming


tougher and more competitive, intra-Europe offers good growth potential, and is currently striding ahead at around 30-40% a


year. Business has come from forwarders, groupage operators and the larger parcels firms, says Martyn Young. It also helps many essentially local hauliers offer not only a nationwide freight service but a pan-European one too. For the customer, it means a one- stop shop for all palletised freight, whether it is going round the corner or half-way across Europe, “with one vehicle, one rate card, one IT system and one invoice”. Palletways is now moving


European dream may be hard to realise, warns Pallet-Track boss


Some people in the pallet business may have visions of pallet networks springing up across the Continent with nightly runs between them but it might not be an easy dream to realise, says Nigel Parkes at British-based Pallet-Track. Distribution systems and habits tend to be unique to each country and it isn’t always possible to take an operation developed for the UK market and simply “drop it in” somewhere else, he says. “It is something we’ve looked


into,” he told FBJ. “For nearly two years we researched the German market but we found a number of barriers.” For one thing, Germany


is already well-covered by existing freight networks, mostly cooperatives of hauliers, and while it would theoretically be possible for a UK-based pallet network to tie in with one of these, the types of freight the German networks handle is very different. The idea of a freight network that handles only pallets is quite alien there – as indeed it was in the UK until a few years ago – and the networks tend to handle not only pallets, but small parcels and long thin pieces that cannot readily be palletised. Most German networks would probably not be amenable to peeling off their pallet volume and making other arrangements for the rest of their traffic. Meshing a UK and continental


system presents other stumbling- blocks, Parkes adds. “For one thing, you can’t use double-deck trailers in most continental countries. And if you’re only running a straight- frame trailer with space for 26 pallets, in a larger country, costs can very easily go adriſt.” Sending


a pallet standard trunk vehicle abroad


Tread carefully on the Continent, Parkes urges pallet operators


could be very expensive compared


with a traditional


groupage operation, which is why Pallet-Track uses French-owned forwarder Logfret for its link to and from the Continent, using the forwarder’s regular groupage runs. “The forwarders really know what they’ve been doing and have done it for a long time,”says Parkes. Moreover, a three-stage trip from the UK pick-up location to the destination on the Continent, via the pallet network’s main UK and foreign hubs, can work out much more expensive than using a local groupage operators direct to the continent, Parkes believes. It could also be very hard to arrive at a satisfactory agreement with a Continental counterpart on how to divide up the cost of running a trunk vehicle between them. A 50- 50 split might seem reasonable, but given that most flows between the UK and Europe are imbalanced to some degree, one party could end up the loser. Two continental networks


exchanging pallets might run into problems in maintaining common prices and coming to agreement on what


Inevitably, most


to charge each other. foreign


pallet network’s


operators will tweak their price structures to take account of local conditions – some countries have a larger proportion of dense, heavy traffic, for instance – and this could lead to problems, to say nothing of


the problems that could be caused by currency fluctuations. Pallet- Track and Logwin have had to align their pricing structures with each other – the pallet operator naturally has a per-pallet price while Logwin uses


the traditional forwarder’s


volume-based formula – and while it works to both parties’ satisfaction, “it’s a bit swings and roundabouts” Parkes says. There are also the likely levels


of traffic to consider, especially in the early stages of setting up a network, particularly for a network like pallet-Track with shareholders to consider. For Pallet-Track, Continental business amounts for less than 1% of its nightly volume. “Make no mistake, if a Continental operation was viable, we’d go for it and indeed started off our research thinking that it was – but when we looked into it, we came to the opposite conclusion,” says Parkes. He concedes though that the


situation could be different for other operators with different cost models and structures and also that the situation could change. Aſter all, it took domestic pallet networks in the UK a while to take off; before they existed, there were a handful of general nationwide freight services before the market fragmented into pallets, parcels and general freight carriers. Tufnell and Nightfreight are probably the last two surviving non-pallet freight networks.


around 500 international pallets a night between the UK and the European countries it serves. Mostly, the services available from the UK are to and from the countries where there are also Palletways domestic networks but there is some traffic outwith that network to, for example, eastern Europe or Switzerland. As on its domestic service, Palletways likes to keep things simple. Unlike many groupage operators, it offers the same rate inbound and outbound and, of course, its services go every night – again, not necessarily the case with groupage. Lately, Palletways has launched


a Premium Plus service from the UK to Germany with 24-hour delivery times to most of the country – as opposed to standard premium which is two days. It is as quick as most parcels express


services but a lot cheaper, says Martyn Young. “The parcels operators can be expensive because they charge per kilo rather than per pallet.” Because the parcels firms historically were the only companies that could deliver so quickly, “it was a part of the market that they had by default” - but no longer. Palletways hopes to run out similar fast services to the rest of its European network later. It will also start looking at


where to set up its next European domestic network. Eastern Europe – quite possibly Poland – and Austria, which feed naturally off the German operation are the most likely candidates, says Young. In fact, he is pondering whether in some parts of Europe it would not be more appropriate to take a regional rather than a purely national approach – as is already


the case in Benelux, of course. Germany has a reputation as


being a tough nut to crack for pallet operations – there are already a lot of traditional hauliers’ cooperative networks that fulfil a similar function to pallet networks though in a somewhat different way. But Germany is going well since starting in June 2011, says Martyn Young. “We’ve found it a fantastic


market and one that hasn’t been cracked before.” Part of the secret of success, he believes,


is that


Palletways actually goes into other countries, sets up and runs the operation itself – it doesn’t simply licence out its name to a third party as some operators do. “That way, we can be confident that we can deliver the results. Germany probably wouldn’t have worked if we had simply licenced it out.”


Geodis gives Fortec a bridge into Europe


The Fortec UK pallet network is part of the Calberson family, which gives it a natural link into Europe through the forwarder’s network of Continental services. But while Fortec is a typical British – and Irish - pallet system, it relies for its links to Europe on Calberson’s regular general-purpose groupage services, says managing director of Geodis UK, Jamie Cuthbert. “Fortec is a major part of our


business, and has been since 1996, and it continues to grow,” he said. It has prospered despite – or


possibly, because – of the tough economic climate. “Members are trying to optimise their trucks in these difficult times” – and a pallet network is an ideal way of ensuring that trucks are filled and wasteful empty legs eliminated as far as possible. The pallet network concept


has also come of age in the UK. “It’s now accepted in terms of its performance and standards. People have confidence in it and the sorts of products that they would once have been nervous about putting into a pallet system, such as high value goods, they will now happily ship.” As Geodis runs groupage


trailers every day to the main European countries, this gives Fortis a natural lead-in to the Continent.


Issue 1 2013


///PALLETS


Jamie Cuthbert


Geodis’ IT systems and European depot network. While the groupage trucks are


not officially part of the pallet system, most of the cargo they carry is in fact palletised and they are in effect an extension of the Fortec network. They run daily to three platforms each in Germany and France, plus daily to Milan, Spain and Benelux. Onward connections are available from those platforms to virtually anywhere in Europe. Geodis and Fortec are also


It also has access to


working on a pallet network- style ‘rate card’ for Europe, adds Cuthbert. While he acknowledges that there are operational and ‘cultural’ differences to overcome, “we do need to do that,” he says. It’s unlikely, though, that Geodis would go so far as having the same rates in either direction to or from the Continent. There are no current plans to set up pure pallet domestic systems


in any Continental countries,


although the Cargoline network that Geodis is a nominated UK member of is in essence very similar to one. “To all intents and purposes it does the same job,” Cuthbert points out. Cargoline mainly handles pallets, but it can also handle smaller packages and non-palletised freight too. In France, geography doesn’t


lend itself to a UK-style next- day delivery network, although Geodis’ parent company, as one of the major operators (it is in fact owned by the French railways, SNCF) can reach 75-80% of the country within two days. The problem for a next-day operation is that the South of France and many of the main industrial areas are more – oſten much more – than a single driver’s shiſt from Paris. Next-day delivery


is possible,


but only expensively by using double-manned trucks or swap operations.


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