With the world of road haulage and particularly the palletised freight sector changing rapidly, networks are under pressure to keep up with new demands. Kevin Buchanan, Pall-Ex’s recently appointed group managing director, explains what they must do in order to stay ahead of the game.

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Pallet networks, in comparison to some of the rest of the logistics industry, are not on too bad a footing. Certainly, they aren’t as precarious as traditional general hauliers. Over the last few years and during the recession, many such businesses saw their margins squeezed and customers dry up, leaving no funds or opportunities to expand their fleet or services.

Coming out of the recession, many hauliers have been left with a lack of drivers, and therefore a struggle to operate at a profitable capacity. This has led them to use pallet networks more and more, meaning that the likes of Pall-Ex have experienced growth in the last few years.

The downside, however, is that customers can fail to fully perceive the value in Pall-Ex and other pallet networks’ services, relative to the incredibly significant role we play in the country’s general supply chain. The fact is that, all too often, the price customers pay is too small, meaning that hauliers operating within pallet networks do not get enough out of the deal for delivering the pallets.

It is now obvious that all of the networks, including Pall-Ex, will have to increase their prices at some point if the industry is to remain viable. After all, there is no point offering dirt-cheap rates if the UK’s hauliers go bust and leave a gap in the network’s coverage. Cheap services come at a high cost to the industry and its customers.

With the right kind of profitable incentives to attract hauliers into becoming members, the pallet network model has a long life ahead of it. This is something that Pall-Ex CEO Hilary Devey is particularly keen on – helping to sustain the businesses of the independent hauliers that not only allow Pall-Ex to work, but to literally keep the country moving. She recognises their importance to the logistics industry and wants Pall-Ex to allow them to operate sustainably.

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However, the question of how to add value to pallet distribution services in order to achieve sustainability is a debated one. I think the answer, though, lies partly in the diversification of the services we offer.

Pall-Ex has already made great progress, with services like Retail Plus, which sees the delivery operative unwrap and decant pallets of products at retailers’ premises and take away the packaging. Personally, I can see the service extending further to cement Pall-Ex’s reputation as a quality service operator, rather than simply a cheap one.

I anticipate that future developments, such as automated ETA updates for palletised consignments, will play their part in improving the customer service to a level where customers recognise the extra quality and value that they are paying for, and will make the whole process profitable for all of the businesses that are involved with the transaction.

This, for me, is the crux. Pall-Ex will continue to grow, as will the other big pallet networks, but for Pall-Ex, success is not to be found in the realms of another 30 per cent. Hilary is not that greedy. She sees the greater importance in running a respected business in the sector. To achieve that, I make no apologies for obsessively focussing on quality of service.

This re-gearing of the pallet networks’ service offering might not be what many will expect – and price rises are bound to stimulate debate. However, if the service is strong enough and clients see the increased value, it could pave the way for a much stronger recovery for many more businesses.

Kevin Buchanan is groups managing director at Pall-Ex.

www.pallex.com

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