Pall-Ex pays dividends for Trucklink


26


Issue 1 2015 - Freight Business Journal


///PALLET NETWORKS Buchanan sets his sights on Europe


During his days at Palletline, Kevin Buchanan was known as something of a ‘Eurosceptic’ in pallet work circles, seeing little profit in his then company trying to break into the Continental or intra-European markets. During his time at its helm, Palletline was firmly focused on UK domestic work. However, in an interview


Ashby-de-la-Zouch based haulier Trucklink.eu says its pallet volumes have risen by half since it became a member of the Pall- Ex network. It has increased the number of pallets distributed via Pall-Ex’s UK and international network from 40 to 60 a night since joining in April 2014 and has won 12 new customers through its work with Pall-Ex, including Butchers Petcare, Blast Wash and Premier Warehousing. Truckline.eu managing director Nigel Todd, said: “Alongside the


international business markets that have been opened up for us, a key benefit of being a Pall- Ex member is the quality of the IT systems that have helped us to deliver great service to our customers.” Pall-Ex group managing


director Kevin Buchanan added: “As a member of the Pall-Ex network, localised UK businesses such as Trucklink.eu are given the opportunity to expand their customer base and take advantage of international markets.”


Regional hubs unlock Palletline potential


With “stellar growth” across the pallet networks and ever increasing volumes, Palletline is introducing new regional hub facilities in Rugby and Rutland, says operations director, Iain Brown. Following


several years of


growth which has seen Palletline handling greater volumes than ever before, early 2014 saw the network take “decisive action to increase capacity and provide for further growth.” Solutions on the table included


the construction of a brand new central hub at a cost of £32 million – but the business ultimately went ahead with a solution that has increased capacity by 4,500 pallets per night and reduced 1.4 million trunking miles which ultimately saves Palletline member companies £2.6 million per annum at virtually no cost. He explains: “Working


closely with two of our member companies in Rugby and Rutland, Palletline was able to use existing warehouse space, which was previously unused at night. To limit disruption for Panic Transport in Rugby and CS Ellis in Rutland, we worked hard to complete the project within three months.” The hubs were selected for


their strategic locations and


because they allowed achievable time frames, a flexible network structure and excellent cost effectiveness. “Obviously, a regional


hub integration of this scale requires a significant amount of tech support and both Panic Transport and CS Ellis made short term investments to help bring the project online which would be quickly recouped from transactional fees.” More staff were hired and new fork liſt


trucks were purchased


along with investment in CCTV technology and security. Brown continues: “We


established a transitional phase during the first two weeks of opening which included central hub management and other key staff being present on both sites. They were there to help, support and resolve any issues. The hubs were an immediate success thanks


to their rigorously


planned integration that ensured any teething issues could be ironed out immediately. “By making use of existing


spaces within member’s facilities Palletline is able to cope with increased volumes during the inevitable busy times of the year and for the unforeseeable


with FBJ, soon aſter taking up his appointment, the new Pall- Ex boss said that, as far as his new company was concerned, “Europe is a massive opportunity. Pall-Ex is slightly different. It has the critical mass, and it has been setting up networks within each European country and then connecting them with line- hauls” He envisages a future in which Pall-Ex builds up strong domestic networks in all the major European countries and then intra-European traffic will grow up between them, almost by default.


A pan-European approach


will stand Pall-Ex in good stead as customer buying patterns change, Buchanan believes. “There is a risk to UK networks and hauliers, as parent companies who are responsible for freight buying move abroad. You need to have a credible pan-European brand and much stronger brand- awareness in Europe, and the smaller networks could miss out in future.” The Pall-Ex brand is growing


throughout the Continent, with networks now in place in many of the western European countries and advanced negotiations in several others like Germany, Benelux, Switzerland and Bulgaria. Pall-Ex’s strategy abroad is not to try and own everything but “to work with the best available partners”. Rather than impose a British model on a European country, Pall-Ex is willing to vary its model to suit local conditions. Buchanan adds: “I am very


content that Pall-Ex’s strategy in Europe is a good one.” Always one of the more European-focussed


future.” The move has also freed up


additional capacity at existing hubs maximising efficiency for the benefit of the network, members and customers. The integration has kept costs


to a minimum and the model can be easily scaled up or down if the industry starts to slow down


of the pallet networks, Pall-Ex in fact now handles


about as


many pallets in Europe as in the UK and, paradoxically almost, an important part of Buchanan’s tasks will be to reinvigorate the domestic UK business. The latter has been growing at quite a healthy double-digit rate, but perhaps not quite as dramatically as some of its UK competitors, some of whom have seen business soar by as much as 30% in the past year or so. There will be a management team focussing on Europe and another specifically on the UK. The


general shortage of


drivers and capacity in the haulage industry has been fuelling UK growth in pallet networks; the industry is reaping a bitter harvest of decades of Government industry and deep- seated structural problems, Buchanan believes. Hauliers have turned to networks to handle ever larger volumes that years of underinvestment have made it impossible to handle through their own resources.


certainly, few countries currently have systems that boast the on- time delivery performance and reliability of a properly set-up pallet network. That revolution has already


taken place in Italy, Pall-Ex’s earliest European venture. In Germany, on the face of it the


largest potential market, it is much more difficult because networks, albeit rather different ones from the hub-and-spoke pallet concept, are well established and Pall-Ex will have to break into a mature market. “Some companies have caught colds trying to do this, and it’s critical that we get it absolutely right, so we will be taking our time


“A pallet network would be the first


nationwide distribution system many countries will have ever seen.”


But the UK networks also need


to look to themselves and ask whether they have done enough to reward their members. “Some of them have done an appalling job; but the good ones can help make their members profitable again.” Buchanan is under no illusions


that Pall-Ex faces stiff competition as it advances into Europe, but he is convinced that networks will offer something that has not been available before in many European markets. While networks of various types and groupage services do exist, the reliability and quality of some of them is questionable and,


again. Since the new facilities


were brought online, Palletline experienced its best ever Easter figures. The Wednesday before Good Friday is the busiest day of the year for Palletline and this year 16,781 pallets were processed with 99% on time and in full.


to secure the right operation.” In less mature markets, Bulgaria


or Romania for example, the task may be easier, because the pallet operators can offer something that wasn’t there before and can to some extent create their own market. In many instances, a fully functioning pallet network would be the first comprehensive nationwide distribution system many countries will have ever seen. True, the road infrastructure


in some of these countries may be a lacking, but all operators are in the same boat. And even if it isn’t feasible to offer a regular 24- hour service, even a dependable 48-hour service may be a major advance on what has been available before. The varying requirements


of European markets may also require a different


approach


to network design, Buchanan considers. While the UK neatly lends itself to a hub-and-spoke system with a major central hub in the Midlands, a market like


Germany might need multiple regional hubs. In fact, even the UK market is beginning to evolve somewhat in that direction, with increasing amounts of business being pushed through secondary hubs in various parts of the country. As far as the intra-country traffic


is concerned – UK to Europe for example – while there is plenty of competition from the established international groupage operators, Buchanan is confident that Pall- Ex can make significant inroads into this market too. Groupage operators can’t, for example, operate 60-100-point delivery networks in the UK, and the combination of an international trunk haulage operation coupled with dense domestic delivery networks could be very powerful. Already, there is evidence that many international hauliers prefer to stop in Kent and feed their UK deliveries into a pallet network rather than do the Tour de Britain themselves. While Buchanan would


welcome any member able to fulfil Pall-Ex’s quality criteria, he isn’t going out especially to attract international groupage operators. In fact, in time, it could be the small and medium sized domestic hauliers who would have most to gain from joining a network like Pall-Ex’s, able to offer dense networks both at home and abroad and plugging in operators that wouldn’t necessarily have the resources to do international work themselves the benefit of a full- blown European network. Even the Eurozone’s current


financial woes could be an advantage. Buchanan points out that it was tough economic times in the UK that spurred the growth of the networks over hear – and it could be the same story again on the Continent.


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