Hopes for pallet growth; but fear over rates.
Far from reaching their peak, pallet networks still have much traffic to go after. Sector needs to talk up inherent efficiencies more strongly, TPN chairman argues.
Pallet networks “have a very large market still to attack”, says Richard Eldred, chairman and co-founder of The Pallet Network. A study this year by Transport Intelligence had shown that the market share of all networks was 4.8% and revenues total (pounds sterling)528m in 2004; but forecast an increase to 13.5% market share and revenues of (pounds sterling)1.65bn in 2008. He told the UK Express Delivery conference organised by Triangle in Birmingham last week that reports of complaints from some large distribution contractors that customers are becoming too demanding on timed deliveries is “great news for networks”. Network members have a great story to tell about how the networks have taken the cost out of pallet distribution and been able to pass on much of that to customers; they should be even more pro-active in telling that story, he said. Last year’s study for the government by Transport Energy had shown how the networks beat other sectors in terms of vehicle fill by weight and by capacity; and that they have taken (pounds sterling)64.68m of cost out of the movement of palletised distribution every year. TPN’s service failure rate is just 1.6% – which, realistically, is an outstanding figure, he said. Eldred said he doubted that the Road Transport Directive will further help networks. The full impact has yet to be felt, he said. But strong fears were expressed at the conference that rate-cutting will destroy the profitability of the sector. Pallet rates of (pounds sterling)35 to (pounds sterling)45 had been slashed to (pounds sterling)23, (pounds sterling)24, (pounds sterling)26 and further pressure on rates seem inevitable, some delegates suggested. Some of the larger transport companies that are in pallet networks have reduced their work in the sector because of declining rates. They have been able to do so because of their involvement in other areas of the industry, Jim Scanlan, managing director of The Hazchem Network, observed.
Home delivery presents “an extraordinary opportunity” for the express industry and will be as large as business-to-business parcels in volume terms by 2010. That was a keynote message from sponsor Metapack, a software firm of which Alan Jones, formerly chief executive of TNT, has just become chairman. David Emslie, logistics sales director of Lynx Express, said that for every 50 parcels carried in Lynx’s “black fleet”, there is also one pallet. 15% of network deliveries by Nightfreight are now business to consumer, the conference heard from director Tony Pattemore. Nightfreight coined the term “irregular dimension and weight” for so-called ugly freight.
