The revolution pallet exchange networks have wrought for small pallet consignments has done much to cut industry’s costs and reduce its carbon print yet its reward is ever-rising Government burdens. Take, for example, the “green” achievements of the UPN Group.
Since relocating its central hub to Fradley Park it has cut road miles travelled across its network by 180,000 miles a year, while its new paperless consignment system has stripped 500,000 A4 sheets out of the system every year. Its haulier members are also implementing new Eco-Dek trailers to improve efficiency further as rising fuel prices tighten their grip. Consequently, UPN manages the highest fill rates in its sector of over 90%. Before the introduction of the pallet exchange network concept 20 years ago many lorries would have made their return journey empty or less than half filled.
Palletline, the first pallet network, was also the first network to introduce double-deck trailers and was the first to achieve the ISO 9001 environmental standard. Both companies use LPG to power their forklifts which is cleaner than diesel and Palletline is seriously considering the introduction of an electric forklift fleet, which if implemented would be the first pallet network to do so. At some point it believes hydrogen forklifts will be viable but “currently the product has not yet been sufficiently developed for us to be comfortable with performance,” says the company.
In return for doing so much to make transport more efficient, Government loads ever-more cost increases through higher fuel bills, red tape, legislation and under-investment in the road network. Member companies may now use fuel escalators to buffer them against rising fuel costs but they must still contend with frustration caused by red tape and demands of new legislation. UPN also feels that its members face increased competition from abroad where it is felt there is not a level playing field. In other words, the red tape that adds cost to their business many not apply in the same way to overseas competitors, who also pay less for fuel. Some incentives for UK drivers or disincentives for foreign operators would help redress the imbalance.
Many members also feel that long-term investment in road infrastructure would help, given the awful traffic issues faced daily. On tax incentives, UPN feels a financial boost from central government is long overdue. Over-taxation and over-legislation, says Palletline, are significant factors that the industry has had to endure over the last 20 years, “yet perversely it is still ridiculously easy for a company to cease trading one day and set up under a new name the next day, often leaving creditors unpaid,” adds Palletline. “This is an unfair practice which disadvantages genuine, hard-working hauliers who have made substantial investments in their infrastructure, facilities and people but we still have to compete with ‘fly-by-night’ organisations who drive down the market price and facilitate a perpetual circle of insolvency.”
This does not mean that the number of pallet network businesses will decline this year, believes UPN and Palletline, because their business model drives customers during a recession towards the most efficient and least wasteful method of distribution. But it does mean that regional hauliers who make up the networks find it increasingly difficult to stay in business and remain profitable. On this basis the risk is that a pallet network may cease to have full national coverage for the deliveries. Some of the smaller networks already share members in outlying areas.
Yet despite Government hindrances, the pallet exchange networks look quietly confident for continuing growth. Members of the Association of Pallet Networks (APN) collectively moved just under 11 million pallets during 2009 and just under 13 million in 2010. Factor in those palletised distribution networks which are not members of APN and the sector is estimated to move over 20 million pallets a year. Growth across the industry in 2011, however, is less certain believes Palletline, perhaps no more than 5%. Much more certain, however, is that long-overdue Government help will not come any time soon, if at all.
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