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Palletline invests in new hub to leverage Amazon advantage

14 May 2018

The pallet network has taken on a new hub in Coventry and one facet of its operation will be the consolidation of in-bound pallets to Amazon fulfilment centres. HSS editor Simon Duddy reports.

The new 180,000 sq ft hub includes 138,000 sq ft of warehouse space, 28,000 sq ft of exterior canopied area and 14 000 sq ft of offices set in an 11.5 acre site.

Chairman Jim Welsh said: “Hub capacity management is debated regularly at board level. This requires some crystal ball gazing, but last year, we saw growth increasing to the high teens, so we decided we needed extra capacity in the Midlands.”

A large proportion of the secondary hub [around half] will provide a dedicated processing centre for Amazon, as part of an ongoing strategic partnership.

Palletline is the only pallet network to hold Amazon’s preferred carrier status for inbound deliveries. It handles the bookings and administration for its members, who then run into Amazon’s 22 fulfilment centres around the UK.

Palletline managing director Graham Leitch explained: “We are the only pallet network who are on Amazon’s inbound preferred carrier network. We have a central Amazon key account management team who are directly linked to Amazon’s booking in system. We have fixed delivery slots, most of which are during the night.

“Key to making it work is that we have a great relationship with Amazon and a dedicated team for the online retail giant. They know the systems inside out.”

This deep relationship with Amazon brings clear advantages.

“It is harder for Amazon’s customers to use another transport provider, it’s easier for them to go with us because the process is much more seamless. This is a big benefit for our members and allows them to win business.

“Plus, if we can provide the customer with a good service on their Amazon business, we stand more than a good chance of getting the rest of their movements.”

At peak in November, Amazon freight represented 10% of Palletline’s volume. This is up on an average of 7-8%. The programme started six years ago and within three years Amazon movements added up to 2% of total.

Leitch said: “It’s been on an exponential growth curve. In the next 5 years, we hope to see both growth of Amazon freight and the development of other opportunities with Amazon, both for Palletline and for our members.

“Amazon is developing their own parcel delivery network and there is an opportunity for our members to get involved in trunking operations between fulfilment centres and parcel delivery depots. This will help with efficiency also, because members are generally coming out of the fulfilment centres empty at present.”

Palletline member Reason Transport will relocate its depot to the new hub in Coventry. The new facility will also replace Palletline’s smaller Warwickshire hub near Rugby which is scheduled to close in May. The ongoing transfer is going to be done in a number of phases, which have started.

Operations director Richard Gutsell said: “As a separate sortation facility for Amazon freight, it will have the added benefit of relieving pressure and freeing up capacity for the standard freight moving through the network.

“It has not only secured employment in Coventry, but added to it with 20 new positions already created at the new hub, a situation I see as developing further as the relationship with Amazon and the consolidation of our other customers at the hub, continues to develop.”

Still is the forklift supplier for the hub, with the fleet built around RX70 counterbalance trucks.

“We need 12 forklifts, but we have 15 to have capacity for busier moments,” added Gutsell.

“It is a challenge to get forklifts at short notice, it usually takes a few days.” The Coventry hub was previously occupied by City Link, and Palletline has the lease until 2022. While it is good to see more spec warehouse build in the UK, Gutsell comments that it often isn’t suited to pallet networks.

“A lot of spec build has too little yard space for us. Modern facilities tend to have the warehouse built right out to the edges, and come with dock levellers. We don’t use dock doors, so that doesn’t work for us.”