Pall-Ex Group’s Europe Managing Director excited by investments in Poland
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The last few months have been particularly challenging for logistics companies operating on both sides of the English channel. As is well documented, a number of firms have suffered troubles with paperwork and new requirements as a result of the UK’s trading relationship with the EU. However, one of those who appear to have coped well are the Pall-Ex Group, who operate in the UK, Belgium, the Netherlands and Poland among other countries.
Keen to learn more about how Pall-Ex navigated the UK’s departure from the EU Single Market, as well as the group’s ambitious plans for new transport hubs in Poland, we reached out to Pall-Ex Group’s Europe Managing Director, Mark Steel.
Hi Mark, thanks for taking the time to talk to us at Trans.INFO. It seems that companies are beginning to get to grips with the new EU-UK trading arrangements, albeit rather begrudgingly depending on one’s opinion. How have Pall-Ex been dealing with the challenges presented by Brexit?
Pall-Ex and Fortec [recently acquired by Pall-Ex Group] have coped pretty well with the new arrangement. Some of our competitors actually suspended or stopped trading with the EU, but we have never had to suspend our service in any way, shape, or form.
We did invest a great deal of time and energy prior to Brexit so as to make sure the team was up to speed. Just as importantly, we invested in quite a few software changes to make sure that any customers, or members of Pall-Ex that were manifesting freight, had to upload and provide all the information to the new customs processes.
Fortec uses Pall-Ex Group as an International Service as well as their own Irish service. So in essence, we had to duplicate some of the processes for Fortec in Ireland. It’s worked out pretty well, although it’s not been all plain sailing; there have been a few bumps on the road, particularly with some of our third party providers, because there was a massive drop off in freight volumes.
That’s been for a couple of reasons. There was a great deal of stockpiling before the deadline [in 2021] and also people have reduced the amount of freight they’re sending due to the customs processes and additional costs. The third party providers have basically reduced the amount of services that they’re offering. So that’s given us a headache in terms of communicating the changes in departure and transit times for certain lanes.
Apart from that, it’s been okay on our side. I think I speak for every single carrier in the UK by saying that the customers, exporters and importers who were used to dealing with the mainland vary massively in their preparedness to cope with the new process. Some were brilliant, but I’d say 80% of customers that we were dealing with had absolutely no idea of the additional information that they had to provide for us, which gave us a big education problem after Christmas.
But you know, we’ve got through that pretty well. We’re in good shape. We’ve got new third party contractors, the software has even been upgraded two or three times since Christmas to make sure that we’re asking for the right information.
Our customers can’t even print a label off until we’ve got an export clearance back which is really positive. We don’t receive any freight in here that we can’t physically transport straight away. It’s been a big learning curve and the situation has been challenging, but ultimately with the education that we put out to our membership and the hard work we put in before Christmas, I think we’ve coped well.
The deal was only announced officially on Christmas Eve. Surely that must have complicated matters?
Absolutely – I think that was one of the issues we had; just how close to Christmas the deal was announced. Since October we had been preparing to deal with a no-deal situation here. So the element of collecting duties, possibly tariffs etc, was something that we were really looking at. So even if there was no-deal, we would have been fine dealing with that. Depending on Incoterms we would still have had to collect VAT, and if the country of origin is outside of the UK/EU we have to collect some duties anyway.
So we did prepare and that paid off. But one of the problems was that the general public were at home relaxing for Christmas when the deal was announced. I think a lot of the general public heard “there’s a deal,” so they thought nothing would change. And that’s certainly the impression we got when we got back to work on the 4th of January, because people were trying to send in freight with no extra information. So the deal that came in while everyone was sipping claret on Christmas Eve was very much a case of bad timing!!
How have the new trading arrangements affected the use of different pallets?
Well, we’ve seen all of the documentation that was sent out from the government regarding the use of certain grades of pallet and a certain accreditation that these pallets need to have.
But to be absolutely candid with you, we’ve seen no pushback at any customs border about the use of pallets. That may change when the relaxing is eased a little bit, but at the minute, we’ve seen no adverse impact of the use of whatever pallet.
However, I will credit our customers – they do seem to have read our advice and are using a lot of these accredited pallets. I’m not saying everything that’s going to the EU is on these pallets, but the vast majority are on the appropriately sourced pallet. I think this was laid out as though it could be a big problem, but we aren’t actually seeing that at all.
Pall-Ex has a network containing many independent hauliers. How has the company managed to build and maintain such a network?
Well this is a real challenge. But across Europe, Pall-Ex Group has the most members of any network that originated in the UK. So with the acquisition of Fortec to our portfolio, we now have over 600 members.
As you state, it can be quite challenging to make sure that they’re all of the required quality and the right financial standing, and that they will get the correct assistance that they need to build and grow and become successful businesses themselves that remain part of Pall-Ex’s brand.
It starts really by every member being split down into the country that it’s in. So here in the UK, we have two networks. Pall-Ex UK is fronted by a colleague of mine – Sue Buchanan, the network director for both Pall-Ex UK and Fortec. Sue has a team of really competent industry professionals that know how to operate a good depot. They know how to make sure that they’re financially viable by assisting with things like sales, and assisting with anything that a member needs to be a success and to be a successful part of the network.
It’s a common cliche that any network is only as strong as its weakest member. And we really do embrace that. It comes down to the old 80-20 rule. You will get 80% of the problems through 20% of your members, so concentrate unbelievably hard on the weakest members. We’ve always worked with them. Some of the other networks are really autocratic, and if you are failing for whatever reason, they will just exit you from the network. Pall-Ex isn’t like that, we like to work with and nurture our members, particularly where we’ve got a challenging area geographically.
The geographic challenges are massively different. If you want to operate a pallet network model in the middle of the UK it’s really easy because all the hubs are there. But somewhere like Kent, Scotland or some of the outlying areas of Cornwall or Wales, it’s a real challenge getting to the hubs. Likewise, If you have any overspill, having the resources to collect your freight and deliver your freight into the hub is also a challenge. So it’s a constantly moving target. The team will work with neighboring members to help them share truck vehicles and so on.
It’s something that we work very hard at; the network teams in every country are very similar. But obviously, they’ll know their individual territory a lot better than we do. For example, in Benelux and in Poland, we’re also shareholders, so we have an active running in these two networks as well. The concentration is very heavy on the actual membership. Membership will give you two essential things. One is your service quality – If your service quality isn’t there, you wont retain your customer base. A good member will also give the network growth. So we want good members who will grow and also provide a cutting edge service.
Pall-Ex Group is of course an international company with operations overseas. One of the places where I can see the company is growing its presence is Poland. What plans do you have for the Polish market?
We do have some really ambitious plans for Pall-Ex 24, our entity in Poland.
We’re moving our main central hub from a location in Skierniewice, about 45 minutes outside of Łódż, to the outskirts and Łódż itself. It’s right in the centre of the country. We just signed a lease with a company called Uniq Logistics, who will operate that whole facility for us.
So we’re really quite excited about that. It will give our members in Poland some real benefits with reduced line-haul costs, and also a reduction in their overall costs. So we think it will be a massively popular move as more people will be able to access the hub.
We have some exciting corporate customers that will be coming on board as well. In Poland, we have a regional hub structure. We have another hub down in the south-west of the country in Gliwice, and later on in the year, we’re hoping to open an international hub close to Poznań.
People want to use us internationally, but when you’re having to come across several states and territories of a country to get to a main central hub, that doesn’t work internationally. So we’ve identified that, and we’re looking for sites and partners in the Poznań region for later on this year.
So it’s big news really. To sum up, we have a new Southern hub that opened recently in Gliwice, we have a main central hub opening in July in Łódż, and later on in the year an international hub opening in or or around the Poznań area.
We have a strong team in Poland and we are building the membership and we’re assisting with sales activities in the country as well. With the three new hubs we’ll see this year, we’re hoping for growth in excess of 25% year-on-year out there. We’re committed to investing in Poland – it’s a great place to be with great opportunities for growth.
Is there any particular reason why you appear to be focusing on Poland?
The domestic model will work anywhere, so it’s not a case of choosing Poland. Poland is one territory that we have targeted to make sure that we have a domestic network in. It will then lead to us being able to expand our international cross border network.
So essentially, we have to fill as many of these gaps with international partners as we can. One of the caveats in Poland is that the two partners that we were working with wanted the Pall-Ex Group itself to be a shareholder, hence the reason we have an interest there.
We also have an interest in Benelux too, and we are very close to being able to announce a new network in Czech and Slovakia, where we will also be shareholders. Out of the 10-11 territories that we cover, we’re a shareholder in three of them.
Not so long ago you celebrated the achievements of key-workers during an award ceremony. Do you feel the general public have begun to acknowledge the role of the logistics industry in a better way?
You bring up a fantastic point there. The whole perception was that transport is a dirty word. People would see these great big 40-foot lorries going up and down motorways and18-ton, diesel vehicles entering cities. I think the whole perception of the industry was very much tarred with the view that it’s an unclean industry. Everyone thinks these vehicles are inefficient and the emissions are high. Certainly here at Pall-Ex we’ve invested in the best and the cleanest vehicles.
I think what the pandemic has done is actually change the public’s perception of how absolutely necessary these vehicles are for everything that we consume today. The awareness of the general public, unfortunately, comes from e-commerce.
So if all of a sudden your parcel or your pallet doesn’t come to your front door, that’s a massive problem. Because of the key work and the promotion of how important certain industries were to the country throughout the pandemic, it has changed perception.
We’ve seen a lot more appreciation of our drivers and our forklift staff and our service offering than we ever have. I think most transport logistics companies in the UK and indeed across Europe will probably have seen the same thing. I don’t think we are perceived as bad people anymore or an industry which needs to be radically improved.
People are realizing that our guys do a good job. They are really good people, and we’re investing as heavily as we can, so I think it’s been good for us.
Finally, Pall-Ex is a company that seems to do a fair amount of work in the community, including charity work. You also hire a number of ex-military personnel. Could you please tell us a little more about these programs?
Yes, absolutely. We’ve partnered with ex-military charities for the last three years or so now. There’s a couple of reasons for that. If it helps us to resettle ex-servicemen, we think that’s the right thing to do. Plus, you do get a very high calibre of people who are ex-military – very well disciplined and educated.
We like to think that we are one of those employers that will give ex-military and ex-service personnel a really positive start to civilian life. We’re a silver member of the Armed Forces Covenant and we do invest heavily in that. We raise money for charity as well – our staff participated in the March in March for Combat Stress, and that raised over 10,000 pounds.
So to summarize, we are really open to ex-military and service personnel. I myself am ex-Royal Air Force, so it hits home for me personally. It’s great to be able to give something back to those that have served our country.
Photo credit: Pall-Ex