Pallet distribution services are multiplying rapidly in continental Europe with UK pallet specialists competing against the Continent’s large groupage and full load operators to build market share. Malory Davies reports.
The dramatic growth experienced by the pallet networks in the UK only a few years ago has slowed more recently. The recession obviously had a big impact on traffic volumes, but also, the domestic market has matured.
And, while there is still growth in the domestic market, many companies are now looking to continental markets to drive growth in the future.
Palletways has been a leader in developing networks on the Continent. It now has 300 depots and ten hub operations, through which it provides collection and distribution services across 11 European countries. Last year it opened a depot in the Canary Islands.
But Pall-Ex is growing fast while both UPN and Palletforce have been developing continental operations.
Anand Assi, project director at Pall-Ex, says: “The world is shrinking. As new geographical markets are continuing to open up and offer UK-based companies more competitive rates, the demand for distribution networks that operate across multiple territories is increasing.
“With companies being able to source products from cheaper markets, it is important that the logistics costs do not negate the original savings. UK-based pallet networks should be bold and seize the opportunity to take their existing products and expand into these new markets. The UK leads the way in Europe with its pallet offering. This expertise offers up a key opportunity to be able to offer a more complete service to existing customers, as well as sourcing new ones across the Continent.
“In addition to this, the current economic situation across parts of mainland Europe is, in many ways, an opportunity that can help to facilitate growth in the long term. Businesses across the Continent are looking to reduce supply chain costs, and pallet networks have proven to be a highly cost-effective solution. Taking the efficient UK model and introducing it to other countries will allow business owners operating in these localities to run leaner and more profitable businesses.”
In 2011, Pall-Ex launched in Romania. Networks are also in place in Italy, Iberia and now France. Assi points out that these will soon be joined by Poland to help create a truly European-wide palletised freight network.
And, he says: “Currently we are looking for a principal national partner to work with in Turkey. A pallet network here would operate as a gateway between mainland Europe and Asia, offering even greater opportunity for expansion.
Palletforce has joined an alliance of the Continent’s leading pallet networks, Allnet (Alliance of Networks). Other members include: Palet System in France, One Express in Italy and Online Systemlogistik in Germany.
Last year, Allnet distributed nine million pallets, and with Palletforce as its UK partner, the European networks will have 18 central hubs and 314 delivery centres covering 32 countries.
Palletforce launched its first direct Italy service late last year after becoming partners with fellow Allnet member One Express.
The network can call on 17,000 vehicles and 28,000 employees. It delivers some 36,000 pallets every day.
“Pooling our resources with three of Europe’s leading pallet networks creates a strong, unified, quality pan-European service,” says Michael Conroy, chief executive of Palletforce.
“Our Allnet partners are all industry leaders within their own countries and by aligning ourselves with networks with the same ethos of consistent high quality service we are fulfilling our European growth strategy.
“By enhancing our European offering and coverage across the Continent we are further strengthening Palletforce’s UK network and supporting our members to expand their services.”
UPN has launched a range of European palletised freight services, which will link 26 European countries and aim to build the company’s platform for its next stage of growth.
Instant pricing
The launch includes a new web-based portal which links all the depots in real-time and provides instant pricing, quotes and online ordering.
All 26 countries will be served from UPN’s Fradley Park hub in Lichfield.
“We have been researching the European market for the last couple of years, before deciding what we needed to do for our depots and our customers to fundamentally improve their customer experience,” said Andrew Spencer, UPN director.
The launch also saw the company’s IT department build a specific back end system that can collate large amounts of data and calculate detailed quotes in seconds, enabling UPN to deliver significant time savings and set new price points for European freight.
While the continental logistics market might have developed differently to the UK, there are still plenty of major companies competing for pallet traffic. French group Geodis has a large continental network and offers a range of services from groupage to full load transport as well as added value supply chain services.
In the UK, Geodis owns the Fortec pallet network, and Neil Hodgson, managing director of Fortec points out: “Our licensees have easy access to the Geodis network, which enables them to offer a one stop shop.”
Norbert Dentressangle has been expanding its European pallet operations rapidly over the past few years, according to Ray McCord, commercial director at Norbert Dentressangle Transport Services.
It has been building on the domestic networks that it acquired as part of the Christian Salvesen acquisition and linking them with its existing cross-border services. It has domestic networks in Portugal, Spain, France, the Netherlands and Belgium, as well as the UK. And it works with partners in Germany, Italy and Poland to extend its pan-European network.
McCord points out that Dentressangle can not only offer a pallet delivery service, it can offer a full range of groupage, logistics and freight forwarding services to customers. In addition, he says, the whole network is ADR compliant enabling it to serve sectors of the market not covered by other carriers.
The European Pallet Distribution Network is branded Red Europe. Earlier this year it launched a daily service for Germany. Having established the network, Dentressangle is now focused on building volumes, says McCord.
Potential
DSV has also seen the potential in this market. Earlier this year DSV Road launched a daily service covering 32 European countries via a hub in Germany.
The service, DSV Daily Pallet, operates in addition to the existing direct routes using the hub at Schwieberdingen near Stuttgart which will operate 24 hours a day, seven days a week. René Falch Olesen, DSV Road managing director, said it would increase frequency and improve transit times. “Every country will have a daily link with every other country in the network.
“We have seen an enormous growth in groupage loads as new purchasing trends such as reduced inventory and online shopping have changed demand patterns. So, after close consultation with our customers, we have designed the Daily Pallet service.”
While continental developments have been getting most of the headlines, Hodgson points out that Fortec has been seeing good growth in the UK.
“The pallet market is developing strongly which is not surprising given that the latest figures show the UK manufacturing sector is growing and high street sales are up. That’s reflected in what we’re seeing. We find that our network is a good barometer of economic activity and output. We’ve been exceptionally busy over the summer which reflects what is going on in the wider economy.
“In terms of what’s to come, it is still relatively early days in pallet networks as a sector. In time we’ll extend far beyond what we’re doing now.
“There are lots of companies which haven’t yet considered pallet networks as an alternative to their current method of delivery. The future looks promising from where I’m standing.”
Nigel Parkes, managing director of Pallet-Track, argues that future growth will be in different directions – a more bespoke service to suit specific customer requirement. “We have become a nation of importers and distributors, online business and home delivery are areas where pallet distribution can develop.”
A key driver in the development of domestic services will be the growth of the internet, says Parkes. “Internet and flexible delivery times – staying ahead of competitors, using economies of scale for growth and increased production can bring costs down, and therefore increase profit per pallet.”
Parallels
Neil Hodgson sees parallels with the parcels business. “I believe the drivers behind development will be similar to those within the parcel networks. They focused on a good and reliable service backed up by good and customer focused IT – service, systems and infrastructure – a winning formula.
“And perhaps that is one of the reasons why companies have yet to use pallet networks, as historically their IT systems weren’t as good as most parcel networks. I believe this is changing though.”
And he sees scope for the development of new added value services in the sector. “As we target sectors which traditionally haven’t used pallet networks before, we always consider what added value we can bring to that sector to enable us to compete. In many cases it convinces companies to try us out so we can prove our capabilities.”
Parkes agrees: “Yes – full trailer loads and home delivery, dividing the business into key operational zones such as customer collection points – central storage – regional warehousing and drop and go service areas.”
Assi sees opportunities to develop into specific customer markets. “The adaption of services that are tailored to individual industries is a strategy that will diversify the offering of a pallet network. Identifying areas of difficulty for specific markets can give networks the platform to create new and exciting service.
“The UK pallet market is beginning to mature, so now is the time for business leaders to look for new opportunities, both at home and abroad,” he says.
New commercial director for Fortec
Marcus Fischer has been appointed commercial director at Fortec, where he will work closely with the pallet network’s three regional commercial managers.
Lin Simpson has been given the newly-created role of commercial manager at the Fortec Distribution Network, where she will work to develop the company’s corporate division to achieve its future objectives.
Two new members for Palletforce
Lockwood Haulage and Nelson Distribution have both joined the Palletforce network, replacing East Midlands based H Beardsley. Nelson Distribution was established in 1949 and now provides warehousing and transport services for paper, packaging, heating and construction from its five-acre site. It also delivers Just In Time on a daily basis to international automotive companies and makes daily deliveries to major retailers.
Ambergate based Lockwood was founded in the 1960s and now operates a fleet of 75 modern trucks ranging from 12 tonne curtain-sided vehicles to 44 tonne articulated units.
– Simpson Bros, a founder member of Palletforce, has invested more than £2m in its fleet so far this year. The Chester-Le-Street based firm has taken delivery of 22 new Scanias fitted with telematics and Active Predictive cruise control technology.
– And Corby-based RCS Logistics added 14 new single-deck SDC trailers to its fleet in May, just a few months after investing in six new Mercedes Sprinter vans.
Contract renewal for Palletways
Palletways Birmingham has renewed its contract with Simpson Strong-Tie, the supplier of structural building products. Simpson Strong-Tie, which is based in Tamworth, has used Palletways Birmingham as their sole pallet delivery provider since 2007.
– St Neots-based H&M Distribution has invested £250,000 in a purpose built depot, which will create jobs and provide greater distribution support to local businesses.
– Welshpool-based logistics company Speed Welshpool is investing £150,000 in a purpose built depot on a 3.5 acre brown field site at Buttington Quarry.
– Palletways member Jack Richards & Son is distributing the “Big Green Egg” cookers for Alfresco Concepts. Richards has leased 12,000 sq ft of warehouse space to Alfresco Concepts, which will provide a bespoke assembly line for the “Big Green Egg” cooker. This will improve efficiency by housing the entire manufacturing and distribution process on a single site.
£2m expansion plan for DBL
Sheffield-based DBL Logistics has invested in a 33,500 sq ft warehouse and office building on Tinsley Park Road. The company, a member of United Pallet Network has seen its turnover increase to more than £3m a year and the development, is expanding capacity from 1,500 pallets space to around 6,000. Phase two will see a further 16,500 sq ft added by May 2014 and will increase DBL Logistics pallets space even further to around 9,000.
Welch joins board
Palletline has appointed Jim Welch, managing director of Welch’s Transport, to its board. Cambridge based Welch’s joined Palletline in 2010. Welch said: “Palletline’s member led culture is ideal for us – it means everyone has a significant influence on the direction of the network and can work together to enhance the service for the benefit of customers and members alike.”
– Palletline Logistics (Midlands) Ltd, a separate company from Palletline plc which handled deliveries in the Birmingham area, went into administration in July. Two other network members, Taskforce Movement and Storage and Panic Transport (Contracts) have taken some of the capacity, while a new member, Global Logistics Central, has taken on the rest.
CBE for Hilary
Pall-Ex founder and chief executive officer Hilary Devey, was awarded a CBE as part of The Queen’s Birthday Honours List, in recognition of her work for both the logistics sector and charity.
Devey sold her house and car in 1996 to fund her business idea for moving small consignments of freight – the business idea now known as Pall-Ex. “It is wonderful to receive such recognition, but this should be less about me, and more about the charities that I support and the amazing transport sector in which I am privileged to work,” said Devey.
– B Taylor & Sons, the Nottinghamshire-based haulage business, has begun covering part of the NG postcode area for Pall-Ex. The company was established in 1974 by Barry Taylor and is now run by his son Alan. It has a fleet of over 180 vehicles and some 250 trailers.
Pall-Ex has recruited MCL Logistics, based at Newport in South Wales, to cover the whole of the NP and part of the GL postcode areas.
