Pallet networks need to find ways of raising more revenue from customers if more of them are not to go the way of UK Pallets, the boss of Bullet Express has warned.
David McCutcheon, MD of Pall-Ex member Bullet Express said that in the wake of the collapse of UK Pallets this month, that he believed there were major issues coming for the sector that was “strangling itself” by not raising rates.
“Rates need to be increased by 10-15%, to be honest,” he said. “Rates in Scotland are probably the tightest I’ve known them at the moment – one pallet network member up here is charging one particular customer £26 a pallet for delivery anywhere in England.”
Pallet networks have also allowed customers to make pallets increasingly large and heavy without any additional charges in recent times, he added.
“We’ve worked ourselves into a frenzy over the past few years where you can take pallets 2m tall or weighing 1.5 tonnes,” he said.
“I know Palletline has taken a stance on this recently – limiting it to 750kg a pallet [albeit on a health and safety basis] – and I very much commend what it has done.”
Even a 750kg pallet can be “borderline” for staff trying to unload in wet or windy conditions, he stressed.
“People are selling at rates that aren’t sustainable. Margins have reduced dramatically since we all got involved 10 years ago and we need to find ways to get them back up,” he added.
Kevin Buchanan, group MD at Pall-Ex, agreed.
“The reality of it is, customers are not paying enough. There’s not enough perceived value in what we do. The price that the customer pays is too small. Individual hauliers are not getting paid enough money for delivering that pallet,” he told MT.
However, Buchanan added: “The good news seems to be that networks, generally, have realised in the past 12 months that we’re going to have to put prices up.”
The head of Pallet-Track called for an increase in industry rates recently, after the newtork increased its internal rate.