As part of his contribution to a pallet distribution feature that you can read in full in Motor Transport on 29 June, Palletways MD Luis Zubialde, set out the network's responses to a series of issues facing the sector post UK Pallets.
The below Q&A was pulled together by Palletway's press agency but remains an interesting insight into - by volume - the UK's largest pallet network, and its approach to the opportunites and challenges the sector faces.
1. Despite much speculation during the recession there has been only one recent failure among the UK’s pallet networks. With the UK economy picking up, what will happen to UK pallet volumes?
Firstly we experienced significant growth during the recession which has continued since it came to an end.
That’s because the pallet network model was well placed to benefit from the economic downturn as it provides a highly cost efficient solution to move small volumes of goods frequently. Customers don’t need to be tied down by any contracts and effectively just pay for the service when they want it. They also don’t need to invest in fleet and incur any associated maintenance costs.
Our growth has also been driven by our ever-expanding pan-European service for palletised freight deliveries. Since the start of 2008 we have increased the number of countries we serve from 9 to 18.
Another key factor in our success is our strategy to constantly add value to our customers. For example this year we invested significantly in our new Digital Information Hub, an online platform designed to greatly enhance operational efficiencies and customer experience by using live data.
It provides: Full visibility of consignments across the network as soon as they are entered into the system, increasing the ability to plan effectively; instant data on Proof of Delivery, a key performance indicator for the group; customer trading profiles, including average consignments per day and per month; as well as the number of pallets delivered - amongst other things.
Also, since 2008 revenues across the Palletways Group have more than doubled. Not only have we seen growth within domestic markets but also in cross border volumes, which increased by 35% last year and are set to rise by a further 50% this year.
We now handle more than 30,000 pallets per day across 14 countries, and we have broken volumes handled records 5 times already in 2015.
2. Will volumes continue to grow and rates improve or will shippers switch to 3PL carriers, especially for premium next day services?
We are seeing significant volume growth both within the countries we serve and for cross border movements.
As regards rates, based on our experience, we have not seen any downward pressure on rates as we provide a highly competitive and added value service rather than a commoditised solution.
We do not see 3PLs as competition, as we provide a specialised service that is set up to deal with express deliveries of palletised freight. Our infrastructure, including our IT systems, are all bespoke -designed to support a pallet network model.
Indeed, 3PLs are more likely to sub-contract such requirements to pallet networks.
3. What are the pros and cons of using a national express carrier like TNT or ND compared with one of the pallet networks?
Whilst both national express carriers and pallet networks are both hub and spoke models, we are distinct in terms of the products we handle and our delivery methods.
Some parcel companies do offer palletised freight services but it is not their core competence and are provided within a parcel delivery infrastructure.
By opting for a specialist pallet network provider customers will have complete peace of mind that they are using an expert in this field, with a fit-for-purpose infrastructure to provide the highest levels of customer service.
4. Are pallet networks struggling to find enough good regional hauliers to become members and will this ultimately limit their growth?
We are not experiencing this due to our commitment to providing a high value offer to our existing and prospective members, including: the fact that we provide a pan-European operation that enables them to deliver customers’ goods to more countries than any other network.
- Our sales support to help win new business.
- The leading edge technologies we invest in, which are designed to take customer services to new high levels thereby heightening their competitiveness.
- In the last year we have recruited over 20 new members across the group
5. Will the poaching of the best operators by the strongest networks eventually force more consolidation in the market?
We don’t think market consolidation will be driven by members changing networks. If it occurs it will be as a result of competition in the marketplace and the opportunity for economies of scale.
If deals are done it will also depend on the pallet network structures of the two businesses being the same to ensure a seamless integration.