Many of you who are commenting about pallet networks seem to have no idea of just how efficient they are compared with direct deliveries.
The widely quoted figure of £50 is not accurate and many (or even most) pallets get delivered for a lot less. Not all pallets are standard and a DD may well have a lot more on than you might think. The only rules are that the goods have to be handled by FLT, be under 1 tonne (that is widely ignored) and less than 2 metres tall. Pallets under 500kg and euros go at half price.
If DDs were outlawed then costs would go up dramatically. Who would pay? We would at the till.
This quote is from another thread, but set me wondering how profitable pallet networks actually are for the hauliers.
And as for being more efficient than direct deliveries - how does that work?
So Network member 1 collects said pallet while out on pallet deliveries in dedicated, liveried (for the network) truck.
Returns to depot and cross dock or muddy yard puts onto trunk vehicle. Night trunker then takes said pallet, with others, to the network hub and said pallet is grouped with others for same network members post code area. Network member 2 then night trunks it to his depot where again it is handled and put onto a distribution vehicle.
Assuming normal handling charges are £2+ per pallet outside of the network, (eg for storage) then £10+ goes straight away in handling costs. That leaves maximum (based on £50/pallet) £40 shared between network member 1 to collect and trunk and network member 2 to trunk and deliver out.
When the first trunk (network member 1) goes out, they have no prior knowledge of how many pallets are in the system for return. Even if he does not have any pallets to put into the system he has to run in case there are pallets coming back. Likewise network member 2.
I recently spoke to a driver who had done a night trunk four nights each week over three weeks and never carried a bean in either direction! One customer I visited was gob smacked that a pallet weighing approx 250kgs had cost £18.50 from Gateshead to the south coast (it was an own collection that he had arranged, not a network member) and as the office was unattended when the first delievery was attempted at 1845 (not within the requested time frame, 0830 - 1730!) it was redelivered the second day. Profit here? I think not but the network member would have paid for services provided a the hub so they still get paid and that’s why one of the CEOs of one network is on Dragons Den!
I don’t know how networks work, but the way my old company used to do it, was the collection depot got paid to collect and ship to hub.
At the time (2006) it was £35 per pallet for standard pallet.
There were surcharges for oversized pallet’s, but I can’t remember how much.
Incoming pallets were basically delivered for free.
I am not privy to the cost analysis of any pallet network but I did work at a Palletforce company for some time and they were making good profits from it.
Palletforce and Palletline (the dragon’s den one) are different, in that palletline own the whole network, and Palletforce is owned and run by a large number of independent hauliers. I can tell you that there is fierce competition for any postcodes that become vacant.
I do agree that the collecting depot makes the most money from any pallet - after all the customer is their customer and was recruited by their sales force - they also send out the invoices and stand the loss of any default. The efficiency stems from the low, very low by industry norms, level of empty running. Most of the trucks, local or trunk, are loaded both ways and all collections and deliveries are local. The company I worked for started with a second hand DD which went to the hub half empty. Within three years they were sending two DDs twice every evening with some additional trailers during the day.
For the customer the advantages are obvious - cheap, fast, reliable and trackable deliveries. We would frequently collect goods in the late afternoon that were to be delivered to a variety of remote locations the following morning. No own account operator could have a service like that by direct deliveries. Customers don’t want the hassle of phoning around for rates and delivery times - they want one call, a regular timed collection or even a dedicated trailer in their yard. They want to be able to assure their own customers that the goods will be delivered, undamaged, unpilfered and at the promised date and time .
The strength is in the combination, similair to parcel operators, but than in a bigger size.
If well planned, and the right combination, its very profitable.
It is expanded what smaller hauliers use to do on a very small scale, many would drop central London onto a local haulier when they did the Essex and other areas theirself.
Pallet line and Parcelforce have funneld, stirred in a much more organised matter.
A haulier can still get rid of his unfavourable postcodes and can even a couple more deliveries in his favourable postcodes.
What a difference it makes when you have 12 drops in one postcode, or in 12 postcodes.
Fuel, mileage and time, thats when the cost drop and you are able to price very sharp.
The nightshunts happen on the best time in a 24hr period, less traffic, empty roads.
And yes of course, some pallets you will loss on, but others you will win.
But service and relliability is the main strenght.
I think the pallet companies are now starting to undercut each other to the extent that no one will make any money, rising cost and falling revenues will see a few falter
SHYTOT:
I think the pallet companies are now starting to undercut each other to the extent that no one will make any money, rising cost and falling revenues will see a few falter
That is also my understanding. When the pallet networks first came about ten or so years ago they were a way for companies to make more money than they used to. Now, however, with ten or so pallet networks all fighting for the same work prices are heading down and the hauliers are back to where they were before making next to nothing.
SHYTOT:
I think the pallet companies are now starting to undercut each other to the extent that no one will make any money, rising cost and falling revenues will see a few falter
i wouldn’t of thought it was a particularly recent thing, they been in competition from the start.
any easily replicated business that has good margins will soon find they have company, which will keep growing until the margins are squeezed and not as good as they once were.
A firm I used to work for did work for Palletways, UK pallets, UK mail, Tuffnells, Fedex and UPS all at the same time. Everything came in during the night then got split onto the firms own fleet for onward during the day. They seem to be doing well and the drivers get a half decent profit related bonus every xmas.
Santa:
Palletforce and Palletline (the dragon’s den one) are different, in that palletline own the whole network, and Palletforce is owned and run by a large number of independent hauliers.
The Dragons Den one is Pall-ex and I think Palletline is owned by several companies but only own the hubs.
quoted from above…
When the first trunk (network member 1) goes out, they have no prior knowledge of how many pallets are in the system for return. Even if he does not have any pallets to put into the system he has to run in case there are pallets coming back. Likewise network member 2.
Pallet Track and Palletways members have a constant update of pallet quantity and destination on screen 24/7… so , I presume the others do too.
Clunk:
I don’t know how networks work, but the way my old company used to do it, was the collection depot got paid to collect and ship to hub.
At the time (2006) it was £35 per pallet for standard pallet.
There were surcharges for oversized pallet’s, but I can’t remember how much.
Incoming pallets were basically delivered for free.
£35 per pallet to the depot or was the driver paid £35 per pallet?
I get a basic rate + pallet rate for collections and deliveries, but it certainly isn’t any way near £35 per pallet paid to me.
The company charged the customer £35 per pallet. We had 11 depot’s over the UK. Hubs at Manchester and Birmingham. The collecting depot got paid for the pallet. The receiving depot delivered for free. From what I was told, anyway.
Trukkertone:
quoted from above…
When the first trunk (network member 1) goes out, they have no prior knowledge of how many pallets are in the system for return. Even if he does not have any pallets to put into the system he has to run in case there are pallets coming back. Likewise network member 2.
Pallet Track and Palletways members have a constant update of pallet quantity and destination on screen 24/7… so , I presume the others do too.
By 4pm we had a good idea of what would be coming our way next morning. By 6pm this would be a pretty accurate figure. Anything exceptional like oversize, extra heavy, tail lift needed or timed delivery would be notified through the day as the collecting depot got the info. All pallets are either on a 3 day or next day basis so in the morning all the next day ones got priority. Any left over could be collected the next morning or during the day.
Many of the members hold stock for their customers. This means that they can pick and dispatch directly from their own warehouse.
