There’s no disputing the quality of dedicated logistics, yet in times like these such a service might be seen as more luxury than necessity, and the allure of the pallet network is stronger – not just as an option, but as a means of survival. JESSICA DAVIES reports.
Referred to by some as the enfant terrible of the road industry, pallet networks have barely drawn breath since they stormed themarket nearly two decades ago.
To trump the quality of a dedicated logistics service is a tall order, but there comes a point when sticking with dedicated becomes uneconomical. And once you factor in the cost savings a network user can make, the scale of resources and added value on offer, the case for joining is compelling.
Nonetheless, it is vital that an operator assesses a network’s stability before joining. Kevin Buchanan,managing director of Palletline, says it is the first time in nearly two decades that the market hasn’t seen growth, therefore it is important to determine: “What is their volume capability? How are they running sustainable operations?What are their break-even points?”
Craig Hibbert, managing director of Palletways UK network, says that when it comes to choosing a network to join“size doesmatter”.Anetwork thathas significant capacity means it canmaintain customer service levels at peak periods and allow for sustained growth, ensuring network stability.
“Look for a network with a large number of local depots. Themore local the service, the lessmiles travelledincollecting your goods ready for distribution to your customers,” he says. Dave Holland of PalletForce reckons networks are becoming increasingly appealing to companies as a way of dealing with economic pressures. “From a financial and environmental point of view, companies have to look at their own fleets versus shared user networks. We are finding more companies are looking to make key investments in their transport systems andmigrating away fromtheir own fleet.”
When it comes to joining a network, there are responsibilities and obligations on both sides. Neil Hodgson of Fortec reckons it is important not to overlook the business profile of a haulier before joining. “People are so important – they are the business. Therefore it’s vital newmembers have a ‘can-do’ attitude,” he says.
AdrianRussell,managing director of Pall-Ex,warns against companies joining anetwork as away of ridding themselves of awkward deliveries, saying that it will prevent an operator from maximising its margins. “Vehicle fill is harder now. Our most successful members are the ones who actively pursue the smaller consignments,” he says.
Withvolumes falling across the industrydedicatedservices are left in a particularly vulnerable position as vehicle capacity is underused, which can lead to many of them standing idle.
Hibbert reckons once a company notices a rise in empty running, it is time to look at alternative transportmethods. Thehaulage industry’snational vehicle fill average is about 51 per cent, while networks can offer a good 20 to 30 per cent more. “Apallet network offersmore flexibility – customers can have all the capacity they want, and most importantly when they want it,” says Hibbert.
Consignment size is becomingmore of a thorny issue as it reduces further alongwith the economy. Pallet networks have trunking small consignments down to a fine art.Nigel Parkes, managing director of Pallet-Track, says: “Operators who would use their existing fleets to marry work together are finding it difficult to do so with the drop in volume. Also, clients are stipulating delivery times farmore frequently now, making the logistics unviable.”
United Pallet Networks has adapted to the increasing trend toward smaller consignments by introducing the micropallet. This is a next-day priority service designed to bridge the gap between traditional parcels and traditional pallets. Themaximumweight of themicropallet is 150kg,with 1.2mx 0.8mx 0.6mdimensions (same as a Euro pallet), but it costs less than a traditional pallet.
GraemeWilson, commercial director,UK Pallets, has seen some of its members fall victim to the downturn. However, “we can ensure business continuity by servicing any area of the country with our own fleet until such a time as a new replacement is commissioned, and while this can sometimes prove costly to the hub, it means my customer base and our networkmembers never suffer the effects of a drop in service levels,” he says.
A network’s IT capabilities are hugely important and will play a definitive role in deciding which network to join. Buchanan says although networks’ IT infrastructures have come on leaps and bounds, there are still some that are “archaic”. Therefore it is vital to vet the IT infrastructure of a network before committing to it.
Parcel networks have set the bar in terms of IT. UPN was the first to go the next step on from signature capture by introducing onlineproof ofdeliveries (PODs), a service offered by the parcel networks for some time. Dave Brown, network developmentdirector,UPN, says these canbe accessedonline four seconds after a delivery takes place.
Fortec stepped up its IT capabilities with its CarrierNet system, a web-based collaborative software system, for which it invested a six figure sum, and which has improved speed and accuracy of information. The system’s features include: online order entry by licensees and their customers; licensees can arrange third party collections and deliveries; track and trace; centrallymanaged input and delivery tariffs and service levels applied automatically; multi hub capability and automated routeing of pallets; full postcode gazetteer; automated billing of hub; input and delivery charges; ability to use barcode and RFID radio tags; interface to transport management systems used by licensees.
On the operational side of things, pallets have always been scanned both in and out of the Fortec hub, but now each licensee knows exactly how many and what type of pallets they need to collect, they can plan in advance howmany and what type of vehicle to send to the hub for the trunk journey, saving on fuel costs and the need for return journeys.
Palletways unveiled a pan European IT platformlast year, and as a result can offer web-based track and trace for consignment status across the UK and continental Europe. It also offers PODs online the day after delivery across its pan European networks.
Hibbert says that Palletways’ daily cross-channel deliveries tomainland Europe have proved a “major success”, and helps provide a cost effective and highly reliable door-todoor service for companies who see new export growth opportunities due to the weak pound. The service includes a web-based e-scheduler, which shows the time that the consignment will take to get to its destination.
Palletline has invested a total of one million pounds in a digital capture system in a move to be the first network to be paperless at point of delivery by the end of May 2009. The majority ofUK deliveries are nowbeing achieved using totally automated processes across the network, which will help cut hidden costs, and provide time savings, increased accuracy, and instant access to information for itsmembers.
Buchanan says Palletline will launch a virtual hub planning tool in July this year, designed to give a “visual degradation” of operations so a member can see what resources they need. Scanning and digital signature has come along so far, says Buchanan, that members can now exchange freight on a virtual basis.
Larry Klimczyk, managing director of Blackbay, stresses the importance of real-time visibility in determining the point at which using a dedicated service becomes uneconomical. “Because customer information at the time of booking is not always truly representative of the actual volume of freight to be collected or the requirement for pallets, there can be a mismatch. The implications of such a mismatch can be expensive and result in goods not being handled.”
However, Parkes remains sceptical of the overall relevance of digital signature capture. He reckons that the nature of the goods means many clients still require their own paperwork signed, making signature capture “not as attractive as in the parcel networks”.He says this is down to the number of items on each pallet. For example, a palletweighing 1,000 kilos,may contain 30 to 100 different items, each needing to be individually checked to ensure none aremissing.
Parkes says that on average, “40 to 50 per cent of Pallet- Track’s traffic requires customer-owned paperwork to be signed… Signature capture does not replace the customer’s need for paperwork,” he says.
This strikes a chord with Hodgson, who describes haulage as “the bastion” of paperwork – “but those days will change”. Russell says: “There’s a new,more demanding generation of customers coming through”, many of whom may have crossed over fromthe parcel networks, and who have a good understanding of what is available IT-wise.” Retailers are particularly demanding of IT, he says.
Pall-Ex has upped its IT offering, taking on a new IT director, Sean Sherwin-Smith, to implement an aggressive strategy. “We recognise that technology often carries amixed level of fear for some users and so impacts on data integrity.
Not everyone is comfortable using the latest POD capture devices, so we offer a three-phase solution that introduces users to mobile data capture on a familiar platform and migrates themto a fullmobile worker solution as the comfort factor grows,” says Sherwin-Smith.