Eight pallet exchange networks cover the whole UK and much of Europe and since their advent in the early 1990s have bequeathed an environmentally efficient road transportation of goods, costeffective freight for single pallet loads and a certain rejuvenation of struggling hauliers who often laboured under empty return journeys. It would be perverse, therefore, if this splendid achievement was harmed by rising pressures on margins from red tape, driver recruitment barriers and other Government-inspired cost rises.
Nigel Parkes, MD of Pallet-Track, has warned several times against slim margins where rising cost pressures are squeezing margins hard. He says that while it is true that fuel costs have fallen markedly, the cost of everything else, transport-related, has risen. These include the insurance tax, up from 6% to 9.5%, the introduction of Euro 6 lorries which means vehicle costs of a 44 tonne truck have risen between £8,000 and £12,000, and the introduction of the auto enrolment (pension scheme). The highest of these rises is probably driver wages, spurred on by a serious, partly Governmentinspired, driver shortage, which in some cases have rocketed 25% over the last 15 months.
Mr Parkes cites one transport company where a substantial fall in fuel costs last year was outweighed by other cost rises. He has, therefore, called on other pallet network companies to follow his company’s lead by raising rates. Are Mr Parke’s fears, however, shared by the rest of the Pallet exchange networks? It’s hard to say without knowing their profitability rates. Although the industry suffered one casualty last year (UK Pallets), David Brown, MD of United Pallet Network, does not believe its disappearance is a reflection on the market as a whole. He stresses the importance of investing in one’s network and its members, adding: “The pallet network concept is without doubt currently one of the fastest growing transport and logistics sectors in the UK.”
Other pallet networks support Mr Brown’s views. Palletforce, for example, have announced plans to open a new 620,000 ft2 superhub at its Staffordshire HQ, the biggest of its kind in Europe, able to process 30,000 pallets per night for Europewide distribution. A second 240,000 ft2 facility is expected to start business early next year. TPN reflects a similar optimism, saying: “TPN has never been stronger or better at what is does.” Pallet growth has been strong and “we are in an excellent place to anticipate the challenges and growth predicted for 2016,” says MD, Mark Duggan. Meanwhile, other players, like Pall- Ex, Fortec and Palletways, continue to forge ahead in their European expansion through alliances.
So what are we to make of these conflicting experiences? There is no doubt that the pallet exchange network concept is a robust one and can only continue to thrive but that does not mean there are no challenges ahead, like a possible economic downturn or volatile fuel prices. For an industry, however, that has done so much to improve the economics of transport and the environment it surely deserves less discouraging Government practices and more encouragement.