Palletways marches on into Europe 22 fast


The pallet network idea may have been born in the UK but many of


the businesses are


now international in focus. Palletways managing director for the UK, Dave Walmsley points out that while 60% of his organisation’s pallets may be purely domestic, the rest are either handled on one of the Palletways continental European domestic networks or are cross-border. With


growth rates in


Europe and new countries being added, it may only a matter of time before Palletways’ non- UK business outnumbers UK traffic. The UK remains the single largest Palletways market, followed by Italy and then Spain. The international nature


of the business is reflected in the changes in management structure brought in by new owners, South African transport conglomerate, Imperial Holdings which bought the business from Phoenix Equity Partners in 2016. As well as appointing Dave Walmsley (formerly member and network development director) as its new UK managing director, previous UK managing director, Luis Zubialde became the group’s chief operating officer, overseeing the managing


directors of each European


country. Previous managing director of Palletways Europe, Rachael Alpha became group commercial director. It is largely business as usual


under the new owners, says Dave Walmsley, although he notes that Imperial has many growing transport interests in Europe including a Rhine barge operation and major UK truck dealerships. Poland is the next country


on the Palletways ‘to do’ list and the network there is expected to open in about Easter 2017, says Dave Walmsley. A site for a hub in the centre of the location has been identified, as have members and IT systems are of course all ready to go into operation following translation into Polish. “There has been a lot of


interest,” says Dave Walmsley. Attendance at initial meetings by potential members has been good, he says,


“and the


conversion into actual members has been very high, and we’ve also recruited a management team.” While there


previous attempts by other operators


to set Quality not quantity for Fortec


In the competitive pallet business, networks need to provide reasons for customers to use their services. Running a successful business is not necessarily about being the biggest, explains Dave Spong, network director at Fortec. “We’re something of a niche


product among the pallet networks. We’re not the size of some of the larger operators – so we have to provide a reason for customers to come to us, by focussing on the service aspect,” he told FBJ. Fortec didn’t want to get into a


race to the bottom where it was having to discount in order to get volume into its network. Dave Spong has spent much of


his


working life in the parcels sector and has seen the same thing happen there, where the hunger for volume can end up blinkering people to the fact that the object of


the exercise is to make money. Just over a year ago, Fortec


restructured its pricing to make the business more profitable for its haulier members, eliminating discounts for larger numbers of pallets, limiting maximum pallet weight to 750kg and length to 3 metres and generally taking steps to increase profit per delivery round. There was more emphasis on quality of service, and Fortec also added a 24-country pan- European delivery option based on the international network operated by parent, Geodis Group, branded Simply European. Fortec recognised that by


restructuring its pricing, it would suffer a one-off loss of volume, but its month-on-month figures are once again showing an increase and, importantly, the business is actually profitable, points out Dave Spong. He says: “There wasn’t


up pallet


networks in Poland, Dave Walmsley believes that by


having the right coverage in place from the start and by ensuring that it is a viable business both for the members and Palletways itself, it is much more likely to be successful. Certainly, there is no reason to suggest that Poland is not intrinsically suited to a pallet network; industry and population are reasonably easily spread and the road network is adequate. France was a network that


Palletways created earlier. A fourth hub is expected to be added, in addition to existing ones at Paris, Montpellier and Lyon, though there are no concrete plans as yet. France is a big country and there is also a lot of cross-border business with the likes of Spain or Germany, so it can benefit for a multi-hub approach, says Dave Walmsley. By the same token, the UK will


be getting another regional hub at Bristol in early 2017. Adding sub-hubs reduces the travelling distance for more localised flows – in the case of Bristol, it will mean that


have been an industry record number


of pallets this Christmas, with a total of 500,000 pallets in November. This had risen to 850,000 by about 20 December; the month started with a record week of 117,000 pallets handled. Year on year volume growth is approaching 7%. Meanwhile, Palletways


members were running 1,500 vehicles up and down the country daily. Other national Palletways


networks are Iberia, Italy, Germany and Benelux. The first-named have central and regional hubs while Germany uses a recently opened new national hub at Knüllwald, central Germany. The new 50,000m²


traffic from


South-west England or South Wales no longer has to go north to the main hub at Lichfield in the Midlands to reach London, for instance. Palletways UK transported


much growth between January and August , but comparing like for like in October, we’re now getting good growth of perhaps 6-7%.” Dave Spong adds that members


prefer the Fortec way of doing things. “We’ve always been very successful at bringing new ones in.


site includes a 7,300m² transhipment hall, parking and infrastructure, which will upgrade services from the existing hub in Homberg and triple delivery capacity across the region. The new hub will allow daily connections between Germany and the UK as well as significantly improved premium services from Germany to Benelux. Palletways has also reserved


space at the site for another, almost equally large, area to accommodate future growth


if growth is as hoped, it will start to do so from next year. It is currently doing a survey of its network. “We’ve got 100% UK coverage


and we don’t need anyone at this moment but we will do in future, as we expect growth to accelerate from around 7% now to perhaps


and create storage capacity for fulfilment services. The German network was


set up about five years ago and has been growing steadily. It will also serve as a gateway to Eastern Europe. Palletways has a further hub


at Nijmegen in the Netherlands. Further networks, in other


east European countries such as Romania and Bulgaria or the Baltics will be the next stage of Palletways’ expansion, says Dave Walmsley, but probably not until beyond 2018. Setting up a new network is a big undertaking, he points out, requiring a huge amount of investment and management time and effort. Moreover, new networks need a lot of help in the early stages – it’s not something that can be managed from a distance. Pallet markets tend to evolve


over time. They often start out as purely business to business operations, but in the UK the concept has changed to the point where 23% of deliveries are now to private homes, and with the potential for that percentage to increase still further. That


in turn means


further investment, both by members in fleets of smaller vehicles better able to negotiate


can base our strategy around it.” Meanwhile, Simply Europe


is being offered to around 24 countries currently. Fortec’s strategy has been to keep things as simple as possible, with a tariff for various pallets, departure days and transit times that members can drop into their own PDF and send to their customers, very quickly and easily. Later this year, the Fortec


TrackIT electronic map-based system should be available in some European countries on a trial basis and the plan is to extend it across the whole network when the underlying


data


It’s not about being able to handle 5,000 pallets a night – we’re more suited to the smaller operator, and a lot of them are in fact forwarders, or logistics companies, or possibly companies that have started out in small vans and moved into trucks. Those sorts of companies are very customer-driven.” Currently, Fortec isn’t looking to recruit any new members, but


9%, so we will need two or three new members next year, although we don’t yet know where that will be.” Fortec does in fact get


approached by would-be members oſten enough, but it has to be careful to avoid injecting too much volume in just one part of its network and unbalancing it. “It’s all got to grow at the right pace, so we


becomes


available in every country. TrackIT shows the status of every pallet as a coloured dot depending on whether it has been delivered or not and how close it is to destination. Hovering over the dot reveals further information about the pallet and its contents. Operationally, Simply Europe


export pallets come first to the UK hub at Watford Gap and are then trunked to the international hub at


the turn into Acacia Gardens, and by the network in new tracking technology that gives more precise expected time of delivery windows. “We will soon have a full suite of ETA technology that will give two- hour time slots,” says Dave Walmsley. The proportion of private


home deliveries in continental Europe is currently much lower, but that can be expected to increase as consumers get the e-commerce habit. The vast majority of domestic pallet deliveries are the result of an e-commerce transaction. “The UK has tended to lead


on internet shopping, but I think it will come in Europe as well,” he explains. “In the UK, home deliveries grew from 18% to 23% of the total in just two years so it’s certainly on the increase.” Around 2-3% of pallet


despatches or arrivals in the UK are to or from another European country, and again this is a market with potential to grow, Dave Walmsley believes. The market has been fairly resilient, despite the summer’s Brexit vote, and it doesn’t seem to change too much in the face of the fluctuating Pound-Euro exchange rate.


Northampton, where they join the Geodis European system. “Simply Europe is very competitive for consignments of 1-4 pallets, and the beauty of it is that, in Geodis, we’ve got an existing network that we can tap into, without having to do it all ourselves.” Also, the IT, proofs of delivery


and progress report are exactly the same for Simply European as the UK domestic network. “We’ve got a ready-made package. The trouble with some international pallet networks is that the domestic and international


services are very


separate, but ours dovetail together very neatly,” Dave Spong explains. Using the established Geodis


network also removes the need to feed a stand-alone European operation with volume – a difficult task in today’s very competitive market. “International can be very high risk and we don’t want to launch something that can’t be sustained. But Simply European has had very gradual growth and in fact last month (November 2016) was its busiest since launch.”


Issue 1 2017 - Freight Business Journal


///PALLETS


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