This will be an interesting and challenging year but there will always be great opportunities for the UK pallet networks and their member hauliers. What we do delivers even greater value when times are hard. And there’s no denying that times may get harder before they improve, for producers, transport companies and consumers alike.

As with all freight transport, demand for palletised freight distribution is driven fundamentally by consumer demand, and the cost of living crisis will undoubtedly have an impact on ultimate volumes for 2024 and well into 2025. We need inflation to remain as low as possible, and interest rates to follow suit, in order to stimulate consumer demand. This will also make the price of borrowing lower for operators.

Pallet networks do have an advantage in that as volumes become smaller or demand more erratic, pay as you go, cost-effective delivery for fluctuating volumes is where the business model comes into its own. It is also more important than ever for regional hauliers to have ways of competing with the wider market, without having to overstretch themselves commercially or operationally. That’s what pallet networks offer  hauliers - flexible, collaborative partnerships which benefit their wider transport services - and this will be more important than ever in 2025.

There’s no doubting that anyone in the transport sector will be under pressure, however. The autumn budget introduced a few items of great concern, not least the changes to employer’s National Insurance contributions and the threshold at which they are payable. Taken across all logistics workers, this adds £1.7bn to the cost of operations.

When margins are so low in the industry generally, it is hard to see how these extra costs will be managed except to reduce or freeze staffing numbers, just at a point where we need hauliers to be taking on and training apprentices and new talent.

There is also the hike in business rates which we believe will disproportionately hit industries which need space for non-revenue-generating activities – like parking up. The average depot or Hub needs an extensive land footprint but generates relatively low returns per hectare compared to other sectors.

Monday evening in the Hub

Sustainability has been a specific focus for APN members during 2024, and we achieved some significant gains in terms of cutting the carbon footprint of Hub operations, as well as reducing energy, water and paper use. We now recycle twice as much waste as in 2022, and have more than halved overall waste.

Pallet network collection and delivery fleets will also be important learning environments for electrification, and we expect 2025 to see even more ZEVs on trial and in operation. The transport sector is waiting to see if government help will come our way. In 2025 we would like the government to step in to support hauliers. We need incentives to invest the substantial capital required by decarbonisation, and we need clear strategic planning policies which will free up land where it is needed most for industry.

We have yet to see how the government will deliver its pledge to build for growth. It should not forget, however, that it is not just planning and the construction industry which enables its ambitions – it will be road transport which physically delivers the goods. And so we have joined other trade associations recently in asking the Chancellor for a meeting so that we can explain just how high the obstacles are for the UK transport industry and the perils of neglecting such foundational service providers.

More than 750 regional hauliers, which make up our pallet network industry, delivered 29 million pallets to businesses and homes in 2023, with exceptional service levels and vehicle utilisation eight percentage points above the DfT average for artics. They facilitate business and services across the UK. They are also extremely important regional employers, often still second or third generation family firms rooted in their communities.

We would like to see the Chancellor and the Department for Transport recognise their economic and social value, and the template for effective, progressive collaboration which they and the pallet networks provide.

I hope that in 2025 the government will finally see road transport as its partner in delivering success, and work with us to achieve the goals it has set.

Paul Sanders, founder & chairman of The Association of Pallet Networks

 

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