Tuesday 25th Oct 2016 - Logistics Manager

Running out of room?

Your relationship with your premises can be highly emotional. Buildings help to define companies. Moving on from a building can be hard but, like ending a relationship, you will know that it is the right thing to do.

The property decision process you will go through when you decide you need to upgrade, enlarge or move your facilities usually starts when you see your existing space reach the point of bursting at the seams. “Building too small? Get another building,” is what occurs to you first. And it is seldom something you want to do.

Move costs are notoriously high, there may be staff problems, the new landlord could be a horror – the whole process could change the outlook and character of you company. My job is to help company directors move as quickly and easily as possible.

Approach a property professional and you will find yourself called a potential tenant or occupier, or a corporate end user. At ProLogis, you are our customer.

What Richard Eldred found when he started his search is that there is more to a new building than extra size. Chairman of fast-growing The Pallet Network (TPN), Eldred was running his company from little more than 9,300sq m in various buildings in South Wigston, Leicester. He had started TPN in April 2000 with a 2,790sq m aircraft hangar in Bawtry and had subsequently moved to 4,185sq m in Rugby and then on to a 5,115sq m shed in South Wigston. Subsequent growth saw TPN take another of 3,255sq m together with ancillary space at that site.

In autumn 2003, Eldred sought a single new warehouse. Unlike many company bosses, he gave himself plenty of time. He needed all of it. TPN has seen rapid growth of its network in the past five years. It now consists of 71 UK transport firms in a partnership offering dedicated pallet delivery services covering all UK post codes. These companies offer as standard next-day and economy rates, timed book-in, nationwide tail-lift collections and deliveries, each shipment labelled and barcoded, fast POD (proof-of-delivery) service, based on scanned images, multi-pallet discount rates and 13.6m twin-deck curtain-sided trailers.

Under Eldred’s guidance, TPN was developed by a national group of independent regional transport specialists. The independence of each member ensures local service and attention to each consignment, while the national support of the network provides a centrally controlled system committed to monitoring and maintaining the achievement of outstanding service levels. It aims to be the complete solution for the delivery of palletised products, providing the opportunity to forward a single pallet to one destination or a large number of pallets to many destinations.

All can arrive the next day and can even be timed to suit customers’ needs. Central to TPN’s success is a computer system that draws on state-of-the-art Internet technology and communications. It can provide instantaneous reporting at every stage of the supply chain from receipt of order to ultimate delivery such as full proof of delivery, barcoding and on-line track and trace.

Generally, the growth of the UK pallet network market over the past ten years has been phenomenal. While traditional road hauliers have struggled with falling revenues and margins, the pallet networks have seen exponential increases in volumes. The industry is now attracting increasing interest from a range of express, parcels and logistics companies hoping to benefit from its success. With currently only a small market penetration the market looks set to continue its strong growth for many years to come.

When Eldred looked at his collection of sheds in Leicester, he realised his new unit needed to be more than 13,950sq m. He knew he was limited by location – TPN needed to be in a tight triangle in or around the M1M6M69 – but he had enough time to find a site and build his own unit.

Eldred’s first stop was Swadlincote. “We spent a lot of time pursuing that option but it didn’t happen,” he says. “We reached that decision in May last year. Then we felt we had probably run out of time to build somewhere so we had to find somewhere already built: an existing building.”

Eldred looked at buildings on Magna Park at Lutterworth in Leicestershire, including one built for Shell and one for Flextronics. However, Exel Logistics took the Shell building and DHL the other. “Looking at buildings takes up so much time,” complains Eldred. “We found that we did have time to build something on Magna Park. But I felt there’s nothing better than seeing a building that’s built and completed. There’s no uncertainty and you know exactly what you have let yourself in for.”

As Eldred’s search got underway, he found that a new building can improve efficiency for his company by being closer to transport links or to a bigger and more willing workforce, it can be situated in a better landscape and with greater amenities, so he could keep that workforce, too. Had he not been in pallets, he would have found, too, that he could fill it with improved racking or better dock leveller systems. Buildings, location, racking, dock levellers and amenity are the kinds of elements of a building that a developer includes to improve its chances of letting. In short, Eldred decided he should choose his developer as carefully as he chose his building.

He came across ProLogis in May last year. I had been aware he had been looking for a property solution and I met him through John Burbage of Burbage Realty. When I discovered he was looking elsewhere, I offered him a building at ProLogis Daventry. I showed him around ProLogis Daventry but he was adamant that Rugby best fitted TPN’s list of needs. TPN had hired an agent to carry out a search but, in the end, found the Rugby site itself through its existing relations with ProLogis.

“What I liked about ProLogis’s offer was the way they treated us,” says Eldred. “We’re a young company, we’re not the biggest in the world, our covenant was not as strong as they’d like but, in spite of that, they still struck a deal with us.”

ProLogis bought its 34-acre site at Central Park, Rugby, from Grosvenor and Wilson Bowden in 2002. Among other big occupiers on the park, Pearson has 41,478sq m and Gap a 63,250sq m unit and space to expand to 120,900sq m. As well as ProLogis Park, Wilson Bowden and Grosvenor are offering buildings on their part of the site up to 13,950sq m.

TPN took the 20,832sq m Unit 2 at Central Park in November last year, and moved there in January.

Eldred was especially aware that some networks have experienced operational problems immediately after moving. He reckoned there would be a lag between securing his new hub location and moving in, in order to give him time to plan the intricacies of how hub operations would take place there. TPN also had to make some changes to the new building, putting in a couple of extra doors.

“TPN is a very straightforward operation. It’s just drive-through. Unusually for this size of building we don’t require dock levellers. There are a lot put in that we don’t use. And there’s no racking either,” he says.

ProLogis Central Park worked well for TPN from the first night it arrived there. Eldred says he has already seen substantial operational and quality enhancements, thanks to TPN’s move to Rugby – and almost no teething difficulties. He says: “This facility at Rugby has exceeded TPN and its members’ wildest expectations. We simply could not have found a better building and location.”

Among its benefits, the new hub can simultaneously accommodate 14 trunk vehicles being unloaded and loaded, meaning they are back on the road again as quickly as possible. Eldred concludes: “Ultimately, TPN members will judge the operational performance of the hub to a great extent according to the turnaround of vehicles and the careful manner in which we handle their freight. Both of these issues have been massively improved by the move.” n

Kate Bedson is vice president at ProLogis Developments.

Tel: 0121 224 8700.