Pall-Ex defied “challenging” market conditions to deliver a 31% leap in pre-tax profits and a 10% rise in member volumes last year.

In its latest annual results to 31 July 2018 the pallet network, which has around 95 members, saw turnover increase by 8% to £71m (2017: £65.9m) with pre-tax profit rising by 31% to £2.5m (2017: £1.9m).

The network strove to cut costs in the year, according to the results, reducing administrative costs to £7.5m (2017: £7.6m), which the result's strategic report said was "a good result against a backdrop of increasing cost pressure."

Pall-Ex also negotiated a £1.75m invoice financing facility of up to 80% invoice value with Metro Bank during the year, with the company utilising £1.47m of this facility at the year end.

Speaking to motortransport.co.uk, Pall-Ex MD Kevin Buchanan said the invoice financing facility allowed the company to invest without incurring an overdraft.

"The arrangement will facilitate our ongoing growth and development across Europe," he said. Pall-Ex  has networks in Portugal and Spain (as Pall-Ex Iberia), Romania, Bulgaria, Slovakia, the Benelux region and France, through a number of franchise and joint venture agreements.

Turning to the network's performance in 2017 and to date, Buchanan said: “The market was challenging last year and it continues to be challenging.”

Pointing to the latest statistics from the Association of Pallet Networks (APN) on pallet sector volumes, he added: “In the last quarter APN stats show that volumes in the sector retracted by 2.5% - 3%.

"Our volumes were flat in that period, so our performance was not that bad. But it is still tough."

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Buchanan said Brexit continued to be a key factor affecting the sector. "Businesses are delaying decisions because of the uncertainty Brexit has created," he said.

“Although we have not lost any customers – in fact some of our members have grown customers substantially - the problem is that the current customer base is down-trading.

“Some sectors are better than others but we are having to add more and more customers to our base to maintain trade levels.”

Buchanan also warned that the shortage of HGV drivers was a continuing problem, exacerbated by Brexit and the logistics industry's poor image among school leavers.

Looking ahead, Buchanan said Pall-Ex is expecting significant growth in B2C following the launch of its MyNexus software in November last year which provides customers with much more detailed delivery information. B2C currently makes up 15% of the network's total volumes.

“B2C will be massive for us next year,” he said, adding: “We want to give our customers the same visibility as that provided by the parcels sector.”

The network is also preparing to roll out an app dubbed NexusGo across the network in December to help drivers make a dynamic risk assessment at point of delivery for tail lift B2C deliveries. Its launch will coincide with the expected launch of the HSE’s updated guidance on tail lift deliveries.

Buchanan said: “We would have liked to see the guidance put a limit on pallet weights but recognize it is a complex issue. But there is a need for dynamic risk assessment and our app will give our drivers the ability to do that, giving them much more control at the point of delivery and guidance on how to measure that risk.”

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