Under pressure

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The pallet freight network sector has arguably been the success story of the noughties. Now there are nine networks battling it out for market share. Two new networks sprung up earlier this year only to go under very quickly, making one fact clear – the market is full. But the market continues to be buoyant, with double digit growth rates still achieved by the major networks.

Despite competitive pressures, confidence remains high across the larger networks.

Graeme Wilson, commercial director of UK Pallets, says: “Changes in the retail landscape coupled with the pressures facing the traditional logistics players are making companies re-evaluate their transport solutions.”

As competition increases companies need to be able to respond quicker to their customers’ needs and ship smaller and smaller consignments over a shorter period of time, while still being cost effective.

Although the market isn’t enjoying the same growth rates as in previous years, volume doesn’t seem to have dipped at all. In fact, networks such as Palletline have had to come up with new ways of dealing with the growth.

Managing director Kevin Buchanan says it has increased the amount of volume it moves during the day from 14 per cent to 30 per cent. Generally networks prefer to operate at night when there’s less congestion. But by moving virtually no economy freight at night, it can prioritise the more time-sensitive consignments.

Fortec has had a successful year with growth running at a healthy 20 per cent. September was a particularly lucrative month with volumes showing an increase of around 22 per cent compared to the same period last year. Mick Dewhurst, regional business relationship manager, says overall volume is up 30 per cent from last year and the network is “on track for its best ever year”.

Dewhurst says one of the reasons for the growth is its new hub. The company has invested in a 140,000 sq ft hub – three times the size of its previous site. “We were quite site bound in the old location.”

There is some variation in terms of service offering, where some networks offer quarter pallets, and others, such as Nightfreight, focus on certain product types like hazardous or awkward sizes and shapes. But generally, all the networks offer fairly similar delivery options, which ultimately forces prices down.

But for the less volume hungry networks, competitive prices aren’t really a concern. Buchanan says: “People are tempted away by cheaper prices but always end up coming back.”

Nevertheless, networks must offer more if they want to stay competitive. “You can only do cheap for so long. You have to have something else to offer,” says Buchanan.

Craig Hibbert, managing director of Palletways, says: “Key to the growth of any network is the quality of its members as they are the lifeblood of any operation. And key to the quality of the members is the support they receive from their network.”

Although all the major networks are predicting steady growth for the coming years, road transport is certain to go through some rapid changes. Transport companies are already under financial pressures from rising fuel costs, and this is likely to worsen. “There’ll be more demand than capacity as it becomes more expensive for transport companies,” predicts Buchanan.

Pall-Ex founder and managing director Hilary Devey, reckons restrictive legislation is likely to become heavier. She says 2008 will be a tough year, with the economy likely to suffer a downturn. “If manufacturers and retailers aren’t making and selling products, the distributors further down the supply chain, will be directly affected.”

Information technology is playing an increasingly important role with pallet networks, as operators look at ways of bettering their offering and staying competitive. With palletised distribution becoming more streamlined, competition is sure to flare up among networks to offer added value services to members, and their customers.

Alan Cooke, business development director of Palletforce, says if a network is serious about keeping ahead, it must devote considerable resources into extending the traditional parameters of pallet trunking. “End users are now paying particular attention to which networks are actively investing in new facilities and technology,” he says.

Track and trace is becoming a popular means of adding value, as the technology that has long revolutionised parcel delivery is adapted for palletised distribution. It provides an ideal means of maximising confidence that goods are going exactly where they should, as well as providing instant proof of delivery with electronic signature capture.

Hilary Devey says information technology is an ideal mechanism which can keep services at an optimum level. “Anybody can deliver from A to B,” she says. The difficulty lies in being able to provide real time proof of delivery. For Pall-Ex information technology is its second biggest expenditure – the first being its purpose-built hub.

Its wholly-owned IT services subsidiary, Pall-IT, provides information technology and communications services and support for members from initial pre-membership IT installation and training to help desk, hardware and software maintenance.

Its point of delivery information system combines barcode scanning, web-based real-time data and provides scanned documentation within 24 hours.

Devey says Pall-Ex has acquired an extra 12 acres of land adjacent to its existing site. This will soon be home to a further 150,000 sq ft of hub, which will be built over the next 18 months.

Palletways is adding value with Stargate Logistics, its consignment stockholding facility situated adjacent to its UK hubs in Lichfield and Edinburgh. This means customers can store products on site to place orders later than ever before for next day deliveries to multiple locations across the UK.

Stargate has increased its capacity to accommodate demand. Simpson Strong Tie, connectors and structural systems specialist for the construction industry, uses the service in Edinburgh to better its competitiveness north of the border.

Palletforce has invested in its Lichfield hub with an advanced check weighing system for increased accuracy and safety for pallet loading.

European and international traffic is making up a bigger proportion of pallet traffic, as network capabilities expand and demand for such services increases. In Europe the methods of moving freight are very different to those used in the UK. It’s a difficult market to tap into, and finding the right partner is crucial.

Expansion into Europe seems to be the development process next in line for pallet networks. “In an increasingly global economy, many end users will need to transport goods to the continent, and so European coverage is a service that can separate a forward-thinking network from a complacent one,” says Cooke.

UK Pallets caters for daily and twice weekly departures to France, Germany, Benelux, Greece, Spain, Poland and the Czech Republic. “As worldwide trade becomes easier and more accessible we definitely see the growth continuing and it is certainly an area we will concentrate on,” says commercial director Graeme Wilson.


A few years ago Palletways set its sights on creating the first pan-European network. This is fast becoming a reality, as it remains the only company that can service such a wide region without the need for sub-contractors. Its hub facilities span across The Netherlands, Belgium, France, Italy, and Spain.

Its daily cross-channel delivery service between the UK and mainland Europe, has opened up the way for deliveries to the Benelux countries, Denmark, France, Germany and Switzerland. These networks are joined up via its pan-European information technology platform.

Fortec is well established in Europe because of its links with French parent company Geodis. Its international service has increased from six to 24 countries.

Pall-Ex has opened Pall-Ex Italia, its service to Italy. Devey says Italy’s demographics are similar to those of the UK, making it an ideal partner. The success of pallet networks doesn’t depend solely on what value added services a network can provide. “They’re like the icing on the cake,” says Mick Dewhurst, “but you’ve got to have the cake itself as it’s the basis for any network.”

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