Autumn 2007

If the idea of a pallet-load arriving at your front door sounds unlikely, think again. Pallet networks are moving into the multi-channel space, both in what they carry and in the systems they use. Peter Rowlands finds out more

In the space of the past ten years or so pallet networks have become an established feature of the UK logistics scene. You know the concept: regional carriers trunk palletised consignments to a shared hub at some central point in the country, and here the pallets are sorted, consolidated by region, then trunked onward to a local depot for final delivery by a carrier based in that area.

It's a way of allowing local and regional carriers to offer national deliveries of part-loads without actually having a national presence or running half-empty vehicles all the way to their final destination. There are nearly a dozen mature networks now, and the vast majority have been experiencing vigorous year-on-year growth.

You might wonder, though, what relevance palletised freight has for the multi-channel market, which tends to involve deliveries of small packages in parcel vans, not large items shrink-wrapped or roped on to pallets.

 

However, it would be a mistake to be too quick to dismiss the role of the pallet networks here. A number of them actually do home deliveries, and others would like to. They've recognised that it's a massively growing market, and they don't want to be left out.

Palletline, for instance, says internet deliveries represent one of its biggest growth areas, and Palletforce gives strong hints that it is looking at this market too. Pall-Ex already does home deliveries of furniture.

If you're wondering how these organisations can contemplate this type of work, it's worth bearing in mind that the companies making up the pallet networks don't just run heavy lorries; many also operate relatively small vehicles that wouldn't look out of place doing deliveries in suburban streets.

What's more, the networks are introducing technology that has much in common with the systems used in the parcels market, including online booking, electronic signature capture and online track and trace. The two sectors have much to learn from each other, and end users can only benefit from picking judiciously from each.

One of the most obvious ways in which pallet networks can attract multi-channel business, especially from smaller companies with little experience of freight markets, is to accept online consignment bookings in the same way as parcel carriers. This can simplify the ordering process for users, and give it a degree of impersonality that could help them overcome any sense of ignorance they might have about the freighting culture.

Palletline is one of the first to have taken this approach, and managing director Kevin Buchanan confirms the attractions it can offer for inexperienced users. 'One can almost provide an 'idiots' guide'.' He adds that the company has gone to some lengths to research consumer protection issues.

He says early results are promising. 'We haven't optimised the web site yet,' he told us when we were preparing this article, 'but we anticipate that it could account for up to a thousand orders a week within twelve months.'

Another network that has been developing a simplified credit card-based booking service is Fortec, which was planning to launch its Fortec On-Line system in the third quarter of this year. This is being aimed particularly at smaller businesses, and as director Rod Abrahams puts it: 'It should give our licensees an extra edge when they're selling.'

UK Pallets, the Business Post subsidiary, has also initiated a form of online booking, which is aimed particularly at companies wanting to despatch one-off consignments and pay by credit card.

There are synergies here between UK Pallets and the group's parcels wing. Although they use two different computer systems, these can be accessed online through a common gateway. Not only that, but commercial director Douglas Smith says the booking system also has the ability to evaluate orders intelligently, and can redirect them from parcels to pallet network if that represents the most economical option for the user.

'Suppose someone wanted to despatch seven parcels to the same destination, and the result would cost a given amount. If consolidating them on a single pallet would reduce the overall cost by ten pounds, then so long as service-level requirements are still going to be met, the system can make the decision to do that automatically.'

He points out that this approach might not work for clients who do their picking on an ongoing basis through the day and despatch consignments as soon as they're ready, 'but it makes a lot of sense for consolidated despatching.'

So what kind of goods are suitable for home delivery through pallet networks? UK Pallets has handled pallets of turf, and so has Palletline, which also mentions products such as sit-on lawn mowers. It also has a member with a contract to deliver crates of eggs. Pall-Ex does home deliveries of furniture, and also provides home deliveries of patio stones, paving slabs and similar building products. Whilst not exactly home deliveries, this company also delivers extra-large soft toys for a supermarket chain to 340 store outlets nationwide.

Unusually in the pallet market, Pall-Ex is willing to break down individual pallets for some customers, and to remove the shrink wrapping and take away this and the pallets themselves. This is rare in the freight market, where such functions tend to be considered the responsibility of the recipient; but Pall-Ex has recognised that retailers and other smaller businesses may not have the ability to cope with this kind of requirement, or the space to store the empty pallets and bulky packaging materials. And consumers certainly wouldn't. It's yet another way in which networked pallet deliveries are making themselves more 'consumer-friendly' to extend their appeal.

Fortec, while not setting its stall out specifically to attract internet shopping traffic, already offers various features that equip it for this market, including an extensive fleet of tail-lift equipped vehicles. It also offers Saturday morning deliveries - still not the norm even in the parcels market, but seen increasingly as an essential requirement for home deliveries.

Regional business relationship manager Mick Dewhurst also told us earlier this year about a concept under development to offer a 'pallet box' - basically a tough, collapsible cardboard container the size and shape of a pallet, which would meet a variety of demands in this market. It will reduce readily in size when broken down; it will hide vulnerable product that might be visible through conventional shrink-wrapping; and it can make otherwise compatible but awkward-shaped products more readily stackable.

Something that pretty well all pallet networks agree on is the need to offer customers an online track and trace facility. Most networks now offer this to a greater or lesser extent, albeit with varying degrees of sophistication. But Douglas Smith of UK Pallets sounds a note of warning. 'You can almost never get a hundred per cent real-time track and trace in this market, whatever the other networks tell you,' he says. 'Some of our competitors are inclined to stretch the truth. If we ever do get there, it will be a long time coming.'

There are a variety of reasons for this, he says. 'For instance, individual members may not have large fleets of vehicles dedicated to collection and delivery operations. They're likely to handle some of the C&D work with vehicles from their general fleet. But they're not necessarily going to invest in expensive data capture equipment and wireless technology for those vehicles if it might only be needed occasionally.'

He says networks tend to scan product in and out of their hubs, rather than at point of origin, especially if they don't carry barcode labels when they're first collected. 'Often this is enough.' However, having explained why depot-based scanning is not easy, Smith goes on to say that UK Pallets is in fact rolling it out steadily, and already claims to provide on-road scanning for up to 85 per cent of its operations.

Pall-Ex claims to be well ahead of the game in this respect; it says it succeeded in getting its members to provide handheld computers to all delivery and collection drivers as early as 2005. The information is passed back to a central web server by GPRS, and is available online to member-depots, hub staff and corporate customers.

More recently the company has taken another forward-looking step, equipping the fork-lift trucks at its central hub with barcode scanning equipment.

Fortec pioneered the use of Deltion's CarrierNetOnline hosted management software, which has already succeeded in achieving a degree of IT conformity among its licensees, but it reckons that scanning both in and out of its recently moved and expanded hub is the key to effective track and trace. Fortec has also introduced image scanning of proof of delivery documents.

Palletforce says it is already 'very good' at hub-based scanning of consignments, and network solutions director Alan Cooke says the company will have developed a full real-time track and trace capability 'within eighteen months to two years'.

Meanwhile, Palletline claims to be 'miles ahead' of the market in this area, having built a web-based system around Vigo software that is designed to interface readily with a wide range of other systems. 'We publish an approved list of hardware, and provide guidance for integration,' Kevin Buchanan says.

Palletways, another of the biggest and longest-established networks, recently launched what it calls a 'quality measurement' system, in which it monitors the quality and accuracy of information generated via the network. It says it can already deliver POD information on the due delivery date, and also measures consignments delivered 'on time or early in full' (OTEIF), though has not told us exactly how the information is derived.

Another feature often sought by companies involved in multi-channel sales is warehousing capability. Although some pallet networks offer specific network-based storage and picking, most tend to consider that this is a task best dealt with by individual members.

Palletforce's Alan Cooke, for instance, points out that among them its members offer nearly 5 million sq ft of warehousing space. And as Palletline's Kevin Buchanan puts it: 'If we receive an enquiry for warehousing at the central hub, we pass it out to the local member who was best equipped to deal with it.'

Clearly the pallet networks are moving steadily forward in terms of introducing features that extend their appeal beyond the traditional freight market, and at the same time are equipping themselves with the necessary systems and technology to meet the more exacting demands that these complex markets exert.

As Palletforce's Alan Cooke puts it: 'We aim to expand and diversify, and are looking at news business areas, and independent market research shows that there are clear opportunities in home delivery. There's huge untapped potential in this market.'

So the message is plainly to watch this space. Even if pallet networks hadn't struck you initially as a first choice for multi-channel work, you should definitely keep them in your sights.