In one respect, simplifying supply chain costs by using single source, road-based suppliers has not found much adoption by household-name retailers but that is changing and should give a fillip to the now 20-year old pallet exchange networks. This, at least, is the experience of Pall-Ex, who for the last five years have been responsible for collecting domestic, palletised  freight from selected, ambient grocery and general merchandise vendors. This is then consolidated at the network’s central hub before being delivered to Asda’s distribution centres at Lutterworth and Doncaster.

In common with other pallet exchange networks, the Pall-Ex approach is to consolidate small consignments at a central hub and refill incoming, decanted lorries with return loads to their area of origin. Typically, a network would involve a 100 or so member hauliers, many of whom would offer storage and ancillary services, like repackaging and re-labelling  and it would cover the whole country with its network members. This avoids return journeys with empty trailers and so has profound benefits for the environment and operating costs. In Asda’s case, Pall-Ex says that it has saved Asda’s suppliers over £100,000 last year and cut the distance travelled by 340,000 miles compared with previous methods.

The benefits don’t stop there. One not readily seen, perhaps,  and which other major retailers might care to consider, is reduced congestion at distribution centres. The Pall-Ex strategy has helped reduce congestion at Asda’s distribution centres and having one carrier means a single point of contact to trace freight, meaning additional cost savings and administrative reductions. Not so long ago, in the rush to establish very large regional distribution centres, one household food retailer found that too many delivery vehicles were turning up on any one day, causing chaotic, costly delays, and so had to revert to an intermediate level of warehousing to act like a valve to control flows to the DCs in a more orderly fashion.

Given the great value that pallet exchange networks bestow on the country’s environmental credentials, it is a pity that the UK government cannot or will not remove some of the impediments to UK-based hauliers. It has been suggested that a relatively simple and effective solution would be a system where UK hauliers paid no VAT on fuel for commercial vehicles. This would mean that a ‘pay as you go’ method for HGV tolls would be sustainable and that the advantage of foreign-based hauliers filling up on cheaper diesel abroad would be diminished to a more level playing field.

Another view, however, says that there should be no road charging for domestic traffic within the UK because UK road users, as a whole, are already heavily taxed and the revenues gained far outweigh any money spent by the Government on the current road infrastructure. However, to level the playing field, foreign road users could be charged along the lines of the Swiss model, so that every time they enter the UK they could be charged with the help of number plate recognition systems.

The trials under which all UK hauliers labour and the threats overhanging them are not confined to UK government policies. In one respect, for example, the European Commission seems set on shooting itself in the foot over environmental issues. The UK pallet exchange networks would like to see the continued use of the double-deck trailers within the UK. This key driver provides both suppliers and customers with a cost efficient freight service. But an EU proposal is looking to standardise the height of lorry trailers across the European Union to 4 mts. Such a move should be vigorously resisted because if permitted it would make up to 9,000 double-deckers obsolete overnight as they would break the suggested height limit. Worse than that, research suggests implementing such proposals would mean a 5.5% rise in the number of lorries on the roads, an extra 320,000 tonnes in carbon emissions and cost the haulage industry an additional £305 million at a time when cash flow is seriously constrained. And those costs do not include the inevitable extra road accidents from far more vehicle journeys.

Pallet exchange networks traditionally thrive during recessions because of their obvious cost advantages over other delivery models but that does not mean that they should be treated like some milch cow by unelected bureaucrats and addle-headed politicians.

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