Market-leading palletised freight network Palletline’s move into a new £20 million central hub in October last year set a new gold standard in quality and sophistication for UK pallet networks. Occupying a 15-acre site in Solihull, the new hub’s unique operational systems enable Palletline to process over 25,000 pallets in 24 hours.
Putting safety first, the new hub was the palletised freight industry’s very first drive-through, side-load operation, achieving total depedestrianisation. This move successfully revolutionised the operational model for pallet hubs, enabling Palletline to deliver unparalleled levels of quality, performance and safety, coupled with technological advancements to meet developing customer expectations.
The new hub also facilitated a step change in quality control and IT development, yet Palletline didn’t stop there. Since 2008, the network has continued to innovate and grow, implementing technological ‘firsts’ including legally compliant digital signature capture and freight scanning processes to further enhance services to customers across the UK.
Equipped with these new and market leading IT solutions for total freight visibility, Palletline’s technology has taken on the value and scope of a more expensive 3PL solution, offering a realistic alternative to less flexible cost plus contracts. In short, the new, technologically enhanced network can provide all the same services, yet on a far more economical basis. Kevin Buchanan, Palletline’s Managing Director, spoke to Warehouse & Logistics News.
Warehouse & Logistics News – When was Palletline set up and who by? Are they still involved? How many members are there?
Palletline began 17 years ago when six haulage companies realised that each moving small consignments around was not efficient and agreed to work together to cover the UK. It became formalised into a limited company. Among the founders Ken Hackling, owner of John Hackling (Transport) of Gloucestershire and Bob Russett, owner of Palletline Logistics in Birmingham, are still around. We have a stable network with many longstanding members including Expect Distribution, formerly Pennine Parcels, 2007 Haulier of the Year. We have 75 member depots, more joining in the next few months, and could go up to an optimum 85.
WLN – Do your members cover the whole UK? Do you cover Ireland and Europe?
We cover the whole UK, every postcode every day, plus Ireland and continental Europe utilising Members’ international services.
WLN – How does Palletline’s ownership structure differ from other pallet networks?
Only Palletline members can own shares, from a minimum 2,000 bought on joining to a maximum 9.75%. The members retain the profits, not the hub. The members own the hub and the infrastructure: each member depot is – we can say very proudly – independently owned.
WLN – How long have you been MD?
I replaced Glyn Jones as MD in May 2007, after five months as head of commercial activities.
WLN – Who else is in the management team?
The other executive directors are Ruth Moor, the Finance Director, who has been here over six years and Mark Pulford, Operations Director, who joined in June 2007. We sit on the management board with a team of member directors. The senior management team reports to the executive directors and includes general managers for the key functions – commercial, operations, Information Technology and management accounting.
WLN – What is the state of play of UK pallet networks?
It’s an unusual situation: the industry is struggling with growth. In recessions, pallet networks normally do well but this came on so quickly. Everyone’s business was booming, and people were planning for growth and building bigger hubs but with volume downturns reaching 20% I think some UK networks will find it hard to survive. If we had a smaller base level of freight, we’d be in difficulties too.
WLN – How is Palletline doing?
We currently have a 7.2% downturn (as of January 2009), which is manageable, and will still end up ahead of budget this year. It is hard to see how the present number of networks can continue or how long many companies can endure: it would not surprise me to see fallout and mergers of small networks in the next 6-12 months.
The new site was an NYK Logistics-operated distribution centre for Jaguar Land Rover. We had already done a significant amount of work in designing the most efficient hub model and when we found this site, it was almost perfect as it was. We have made minor refurbishments to the building including putting doors at both ends, and creating a straight entry and exit for tipping lanes, so freight is directly unloaded into members’ bays. Vehicles move through the hub one-way, unloading in the hub and reloading under canopies. This delivers continuous unloading and reloading, achieving greater safety and efficiency than other networks.
The total site covers 15 acres, with pallet handling occupying 230,000 square feet including 50,000 sq ft of canopy loading areas. In addition we have dedicated 40,000 sq ft to quality control, which checks every vehicle in and out and scans every pallet coming through. It’s not Britain’s largest hub, but it is certainly the most efficient.
WLN – How do you check vehicles?
We photograph vehicles on each side, using advanced digital technology to scan and record the freight’s condition, and use purpose-built long range scanning to capture the bar code labels. This year, we have invested over £500,000 in new cutting edge scanning technology.
WLN – When did you start planning the new hub?
The hub was one of my first challenges: I joined in May 2007 and found the new premises by July. Our previous hub was in Tyburn Road, Birmingham: we moved in October 2008.
WLN – Who put up the money?
We acquired the site through retained profits, sales proceeds from the old site and some bank equity. We have been able to achieve only a small increase in unit handling charges to members because of our strong historical financial performance: we had been planning this for some time, hence no need for a sharp rise.
WLN – What level of pallet throughput are you running at?
Our very first full freight sortation last October was achieved one hour earlier than at our original hub, despite procedural changes! We’re quite cautious as a company but it’s turned out even more efficient than we planned. We currently process over 200 vehicles every 24 hours, despite the downturn in freight volumes.
WLN – The hub features the industry’s first purpose-built on-site quality control centre. What does that entail?
We have six scanning lanes with purpose-built gantries. Operators stand level with the pallets and check the scan totals against the inbound manifests. Since implementation of our new scanning technology, which incorporates high resolution digital image capture, it takes just 3-5 minutes to check each vehicle in and out. We scan 80 vehicles per hour, which we believe is better than other networks. We have invested £250,000 in the new checking area: not just technology, we have also segregated the staff duties, training them as specialists. Forklift drivers start on unloading and graduate to loading. We use full time people, not agency. We re-check staff every six months and are the only pallet network with the new ISO Health & Safety Standard 0HSAS18001, which we’ve had since December, and the QA Standard ISO 9001, which we’ve had since August 2007. By the end of this year we expect to have accreditation to Environmental Management Standard ISO 14001; another example of Palletline leading the way as the first pallet network to achieve all three.
Freight must be secured to the pallet, be dry, and be in a sound condition, labelled and well wrapped. We enforce compliance rigorously. We have a remediation area in the QC building where we fix pallets so freight can travel on. If there is a recorded defect we produce incident reports – including photographs captured as part of the scanning process – for members to raise with their client, ensuring future compliance. Incidents tend to be rare.
WLN – What IT systems have you put in place to give members visibility of ‘their’ freight?
We have our own in-house web-based system PERACTO, developed by VIGO, which tracks pallets throughout the handling process; from collection depot through to the end delivery. Members can provide their Customers with online access to proof of delivery information, allowing them to benefit from the visibility available. We also have a virtual hub and bay system, showing the different freight coming into each bay which enables our members to accurately forecast volumes and ensure that consignments meet their service level.
WLN – Proof of Delivery starts and ends with a signature, paper or otherwise. How close is Palletline to being paperless?
We launched digital signature capture in July 2008, and went paperless in May 2009. We are ahead of schedule, the first to have this technology fully operational across the UK and into Ireland.
WLN – How ‘green’ is the new hub?
Pallet networks themselves are a very green concept, saving road miles and vehicles. At the hub we don’t heat the warehouse, we recycle the maximum amount of waste, use Hyster CNG-powered forklifts and all of our staff are encouraged to be environmentally aware. We are currently investigating a new high efficiency lighting system for our Hub building, forecast to reduce our lighting energy costs by up to 70%. This is a substantial capital investment, however Palletline is always looking to innovate and lead the field – hence our pending accreditation to ISO 14001.
WLN – How does the new hub compare with other networks’ hubs in the UK and in Europe?
We achieve the highest known performance, moving 25 pallets per hour per man versus 19-20 normally. We restrict FLTs to 10 km/hr: the process is outstanding, not the pace. We’re the only hub where vehicles drive through to tip freight into the bays and reload under canopies, minimising FLT journeys and moving more pallets per hour.
WLN – Have you recruited any new people to run the new central hub? What other key appointments have you made?
The new hub enabled us to expand, and now we’re exploiting it. We’re actually using less people, more efficiently. At the end of 2008 we appointed Nikki Dawson as General Manager for Commercial Development, handling member relations, recruitment, marketing and the broader commercial strategy.
WLN – Britain’s cities are taking steps to reduce emission and congestion problems, putting pressure on supply chains. How does your City 24 initiative help address this?
City24 addresses city centres’ problems with daytime freight deliveries and extends the principle of pallet networks and shared vehicles. We work with city councils to zone areas for night deliveries, and set up consolidation centres.
WLN – Your East Anglian member company Foulgers was carrying out a City 24 consolidation centre ‘pilot’ scheme in Norwich. How did that go?
Norwich was been a pilot scheme, with the town’s shopping centres using the consolidation centre and our vehicles using bus lanes. We’ve been developing the concept, so it’s not been mandatory for shops to use it hence the full efficiencies haven’t been seen, but we believe it will work. It’s certainly much easier for councils to set up night time Delivery Zoning and call in the networks than go to tender for consolidation centres.
WLN – What are your plans for introducing similar schemes elsewhere?
We are looking to roll the idea out to other councils. We will be campaigning to all local councils in the next few months and forming a working party.
WLN – How do you cover London? Will you be applying the City 24 principles there?
We have an extensive member network there, with 10 member depots inside the M25 and Palletline London, a new consolidation centre on Perivale Industrial Park to support members, so by consolidating there, we already apply City 24 principles.
For Palletline London, we have invested over half a million pounds in Renault City24 vehicles with special body size and chassis, running on clean diesel with a maximum payload and number of drops per vehicle. This bespoke fleet is designed to meet the requirements of the urban environment, enhancing both capacity and efficiency in and around the capital.
WLN – You’ve recently brought in a number of new Member Companies this year; what do they bring to the network?
No fewer than five companies have joined the Palletline community in 2009. These include ARR Craib, covering the Grampian and Tayside region and making their first venture in pallet networks and DB Schenker, leading European freight forwarders, utilising their expertise to enhance our services on the eastern side of Greater London. The other three are Garn Transport of Spalding, JA Leach Transport of Rochdale, and most recently Glasgow-based Gordon Leslie Distribution – all have left other networks who couldn’t offer our benefits. They show our diversity: all members share the same quality ethos.
WLN – Are you looking for more members?
We’re always interested in adding quality members to our network. We look for financial security, operational competence and commercial savvy. They need to share our co-operative, quality ethos. We turn away many companies who might be good enough for other networks, but not for Palletline.
WLN – What are the benefits of belonging to Palletline as opposed to A.N.Other Network?
It’s an impressive list! Members’ ownership means services cost less; there is more value added in IT and sales support; development of new commercial offerings isn’t driven by central profits.
WLN – What specific pallet services do you offer as a network? What service innovations have you introduced recently?
We offer next day service with timed delivery, and 48-hour and 72-hour economy. Our main service innovations are rigidly enforced levels of quality control, the best track and trace system with digital signature capture, giving real time and accurate consignment information; our new strategic product offering is City24, which is something no other pallet network is currently offering.
We give members sales training and marketing support. We will be emphasising our brand’s strength over the next few years, making it obvious to members’ clients that not all pallet networks are the same. If you can’t take chances with freight come to Palletline: it’s cheaper in the end to pay to have it done right.
WLN – What externally recognised quality accreditations do you have?
The hub is accredited to ISO9001 and OHSAS18001, and we expect to achieve ISO 14001 by the end of this year. In 2008 we started independent member audits through the FTA and we’ve repeated these in 2009. It takes 2-4 hours per depot and they have 24 hours’ notice. There are certain things we need to see: we also inspect random consignments. The FTA report back to our network services who put action plans in place if needed. We had high compliance last year and again this year, despite raising the bar again.
WLN – You’re at the top end in terms of quality and are leading by example. Is there still room for ‘cheap and cheerful’ palletised freight operations? How important is price in the current environment?
Unless something fundamental changes, the way the others operate isn’t feasible over the longer term. The networks must change or expect to shrink. It’s about substantiation: show the benefit and you can justify the price.
WLN – You introduced a new livery for members’ vehicles in 2009, which won an industry award. What’s the story there?
Our members are rebranding as they replace vehicles over the next three years, 6,000 in total. The rebrand was both practical, for better visibility, and brand positioning. We needed the design to evolve but maintain the red “swoosh,” the moving lines symbolise the multi-directional movement of Members’ freight. The revised strapline, ‘The people driving palletised distribution,’ confirms we are a people organisation, making changes for long-term sustainability. It’s on our vehicles, stationery, buildings, new marketing material and on our web site. We were proud to achieve recognition as Motor Transport’s ‘Livery of the Year’ for 2009.
WLN – Talking of people, what are you doing to bring staff forward?
We’ve launched the Palletline Academy, training our people to the best level with continuous learning programmes. The Academy isn’t a single place, it’s virtual, a cultural change putting training at the centre of our business.
WLN – What external factors do you see affecting UK pallet networks over the next year or so?
We discussed overcapacity and other smaller networks with new, big hubs which they might struggle to afford in the downturn. Congestion is still important despite lower freight volumes and high street movements below 2008. UK and EU legislation puts pressure on costs and with driver Certificates of Professional Competence (CPCs) coming in, costs will continue rising. When we come out of the recession, there will be a lack of capacity and a market readjustment to realistic price levels.
WLN – Finally, where do you see Palletline going?
We see Palletline continuing to lead the pallet networks’ evolution. IT improvements are already enabling Palletline Members and their customers to track the whole process and exchange freight on a virtual basis: networks that can’t keep up are susceptible to failure. We’ll go on offering a broader portfolio of services covering all aspects of pallet distribution and continue to be the industry innovators.
Palletline Plc Tel: 0121 767 6870 www.palletline.co.uk