Last September, Stuart Godman took over as the CEO of Pallet-Track. Godman boasts over 30 years’ of experience in the industry, and has held senior positions at Absolutely, Connect Group Plc, DX Group Plc, Target Express and TNT Express.
The new CEO has been tasked with delivering the pallet network “next level growth”, but given the cost pressures the haulage industry is experiencing, the challenge is most certainly a daunting one.
In this exclusive trans.iNFO interview, Godman stresses the importance of standing firm on price amid a time of intense competition, sheds light on the key role that industry associations have to play, and also advocates legislation that would provide hauliers with better payment terms.
We started off our discussion by addressing the tough situation in UK haulage at this moment in time.
Godman conceded that the market is “obviously in a depressed state currently” and touched on the number of local hauliers and regional businesses that had entered administration in the last year or so.
“There’s more supply at this moment in time than demand. Transport and logistics businesses obviously have a lot of expensive assets in the shape of their vehicles. If a company’s trucks are not at work, it puts the business under a lot of financial pressure,” said Godman.
Taking this into account, we then quizzed the Pallet-Track CEO on how one would achieve “next level growth” in times such as these.
In Godman’s opinion, it will be key for Pallet-Track Track’s members to stand firm on pricing:
“It’s all about having a very stable network. To create that, you must ensure your members are financially viable. Then, to achieve that viability, you need to make sure you’re operating with enough margin for your members to create sustainable profit. That means not having a race to the bottom by offering the cheapest price. Although that may get volumes up, it does so at the cost of doing business. You then run the risk of losing members within your network because you’re putting in more volume, but at low margin, and the two don’t compute,” the Pallet-Track CEO told trans.iNFO.
Godman added:
“We’re in an industry whereby we can influence the financial stability of our members to a degree by charging the right prices and standing firm on price. You also need to ensure you provide quality service at a competitive rate. By doing all that you can form great relationships that will grow your business, even in tough times. It’s not a particularly scientific mantra; it’s all about service, relationship and margin.”
As Godman had stressed the need to stand firm on price, we asked the Pallet-Track CEO if he thought minimum pricing legislation could be a good solution. Such legislation has already been implemented in Hungary, and Romania’s haulage association says it wants to see similar measures introduced in Romania too.
In Godman’s view, the priority would rather be to have some legislation to combat late payments and unfair payment terms:
“With minimum pricing, everyone can argue that they’ve got a different cost base. I’d rather focus on ensuring strict payment terms are adhered to, and that we can keep cash moving. That’s what businesses need to survive. A lot of small hauliers operate on such fine margins that if a large customer tries to stretch the payment terms out further, they inadvertently pile even more pressure. If you look at a lot of these great haulage businesses of late that have gone under, some of them were viable in terms of margin. It was just cash that was the problem,” Godman told trans.iNFO.
The Pallet-Track CEO also explained that although there have been actions taken to try to address the issue of late payments, something more concrete would help to avoid status-quo, which is seeing hauliers shy away from investments due to concerns about overdue payments:
“We have had some sort of good payment scheme, and there’s been an informal look at this issue. However, I think there’s more the government can do to ensure that prompt payment is not just a nice thing to do. It’s a must have. The status quo is stopping haulage businesses who have outlays from investing a lot upfront as they run the risk that they may never get paid. There are big assets that are left behind and it’s all very difficult to absorb.”
Interestingly, there is an example of a European country where such legislation already exists. Back in 2021, Spain rubber-stamped legislation that allows for fines of up to €6,000 to be issued for late road transport payments.
In the event of repeat offences, the fines can be as high as €30,000. In addition to this, Spain also ‘names and shames’ the worst offenders when it comes to late payments.
Back in September of last year, Fenadismer, Spain’s most established haulage association, said that the legislation had noticeably reduced late payments.
Given this success, should the UK follow suit? In response to this question, Godman suggested he’d rather see good payers praised than bad payers criticised:
“Maybe we should be naming the companies that are great payers. That may make more companies want to do business with them and so it’s self fulfilling. So rather than just always highlight the bad, we could highlight the good.”
Finally, given the troubled times that hauliers are going through at the moment, Godman also reinforced how crucial it is for companies to collaborate.
“Collaboration and cooperation are strong words and they’re good words. We try to work with our members to see if there’s opportunities to centrally procure to help drive volume, boost sustainability and sustain margins,” said the Pallet-Track CEO.
Another key form of collaboration are of course industry bodies such as the Association of Pallet Networks (APN).
“Costs can get pushed onto industries if they are too subserving and don’t stand up. There are additional costs our sector is having to bear that we can’t keep absorbing because the margins in distribution are too small. There’s not a lot of room for error, so sometimes competitors need to come together to share a common voice,” Godman told trans.iNFO.
Godman continued:
“The APN really gives us CEOs a voice. Through something collective, we can work together on numerous issues. Dirty fuel is a good example, as it has caused a lot of forklift truck failures. Collectively, we’ve been able to raise that with both the Health and Safety Executive and the Road Haulage Association. They’ve listened to us, and there’s been progress. I think that’s a good sign of how you can work together for collective benefit.”