Gearing up to meet challenges ahead
April 1st 2004

Providing quick, cost effective delivery of small palletised consignments, palletised networks look set for further expansion. However, according to PalletFORCE changes are likely for both operators and users Palletised networks have become a major success story in road haulage over the last decade. The current pallet network market handles over 24 million pallets annually and is set to expand still further thanks to the wide range of benefits it offers for fast, cost-effective distribution. Yet a number of challenges lie ahead indicating that changes are likely for both operators and users of pallet networks. Increasing competition, declining end user rates, a continuing shortage of drivers, forthcoming legislation and the drive to improve cost efficiencies are all key issues for operators according to PalletFORCE, one of the industrys fastest-growing distribution networks, and will have a knock-on effect for logistics and warehouse managers. Mick Scarlett, PalletFORCE chief executive comments: The industry has enjoyed a period of tremendous growth and there is still plenty of potential but it will be those operators who react swiftly to the current challenges that will reap the rewards of the opportunities on offer and continue to meet the needs of the marketplace. Palletised distribution was introduced during the 1990s, responding to market demand for a cost-effective solution to the quick delivery of small palletised consignments. Adapting a system previously set up by parcel carriers, the new pallet networks operated from a central hub offering companies much greater flexibility in distribution. Smaller loads of up to five pallets could be sent on a next day service which was not previously available and, as the networks have matured, a wide range of services have been developed to handle any size of consignment from single pallet deliveries through to larger part loads. Flexible delivery times and daily services to Europe are offered, as well as tailor made services such as warehousing, order picking and dedicated vehicles. Efficiency savings The hub system also offers significant efficiency savings over conventional methods of distribution. Each member depot delivers goods originating from its operational area to the central hub. They then collect goods for delivery to their home area for the return load a streamlined process which offers a more competitive, profitable distribution service for both members and customers, whilst substantially reducing environmental impact. These benefits led to tremendous market growth and the sector is now ideally placed to take advantage of the current trend to outsource logistics, with many hauliers now offering a total package for their customers including the collection, storage and distribution of goods. Yet similar to the parcels industry before it, increasing competition and falling rates may mean a tough time ahead for some operators who are not geared up to meet these challenges. Another factor currently affecting the market is the continuing shortage of drivers which is adding pressure to operational distribution costs. Distribution rates have been falling for the past few years. Pallet networks have continued to reduce prices to end users for a decade and, although further reductions may be seen, many industry operators feel that this will reach a point where prices will level out. To maintain competitive prices network operators have worked hard to streamline their operations and this continues to be a priority. Scarlett continues: With competition in the marketplace increasing and rates falling, transport companies have to look at new ways of creating efficiencies to retain their growth profit margin. Price increases are not possible so the focus must be on achieving further efficiencies. This trend has led to a number of recent alliances between transport companies looking to operate more efficiently and compete more effectively against larger operators. In spite of these challenges, the palletised distribution industry continues to be an innovative fast-moving sector committed to supporting members and end users. Key issues in distribution for end users are improved communication and further reductions in administration and IT including track and traceability, which is particularly high on the agenda. PalletFORCE will be responding to market demand for improved traceability with a real time track and trace system due to be introduced later this year which will bring greater speed and efficiency through online proof of deliveries and consignment bookings. Quality is the motivating factor behind all of the companys operations explains Scarlett, PalletFORCE has a clear strategic plan driven by one main objective continuous quality enhancement. Our focus on quality since the inception of the network has enabled PalletFORCE members to deliver customers excellent levels of service. As a result, PalletFORCE has doubled its number of depots within two years and outstripped its competitors again last year with an incredible 70% growth in pallet throughput. Rapid expansion Launched just over two years ago PalletFORCE continues to grow, handling thousands of pallets every night through its 120,000ft2 central hub in Lichfield, Staffordshire, which was extended at the end of last year, doubling capacity to 6000 pallets a night with parking facilities for 200 vehicles, to meet increasing demand. Thanks to this rapid expansion, PalletFORCE currently offers a network of over 60 shareholder member depots across the UK, who combined have over 2000 vehicles, and more than 3mft2 of warehousing. The latest development from PalletFORCE is the extension of its service to Scotland to offer next day deliveries to Inverness and Aberdeen. The service, which is operated by Carlisle-based member, Wm Armstrong Ltd, was launched in February when the first consignments were collected from the PalletFORCE hub and delivered next day to Aberdeen and Inverness. A new competitive pricing structure was also launched to enable members to offer a cost-effective distribution service backed by the quality and flexibility of the PalletFORCE network. Geof Armstrong of Wm Armstrong commented, The PalletFORCE network continues to expand at a rapid rate and volumes to Scotland have increased considerably. We previously ran a 48-hour service but plans to upgrade this have been in the pipeline for some time. This next day service responds to market demand for efficient, quality distribution to key locations. As the network continues to grow the service will evolve to meet future needs. Effective communication has also been a key element behind PalletFORCEs growth. Listening to members in order to help them maintain high service levels is a priority. A dedicated Members Sales Support team works with depots across the network to help them service customers. In addition to this are two new appointments, Kerrie Evans who has joined the company as network development manager and Ruth Ryder as new customer services manager, which will encourage strong teamwork and communication, strengthen the current range of services available to support members and build upon the strong relationships between the hub and member depots. PalletFORCE also helps members and end users to keep ahead of forthcoming legalisation. Scarlett explains: Looking ahead for the industry, changes in legislation are imminent and we must strive to meet all the new requirements in a way that enables us to grow as a network without compromise. Legislative requirements combined with the key objective of achieving continual operational improvement across the network will lead to the need for regular risk and policy updates during the year. This focus on customer service and quality distribution means that PalletFORCE now works with many leading organisations across the UK. Toshiba Information Systems, one of the most well-known names in hi-tech consumer products, has awarded a nationwide distribution contract to PalletFORCE member Bedfords Transport. A number of service issues prompted Toshiba to look for a new transport company. We were looking for a network system to provide a reliable, on-time service and chose Bedfords Transport, member of the PalletFORCE network, explains Peter Baczkowski of Toshiba Information Systems. Bedfords Transport operates a next day service for Toshiba and delivers to a cross section of High Street retailers and out-of-town stores. With a range of top quality, high value home entertainment products to be delivered to leading retailers across the UK, each with their own exacting quality control standards on delivered goods, Toshiba demands several requirements from its distributors. Security & careful handling In addition to service and reliability, security and careful handling are key priorities to ensure that goods are delivered safely to stockists and in pristine condition, therefore maintaining Toshibas quality image with the retailer and ultimately the consumer. In this way the carrier is seen as an extension of the customer and has a key role to play in maintaining quality standards. Scarlett concludes: Palletised networks offer a complete package for logistics and warehouse managers and look set to continue to enjoy significant growth in distribution, but it will be those operators who are responding to the needs of both their members and end users for efficiency, quality and service who will emerge as the market leaders. Owned and driven by its members, PalletFORCEs commitment to quality and service is paramount and because PalletFORCE delivers, the network continues to expand and will remain at the cutting edge of developments.

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