11 Sep 2013 How the pallet is helping the modern supply chain to stack up
Nigel Parkes, the MD of Midlands-based Pallet-Track describes how business has never been so good for the oldest technology in the supply chain.
To many people the pallet is a mundane, everyday item that is either illegally dumped at the road side, in a canal or used to build bonfires once a year. However, in real terms, the humble pallet simply makes the world go round. It is by far the oldest technology in what is now a very sophisticated supply chain. It may amount to a few pieces of nailed wood or latterly, moulded plastic, but this simple construction provides the common currency of all logistics transactions. In essence, the consignment – from baked beans to industrial components and consumer white goods – has to fit onto the industry-standard pallet because the rest of the supply chain is designed around it. From quayside to DC, from forklift to trailer and factory gates to back of store – the pallet is the constant travelling companion of billions of product lines crossing numerous time zones on a weekly, daily and hourly basis.
Taking this macro-economic picture, the interaction of market forces – the volatile price of fuel and the demands upon businesses to reduce their carbon footprints – has consolidated the position of the pallet and placed it upon an industry pedestal along with the networks that support its distribution around the UK.
Outsourced third party logistics providers (3PLs) grew out of the freight haulage sector in response to the need of the cutting edge sectors – retail and automotive – for just-in-time (JiT) and supply in sequence delivery. But along with their agile and responsive fulfilment – right product at right place at right time and at the right price – there developed what we would today recognise as operational inefficiencies. Back then, the climate change and carbon emission debate was in its infancy and fuel costs, although variable, were more manageable. However, high service demand stimulated the over-dependence upon more frequent and less efficient journeys that helped create levels of congestion on the UK’s road networks and levels of empty-running that are today unacceptable.
Enter the freight networks to redress some of these issues. How do they work? Network members bring their goods into our central hub and other members distribute them to other parts of the UK – simple and successful.
Pallet-Track joined the Association of Pallet Networks (APN) in 2006 when it was established. Its existence has led to a renaissance in local expertise built upon the experience of hundreds of hauliers working in a formal and co-operative collaboration which means that any potential UK customer is in close proximity to any APN member.
Pallet-Track was a founder member of the APN and endorses the fact that the networks actively consolidate freight, offer the higher levels of vehicle capacity that could only have been dreamed of in the 1990s and provide an excellent UK-wide overnight service.
Local hauliers who become members all benefit from the economies of scale this creates growth and further increase productivity with additional state of the art technology and IT support. Members have access to the latest track and trace technology which allows them to punch well above their weight and compete with the big boys for contracts.
Individual hauliers collect and deliver palletised freight in their own geographical area of responsibility while consolidating loads destined for other parts of the country and Europe. These loads are trunked to national central sortation hubs at night for onward distribution, predominantly using double deck trailers. Because of the way they operate, pallet networks are increasingly regarded as one of the most cost-effective and environmentally efficient forms of road freight transportation – and they work.
The APN’s own figures bear this fact out: members of the network consistently achieve 72% full vehicle utilisation, almost 20 per cent higher than non-member companies. This equates to 800 fewer vehicles to transport the same level of freight which means less congestion and a smaller carbon footprint, as well as saving millions of pounds in unnecessary fuel.
A study by the Chartered Institute of Logistics and Transport in 2009* revealed that a staggering 78 billion kilometres of ‘empty’ running currently takes place across Europe every year, a large proportion of which is in the UK because, unlike the Continent, we inhabit a small island limited in terms of what can be shipped by other multi-modal means. In southern Europe, it is cost-effective to move consignments by train and northern Europe is well served by river shipments down the Rhine, for example, which complement the expansive European road networks. The UK is less fortunate and relies almost exclusively on road shipments, albeit much of it at night to avoid the inevitable congestion and grid-lock, although does offer limited rail movement.
The APN website highlights the fact that members have access to a bespoke online benchmarking toolkit, which collects, collates, analyses and reports information from across the sectors and provides the intelligence for members to view their own key performance indicators and their position relative to other members.
It also boast a Health and Safety Forum Group made up of the risk representatives of each member network that meets regularly to discuss working practices and participates in the national Road Distribution Action Group chaired by the Government’s Health and Safety Executive.
The APN also has close links with the Road Haulage Association, and is regularly asked to contribute to economic issues affecting the road haulage industry. Last year’s London 2012 saw it representing its members on a Countdown Forum for the Olympic Games presenting a detailed analysis on the advantages of using the pallet network approach to support the logistics of the greatest show on earth.
Individual members such as Pallet-Track have proved the business case that pallet networks are the backbone of the modern supply chain. They are a simple transactional ‘value for money’ proposition that reduce ‘empty running’ in a competitive market As a result of our efforts Pallet-Track has ambitious plans to increase its size over the next five years despite the global economic downturn.
However, we are in it for the long-haul to help both our direct customers and partners as well as play an ‘unsung hero’ role in supporting the more established 3PLs with some bespoke next day deliveries across the UK via the network.
The rationale for this is that at a time of sky-high fuel costs our national hub and spoke operation – which has never been busier – reduces our member haulier’s costs as well as their impact upon the environment by cutting delivery distances.
Fewer miles equates to financial smiles as we now have 75 depots across the country involving 1,800 staff in Pallet-Track freight operations with a combined turnover in excess of £50 million.
If I were to sum up this success, it would be that I believe that we don’t do any one thing 100% better than anyone else, we do 100 things 1% better than everyone else.’
This mantra seems to have made the business almost recession-proof. 2012 was a record-breaking year that saw Pallet-Track treble in size in less than a decade as well as passing yet another milestone – the increase in our daily business by more than 1000 per cent by smashing through the 9,000 pallet milestone for the first time ever in one night. When the business launched in 2004, it was moving just 800 pallets an evening. This new record represents a 1,025 per cent increase in just nine years.
Working with a broad range of manufacturers, producers, retailers, suppliers and stockists we supply many household name consumer, business and industrial brands and transport anything from building and construction materials, through to sporting goods, clothing and accessories. All customers and network members utilise the national ‘hub and spoke’ operation.
Our 267,000 sq ft distribution centre in Wolverhampton is now at 80 per cent capacity and we are already looking at expansion options for the future. Keeping it local does not mean that through the right connections you cannot operate nationally or even globally. After all, the humble pallet may be the international currency of the supply chain that makes the world go around and carries the day, but it is the collaborative and co-operative relationships surrounding their use that bring the standard pallet to life.
*Back to the Future – a look at transport and logistics requirements over the next 80 years.