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Transcript of Pallet Networks: Into the Future
Running Head: PALLET NETWORKS: INTO THE FUTURE 1
Pallet Networks: Into the Future
Kevin Straight
Ryan Ragasa
Jianchao Li
A. Gary Anderson Graduate School of Management
Author Note
Portions of this paper are based on field notes taken by Kevin Straight over the summer
of 2013, during which he participated in an internship with Independent Express Cargo, the
parent company of TPN Ireland and visited two of TPN Ireland’s member depots. The
quotations from Mr. Paul Sanders, chairman of the Association of Pallet Networks, are taken
from an email questionnaire sent to him by Mr. Straight in October, 2013.
Running Head: PALLET NETWORKS: INTO THE FUTURE 2
Abstract
The pallet network is an increasingly popular business model in Western Europe. In this model,
individual transportation companies organize themselves into a network to efficiently transport
pallets throughout a geographic area. This allows them to achieve economies of scale, scope,
and aggregation as well as synergies in marketing and information technology. This paper
explores how the pallet network business model works, the types of customer value created by
pallet networks, determinants of the optimal size of a pallet network, and opportunities for the
future expansion of pallet networks.
Running Head: PALLET NETWORKS: INTO THE FUTURE 3
Pallet Networks: Into the Future
Palletized freight is not a new development. Pallets were first used in logistics by the US
military in WWII. Used with early forklifts, they allowed the allies to move large volumes of
material with less labor, freeing up men for the front lines (Risch, 1995). After the war many
used pallets and associated equipment were sold as surplus, and were rapidly pressed into service
by the civilian logistics industry (Potts, 1945). Today pallets are widely used throughout the
world. They are now so ubiquitous that a 2012 article in Slate calls them “The single most
important object in the global economy.” (Vanderbilt). In the end, though, pallets are nothing
more or less than a material handling system. The most interesting things about the technology
are the new types of distribution networks and business models that it enables.
The 20th century was a time of innovation not just in material handling technology, but
also in the fields of strategic management and organizational architecture. The end of the
century saw the emergence of a new type of organizational structure in which small firms self
organize into networks in order to offer a scope and scale of services generally associated with
much larger companies. This movement began in, and is still most associated with, Western
Europe, an area where small family-owned firms have always played an important role in the
commercial system (Perrow 1992).
The marriage of these two innovations--pallet technology and small firm networks--has
lead to an important new business model with potential world-wide application: the pallet
network. A pallet network allows small transportation and logistics companies to transport
consignments of palletized freight over a much larger geographic area and at more competitive
prices than they could achieve individually.
Running Head: PALLET NETWORKS: INTO THE FUTURE 4
This paper will explore how the pallet network business model works, customer value
created by pallet networks, the optimal size of a pallet network, and the future of pallet networks.
How Pallet Networks Work
To understand how a pallet network operates, consider a small trucking company called
Mayday Express, located in a rural district in Western Ireland. Mayday is a small operation--a
few trucks and trailers, a single forklift, a barn-like steel shed, and an attached office with only
two desks. Prior to joining a network, most of Mayday’s business came from picking up full
truckloads of freight in Dublin and delivering them to local companies in County Galway. Like
many small transit companies, the 2009 recession hit them hard and they had to downsize their
already modest operation (Kelly, Paul, Mayday Express, personal communication).
Now Mayday’s business is growing again, since they joined TPN Ireland, a pallet
network that has 23 member depots and working relationships with sister networks in several
other European countries. Mayday’s drivers spend their afternoons doing Galway collections,
not just from their own customers but from those of every depot in the network. Many of the
drivers grew up in County Galway and their local area knowledge is a great advantage,
particularly since the idea of street addresses has never gained much traction in Ireland. Mayday
receives a flat per-pallet fee whenever they collect a consignment for another member.
As night falls, all of the collected pallets are aggregated onto a large double-level
articulated trailer and trunked to the network’s central hub on the outskirts of Dublin. When the
truck arrives at the hub it is rapidly unloaded in a carefully orchestrated series of forklift
maneuvers (Ernst and Young, 2009), then reloaded with pallets to be brought back to Mayday
and delivered the next day. Depots pay a small fee for each of their pallets that passes through
Running Head: PALLET NETWORKS: INTO THE FUTURE 5
the hub, as well as an annual network membership fee. The next day, Mayday loads the pallets
onto smaller trucks for final delivery, again collecting a fee for each pallet that they deliver for
another member (McGowan, 2012).
The advantages for small trucking companies like Mayday are many. Through the
network, they can sell overnight shipping between any two points in Ireland. A reciprocal
agreement with TPN in the United Kingdom allows for 48-hour shipping between Ireland and
England or Wales. Because all of internetwork the collection, delivery, and hub costs are
negotiated flat rates, most of the uncertainty in shipping costs is removed. In addition, the
network provides an IT infrastructure and support, including an electronic data interchange
(EDI) system which is shared between TPN Ireland and TPN UK. They also provide public
relations services and marketing materials for the use of members, some of whom did not even
have printed business cards before joining the network (McGowan, Seamus, TPN, personal
communication).
Ownership Structure in a Pallet Network
The ownership of assets in the network is split between the various member depots and
the network itself, which is typically organized as an independent corporation. From the
network’s point of view, its customers are the individual member depots. Each depot provides
its own facilities, trucks, and equipment. The network operates the hub, which is nothing more
than a large commercial building with enough space to unload several trucks at a time. Some of
the larger networks, such as the oldest network, Palletline, operate two or three hubs (Palletline).
In most of these hubs the fixed costs (for the actual building) are dominated by the variable costs
per pallet (for forklift labor and fuel), and most bubs operate well to the right of the breakeven
Running Head: PALLET NETWORKS: INTO THE FUTURE 6
point, in a range where each additional pallet handled adds linearly to total profit (McGowan,
Seamus, TPN, personal communication).
In theory, each member of the network is equal and has a single vote in matters of long-
term strategy and policy. In practice, it is not uncommon for one of the larger depots to
dominate the network’s decision making process. In Ireland, for example, TPN is a wholly
owned subsidiary of the IEC group, which also owns Independent Express Cargo, the single
largest depot in the network (Straight, K.A., A Design for Freight Forwarding Software,
[unpublished internship paper]).
Bas Groothedde (2005), offers an explanation. He explains that, because of diminishing
returns and blocking factors such as trust issues and fear of dependency, there seems to be a
natural threshold of the number of depots that can cooperate economically in a network.
However, Groothede found that these limitations could be mitigated when a single powerful
logistics firm steps in to manage the network and mediate conflicts of interest between members.
Groothede also adds that, because of the operational economies of scope and scale, most network
members receive value far in excess of what the put in.
With or without the mediating influence of a lead depot, trust is an important success
factor in networks. Perrow (1992) analyzed small firm networks at a time when they were just
becoming popular in Europe. He identifies nine factors that tend to produce trust and limit self-
interested behavior within a network (table 1). All of these factors seem to be present, at least in
some degree, in successful networks like TPN Ireland. At first glance item five, “little difference
among firms in size, power, or strategic position”, would seem to be contradicted by the
substantial size differences between network depots. In Ireland, Independent Express Cargo in
County Dublin is a much larger operation than Mayday Express in County Galway. However,
Running Head: PALLET NETWORKS: INTO THE FUTURE 7
they still have much more in common with each other than with the vast multinational
corporations with which they share the European transportation industry.
Optimum Size of a Pallet Network
Returning to Groothedde’s (2005) idea of a natural threshold for the size of a network, we
might ask how large this threshold is. For the moment, for the sake of simplicity, we will avoid
considering the presence of a lead depot or powerful third party logistics (3PL) firm and its
posited ability to extend this threshold. A clue to the answer lies in the Capacitated Loading
Model, which is commonly used to decide where to open facilities based on variable and fixed
costs and the distances between facilities and markets (Network design in the supply chain in
Chopra & Meindl, 2013).
First, consider the maximum operational area of a pallet network. Ultimately, this is
determined by the service level that customers will accept on next-day deliveries. In other
Running Head: PALLET NETWORKS: INTO THE FUTURE 8
words, for a target service level of 99%, a network will cover an area such that 99% of customers
will be able to receive their pallets the day after they are shipped.
The trunk drivers from the most remote depots must have time to drive to the hub, unload
their outbound pallets, load their inbound pallets, and drive back. Given that commercial drivers
in Europe are limited to working 10 hours per day, and allowing an hour for lunch and tea
breaks, this would imply that it is impractical for the most remote depot to be located more than
a four-hour drive from the hub.1
In practice, existing networks seem to conform to existing natural boundaries (the island
of Ireland or the island of and Britain south of the River Tweed) or national borders (the country
of Italy), leading to slightly smaller dimensions.
The following example will demonstrate that, within such geographic or physical
barriers, the optimum number of depots in a network depends on the ratio between local
(collection and delivery) logistics costs and trunking (between depots and the hub) logistics
costs.
For purposes of discussion, let us assume that a pallet network occupies a perfectly
square territory with no significant natural barriers, and with the hub located in the exact middle
(figure 1). Assume that this territory is close to the maximum feasible geographic area for a
pallet network as we have just described. How many depots should this hypothetical network
use?
1 Driving time would in turn depend on such varied factors as actual kilometers of road, speed limits,
traffic, road quality, and delays at government checkpoints and toll booths.
Running Head: PALLET NETWORKS: INTO THE FUTURE 9
The objective of the network is to maximize its surplus (Chopra & Meindl, 2013, p. 3),
defined as:
Network Surplus = Customer Value - Network Cost
The number of depots has no effect on customer value, however, so the objective reduces
to “minimize network cost”. Network cost is composed of hub costs and depot costs. However,
hub costs do not depend on the number of depots, but only on total volume of pallets processed2.
Depot costs are composed of fixed and variable costs. The capacitated loading model
assumes that fixed costs are dominated by facilities costs. In most cases, depots who join pallet
2 Technically, some indirect costs do depend on the number of depots. An example would be for extra
office staff hours to liaise with more depots. These costs are likely to be very small compared to direct costs,
however.
Figure 1 - Simplified Pallet Network Territory
Running Head: PALLET NETWORKS: INTO THE FUTURE 10
networks are already operational transport companies, and the fixed costs for facilities (an office
and a covered place to stage pallets) are already sunk. From the perspective of an individual
depot, the optimum total number of depots is the number which allows them to maximize their
own surplus:
Depot Surplus = Customer Value - Depot Variable Costs
Again, customer value is independent of the number of depots. Therefore, since all
existing depots are voting members of the network, they will tend to vote to add members until
they reach the number which minimizes their variable costs, and then oppose the addition of
further members.
Even if there is a powerful “super depot” running the hub (ala Groothedde) they will not
necessarily oppose this behavior, since they are already operating in the linear portion of the cost
volume profit curve. They will mainly be concerned with increasing the total network volume
so as to increase their total revenue.
Having established that depots in a network will seek the number of depots which
minimizes their variable costs, and that the hub will support them in this decision, we are now
ready to return to the capacitated loading model for our hypothetical square pallet network. At
this point, it will be useful to divide the square into subregions, representing both markets and
possible depot locations (figure 2). For this example, we will use 49 cells. This number is fairly
arbitrary. However, as it is on the same order of magnitude as the number of counties in Ireland
(32), provinces in Italy (57) and total ceremonial counties in England and Wales (56), all of
which are the territories of actual pallet networks.
Running Head: PALLET NETWORKS: INTO THE FUTURE 11
Please note that the distance between any two cells can easily be calculated with the
Pythagorean Theorem. For example, the distance between Cell 1 and Cell 25 (the hub) is
2 2 . We will refer to the distance between any two cells as di j, where i and j are the
numbers of each cell. We will refer to the nightly volume of pallets flowing between i and j as
xi j.
It is now time to add a few more simplifying assumptions:
1. Every cell in the square network has the same demand for pallet network services.
This is unrealistic, but will serve to make the example tractable.
2. Every cell in the square network has the same variable costs. This assumption is
a bit more realistic, since factors such as driver wages and diesel prices are unlikely to
exhibit extreme variance within a 4-hour driving radius.
Figure 1 - Regions in Simplified Pallet Network Territory
Running Head: PALLET NETWORKS: INTO THE FUTURE 12
3. Inter-network pallet traffic is negligible. This assumption should also be revisited
later. In some real-world networks the import-export traffic with other networks and
carriers is significant.
4. Road distance is equal to straight-line distance.
Furthermore, we have already assumed that:
1. Fixed costs are sunk.
2. Logistics costs dominate variable costs and are proportional to the product of the
volume of pallets and road distance traveled.
Each pallet traveling in a network goes through four distinct stages in its journey. First, it
is collected from the consignor and brought to the collection depot. Next, it is trunked to the
hub. Then it is trunked from the hub to the delivery depot. Finally, it is delivered to the
consignee. In order to model the volumes of pallets transported between different cells in our
hypothetical square network, we will adopt the following notation for our decision variables:
Given:
xi l the volume of pallets transported between consignor region i and consignee region l
Let:
xi j the volume of pallets transported between consignor region i and collection depot j
xj the volume of pallets transported between collection depot j and the network hub
x k the volume of pallets transported between the network hub and delivery depot k
xk l the volume of pallets transported between delivery depot k and consignee depot l
The goal is to minimize the total variable cost, expressed as the objective function:
Running Head: PALLET NETWORKS: INTO THE FUTURE 13
Minimize:
ost cr xi l Di l
n
j
n
i
xk l Dl k
n
l
n
k
ct xj Dj
n
j
x j D j
n
k
Where:
Di The distance between region i and region
n the number of regions in the network
Subject To:
Steady state assumptions (i.e. network is a
closed system with no retention of pallets)
Running Head: PALLET NETWORKS: INTO THE FUTURE 14
Where:
V the total network volume in units
This formulation results in a linear optimization problem in 4900 variables. Since this
system was well beyond the capacity of the standard Excel Solver plug-in, we downloaded and
used Andrew Mason’s OpenSolver package3, which also has several other advantages over
Solver when dealing with linear systems including speed and ease of use (Mason & Dunning,
2010).
Solving the above optimization problem for different values of crand ct clearly
demonstrates that the ratio of these two costs is an important factor in the efficient scale of the
network (figure 3). Only values of cr ct were considered, since local costs will always be
greater than trunking costs (because of the greater number of stops, waiting time for loading and
unloading, and the need for shorter trucks). The number of depots increases as cr ct increases
until the ratio hits 2:1, at which point the optimum is to have a depot in every region to serve that
region. Figure 4 shows the optimum placement of depots in the square network depending on
the cost ratio.
No internal logistics cost data on real networks was available, but a 2:1 cost ratio seems
feasible in light of the aforementioned cost factors.
3 http://opensolver.org/
Running Head: PALLET NETWORKS: INTO THE FUTURE 15
Were we to continue this exploration, the next step would be to extend the model more
realistic cases, which would more closely match the shape of real countries and assume a larger
volume of pallets through urban areas. However, even at this early stage, we can see that, as
long as it is significantly cheaper to trunk pallets to the hub than to transport them locally, a
pallet network will seek to recruit members in every county in the country. This seems to be
borne out by the structure of mature networks in the UK such as Pal-Ex, which tend to have
O(50) member depots.
Running Head: PALLET NETWORKS: INTO THE FUTURE 17
Why Companies Ship Through Pallet Networks
Pallet networks have three important features which make them attractive to customers:
responsiveness, simplicity, and no minimum order size.
Responsiveness is probably the largest source of value added by a pallet network.
Consignments can be called in to the depot as late as noon the day of shipping, since collections
occur in the afternoon and dispatch is often done in real time. For example, a company in
Surrey, UK can call for a pickup around tea time. A truck will be by to collect the goods around
3 pm, and the pallet might be delivered to Cardiff, Wales the next day around 9 am. The only
third party supply chain solution with a higher level of responsiveness would be a same day
courier service, which would need to charge much higher rates than a pallet network because of
its different cost structure and might have trouble handling consignments of several pallets at a
time because of its relatively smaller vehicles.
In general, companies seek to build a highly responsive supply chain when they are
selling innovative products with uncertain demand (Fisher, 1997). The ability to ship a single
pallet in 24 hours is highly sought after by these companies, particularly if they engage in just in
time (JIT) inventory practices. However, lower technology industries also need this level of
responsiveness if the demand is uncertain. An example would be print shops. Print shops often
receive rush orders which require paper stock in unusual weights or dimensions. Paper is usually
transported on printers’ skids (which are similar to pallets, but lack lower lateral cross members).
A print shop can order a skid of paper from their vendor in full confidence that a pallet network
will deliver it the next day so they can begin printing their job. Often, the print shop will also
use the same pallet network to deliver the finished product to their own customer.
Running Head: PALLET NETWORKS: INTO THE FUTURE 18
Not only are pallet networks a responsive solution in terms of speed, but they are also
extremely flexible with regards to capacity. In a pallet network the bottleneck process is the
trunk truck which goes to and from the hub at night. However most of the depots have several
trucks. If they have a large order, they just send an extra truck to the hub that night. This means
that a customer who usually orders a pallet or two per week can put in a twenty pallet order with
confidence that it will be accommodated.
Simplicity is another important feature of pallet networks. A customer can call their
depot and get a single flat price for a consignment, without the bother of dealing with brokers or
subcontractors. Some pallet networks offer an even easier option for their high volume
customers, implanted computer systems which run the same EDI software used by the depots
themselves. Such systems allow the customer to enter consignment details and schedule pickup
and delivery directly, then print their own shipping labels for each pallet. This is beneficial to
the customers because of the time savings and convenience factors. It is advantageous to the
pallet network because it raises switching costs for the customer. Additionally, annual fees and
contract IT support for implant customers can be a profit center for some pallet networks
(McGowan, Seamus, TPN, personal communication).
The final selling point of pallet networks is lack of a minimum order size. Imagine a
company that manufactures wheelbarrows. A typical rural hardware store might order a pallet or
two of wheelbarrows per year (figure 5). The manufacturer could ship this quantity of
wheelbarrows by contracting with a non-network transport company, but most carriers would
charge a high rate, if they took the job at all. This is because they would most likely not have
any other freight going to this small rural town, and they would have no expectation of picking
up a load for the return trip. So the wheelbarrow manufacturer would be forced to pay for a
Running Head: PALLET NETWORKS: INTO THE FUTURE 19
whole truck for a round trip. Far more economical would be to use a pallet network, which
excels in rural deliveries and happily accepts single-pallet consignments. Indeed, many networks
also accept cartons (which they pile on top of the pallets in the trailer) and some even take
envelopes (which ride on the passenger seat in the cab).
The low order size is a great boon to firms selling perishable inventory. For instance,
Matt Reilly Cakes in Dublin, Ireland, sells a range of cakes, bagels, and donuts in convenience
stores and supermarkets throughout Ireland. Their product is essentially functional, and they
would love to ship it in whole truckloads. However, an entire truckload of cakes would go stale
before it could be sold. Thus, while they have their own fleet of trucks for deliveries within
major cities like Dublin, they have come to rely on a pallet network (TPN Ireland) as their supply
chain solution to deliver pallets and full pallets to small towns.
Figure 5 – Pallets of Wheelbarrows Waiting at a Depot
Running Head: PALLET NETWORKS: INTO THE FUTURE 20
All three of the factors can be important selling points when depots sell the services of
the network to customers. It is no wonder that pallet networks have become an important link in
many European supply chains.
Current Status of Pallet Networks in Europe
Since their initial appearance in the United Kingdom in the 0’s (Palletline), pallet
networks have become a popular business model not only there, but in Ireland and Scandinavia,
and have begun to penetrate Italy and other Mediterranean countries. Rod Francis, managing
director of UK and Ireland for Pallets Operations in the company EP explains “the UK
market operates within a very sophisticated FMCG supply chain and compared to the emerging
markets, is highly penetrated with pallet pooling service offers... (MacLeod, 20 b).”
As networks reach a mature scale, they have begun to shift their focus from expansion
and recruitment of new depots to operational efficiencies, “targeting improvements in fuel
efficiency and fleet performance” through a greater use of transportation management software
and higher utilization of equipment (Ireland, 2014).
At the same time, innovations in material handling technology have made palletized
transportation even more attractive. For example, Schoeller Allibert, a world leader in plastic
reusable transit packaging (RTP), has generated immense savings across a broad range of
harvesting and distribution trays for the fresh produce sector, as Simon Knights, regional sales
director explains “It’s possible to stack more than 25 empty XLXS folding trays per standard
UK pallet compared to the usual 180 nesting trays - leading to an 80 per cent improvement in
vehicle utilization, fewer road miles and a reduction in the amount of storage space required.
Running Head: PALLET NETWORKS: INTO THE FUTURE 21
XLXS is therefore an efficient and robust alternative to the cardboard containers which are still
often used to import goods from Europe in the grocery sector (Europe News, 20 c).”
Other companies have invested in automated equipment to load the pallets themselves,
which is currently one of the most labor intensive operations in the process. For example, Irish
milk powder producer North Cork Co-Op Creameries recently ordered a new automatic
palletizer for their facilities in Kanturk, Ireland which can assemble up to 250 bags of powdered
milk onto pallets per hour (Euronews, 2014c).” It stands to reason that, as European companies
continue to invest in pallet technology, their demand for networks to carry the pallets will also
increase.
As attractive as the model is, however, the modern business environment in the UK and
nearby countries can be a delicate one in terms of pallet networks. The “availability of trucks
and drivers is now a critical issue (Druce, 20 )” as it threatens to stifle the road transport’s
recovery and hurt the wider UK economy, as described by pallet network boss Nigel Parkes of
Pallet-Track. It is also a domain filled with ruthless competition where in certain industries like
air-travel consistently seek any new advantage that can improve their supply chains. Chief
Executive Officer Andrew Tinkler of EasyJetPlc stated “The airport is at a break-even point...
All we have to do is prove we’re a fast and efficient airport... Over the next two to three years the
group is about realizing the value of these assets (Lundgren, 2013).” This type of insight
describes the managing of a return to growth within the industry of not just innovative, but also
functional items and where the networks themselves act as a key challenge faced by all transport
firms. One example is where EasyJet recently had to incur a “ . million-pound hit” against the
discontinuation of a chilled pallet network .
Running Head: PALLET NETWORKS: INTO THE FUTURE 22
The European markets have shown however that there is tremendous opportunity in
regions such as Scandinavia where companies including Emba Protec GmbH, based in Bad
Oeynhausen, Germany, have expanded rapidly into regions such as this and other “key
developing European markets” owing their ultimate success as number one in the manufacturing
of retention and suspension packaging systems in its domestic market of Germany thanks to its
newly diversified markets. Boris Frankowski, Owner/ Managing Director of Emba Protec has
commented “In December 20 2 we moved into our new purpose built head office and production
facility of 30,000m². This incorporates a modern 10,000 m² warehouse with a high bay facility
for over 6500 pallet spaces... Our future plans include further developing the export markets,
with the UK, France and Eastern Europe seen as having major potential. Elsewhere we are now
developing into Australasia, and have an open mind to other global markets (Europe News,
20 a).” There are still large amounts of untapped shipping opportunities worldwide that the
pallet networks haven’t been utilized in yet, but it is only gaining more momentum in each of the
remaining regions, which in the end, has a likely chance of being a universal industry shipping
standard once tested. As Mr. Frankowski stated “The K market is under developed in terms of
retention and suspension packaging, and it has the ability to be a similar size if not larger than
the domestic market. We have very ambitious targets for the UK and other export markets, and
believe our unique service, standard stock programme and quick turnaround service for bespoke
projects are key to our success ” (Europe News, 2014a).
The Future
The pallet network sector continues to expand and gain a larger portion of the overall
transportation market in the countries where it is established, and the trend seems set to continue
Running Head: PALLET NETWORKS: INTO THE FUTURE 23
for the foreseeable future (Association of Pallet Networks, 2013). However, as the market
approaches maturity in its original heartland, industry insiders have been casting their eyes
towards Eastern Europe, which seem well suited to the pallet network model (McGowan,
Seamus, TPN, personal communication). One of the larger UK networks, Pal-Ex, opened
affiliates in Romania and Poland this year (Pal-Ex, 2013). Its competitor, Palletways has
launched operations in the Czech Republic and Slovakia (Palletways, 2013). The former Eastern
Bloc countries are attractive because they tend to have well developed road systems and large
populations, yet tend to be served by small local trucking companies—perfect conditions for a
pallet network.
While Eastern Europe is an obvious target for expansion, the model could be exported
to other continents as well. As Paul Sanders, chairman of the Association of Pallet networks
states, “The model is workable anywhere were you have a transport network of businesses with
resource and area coverage” (Sanders, Paul, APN, personal communication).
It is also possible that pallet networks will expand to handle different kinds of freight.
Mr. Sanders feels that “ ulk loads is a future opportunity, using the same compliance and
software systems, loads being orchestrated by the hubs and operated by the members with an
agreed conditions of carriage agreement.” Other industry insiders are exploring ways to handle
pallets of refrigerated product within the network model (McGowan, Seamus, TPN, personal
communication).
Alternately, pallet networks could move beyond truck transportation and use other
modes. Groothede (2005) has pointed out the possibility of using barges to transport the pallets.
This could work particularly well in Western Europe, with its many navigable rivers.
Running Head: PALLET NETWORKS: INTO THE FUTURE 24
With all of these possible opportunities, it is clear that pallet networks will be a force in
Europe, and perhaps the rest of the world, for some time to come.
Conclusion
Pallet networks are an exciting business model for many reasons. Their high efficiencies
and utilization rates are a boon not just for their members’ bottom lines, but also for the
environment, because they use less energy to move pallets the same distance (Association of
Pallet Networks, 2013). As a third party supply chain solution, they offer a mix of
responsiveness and simplicity that most companies would find hard to duplicate in house.
Beyond the operational level, pallet networks have an elegant strategic appeal in that they let
small family trucking companies offer a value proposition that is competitive with the offerings
of corporate behemoths. It will be interesting to see if the model spreads beyond Western
Europe in the coming decades.
Running Head: PALLET NETWORKS: INTO THE FUTURE 25
References
Association of Pallet Networks. (2013, June). 7.5 Million pallets deliver continued sector
growth [press release].
Chopra, S., & Meindl, P. (2013). Supply Chain Management: Strategy, Planning, and Operation
(5th ed.). Boston: Pearson.
Druce, C. (2014, 02 10). Shortage of labour damaging recovery, says pallet-track boss.
Retrieved from http://motortransport.co.uk/blog/2014/02/10/shortage-of-labour-
damaging-recovery/
Ernst and Young Entrepreneur of the Year Awards: The Pallet Network [video]. (2009). RTE
One. Retrieved from
https://www.youtube.com/watch?v=O5ZLGETu9ko&feature=youtu.be
Europe News. (2014a, January 8). Retention and Suspension Packaging Systems. Packaging
Europe News. Retrieved February 27, 2014, from
http://www.packagingeurope.com/Packaging-Europe-News/56836/Retention-and-
Suspension-Packaging-Systems.html
Europe News. (2014b, February 6). GPL Series Palletiser for North Cork Co-Op Creameries.
Packaging Europe News. Retrieved February 26, 2014, from
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