As palletised freight distribution network Pall-Ex celebrates its 20th year of operation, CEO and Chairman of Pall-Ex Hilary Devey - known to millions of TV viewers as a sometime dragon on the hit BBC2 show Dragons' Den - speaks exclusively to SHD Logistics about her experiences over the past two decades and gazes into her crystal ball to see what the future may bring.
SHD Logistics: In your time at the forefront of your industry, what have been the greatest changes you have witnessed?
Hilary Devey: Thinking back to 1996 and it’s certainly fair to say that getting to where we are now at Pall-Ex hasn’t been easy. I still remember that very first night in an old aircraft hangar. We had no power, no running water and two Portaloos for 40 lorry drivers and myself! On that first night, we tallied up 117 pallets to be delivered – today that stands at over 10,000 every single night.
The greatest changes I’ve seen have been advances in technology, which underpins how we operate today. Until recent memory, our industry was reliant on pen and paper records, but that’s completely different now. These days, our customers and members want instant visibility as standard, knowing where their delivery is and when it will arrive. As such, real-time proof of delivery, digital signature capture and tracking apps are now the norm.
In some ways, it’s reassuring to see that some things have remained the same, and the fundamental basics of our operating model haven’t changed.
The ‘hub and spoke’ concept is still based around a network of hauliers collecting and delivering freight in allocated postcode areas, exchanging pallets at a central hub. It was designed to eliminate ‘empty journeys’, and when you consider the fact that our current fill-rate is 97.6%, it’s clear that the model is still not only commercially viable, but is having a huge effect on the environmental impact of the industry too.
SHD: What are the challenges a business such as Pall-Ex faces today in the areas of infrastructure, legislation and recruitment?
HD: Moving forwards, the logistics industry has a number of challenges it will undoubtedly have to face. In terms of infrastructure, technology will continue to affect the way we work, particularly as millenials are driving the transition through their focus on mobile apps and a digital-based approach.
Legislation is, in some ways, anyone’s guess, particularly after the influence of the EU has been reduced post-Brexit. The uncertainty in itself is a challenge.
For recruitment, we’re still seeing a shortage of drivers and have spent considerable time this year exploring the reasons and implications for this.
Despite all of these threats, our members should feel reassured to be part of a network that wants to succeed together.
The achievements of each and every member is important to me and I passionately want them to succeed. The reality is that margins are quite low and haulage companies are being squeezed across the board. It may sound cliché, but if I know a member is struggling, it will give me sleepless nights. If things get tough, we pull together.
SHD: Is it as hard now to attract new recruits into our industry than it has ever been?
HD: The shortage of drivers and how to tackle it is discussed a lot in our industry. We recently conducted a study into how our industry is perceived as a viable career choice, and it seems that the impact of driver shortages is still to peak. Even those hauliers who are not experiencing difficulties recruiting are worried about it.
Separate research by the Freight Transport Association (FTA) has shown that over the last five years there has been a steady increase in the average driver age, rising from 45 in 2001 to 48 at the present time. Around 64% of HGV drivers are 45 or older and only 1% of employed drivers are under 25 – so it’s a real issue we are going to have to face.
SHD: Have you seen the industry becoming more attractive to women over the past 20 years?
HD: As a typically male-dominated sector, it was unusual to see a woman in the industry 20 years ago – never mind at the helm of a business. There was a stigma that it was a man’s game, but I’ve proved through the sustained success of Pall-Ex that’s nonsense.
What we have started to see is a shift in the perception that opportunities in logistics are primarily about drivers. Yes, that is a crucial element to our work force, but the fact is, there are so many other opportunities and career options for both men and women, whether that’s in finance, operations, marketing, customer care – the list is endless.
The other aspect to communicate to women (as well as men) is that if you want a career in logistics, you need to be realistic. It’s a competitive market and determination and tenacity is key. I learnt this from the beginning when the banks all shut their doors on me in terms of funding. We all know that I sold my house and car to raise the money – which isn’t something I would recommend those starting out today to do by the way, but at the time, I had a point to prove.
SHD: What are the disruptors the UK logistics industry is facing over the coming few years?
HD: Predicting what will happen in our industry is a skill, and as someone who has been in the game for over two decades, I am often approached for advice.
Since starting out 20 years ago, the internet has grown from being a fledgling method of communication to a medium we cannot imagine being without – and this is what I think we will see disrupting the market further. With the rise of online shopping, we have reacted with our Retail Plus+ service, reducing the pressure on retailers to hold as much stock, and enabling a more ‘just in time’ delivery service. We’re also well-versed in the home delivery market, but that is certainly an area of growth for pallet networks like us and an area in which we expect to see new players emerge.
SHD: If you could be a part of the Brexit negotiations, what concessions would you like to secure to ensure UK plc remains competitive globally?
HD: Much of the rhetoric from the Leave campaign included references to “red tape” imposed on British businesses. However, the fact is that many EU standards make a positive difference to the logistics industry, whether that’s maternity leave, safe working hours, environmental pollution targets or of course, the funding to our infrastructure which is now hanging in the balance.
At present, the uncertainty of Brexit has not halted our progression or our success in Europe. In fact, our operations abroad are growing, and the European market currently accounts for 50% of our total volumes. This year we have commenced operations in the Benelux nations and we’re in final negotiations with several other partners, which will see us moving into new territories in 2017. There are still many opportunities in Europe but we’ll certainly have a clearer picture by March of next year.
SHD: Are there any aspects of EU membership you’ll be glad to see the back of?
HD: No-one can predict what a post-Brexit Britain (or Europe) will look like, but I stand firm in my belief that the entire European supply chain will likely be affected. Those areas under pressure will be jobs, trade and investment, and when I speak to members, customers and other business leaders, the uncertainty is already being felt.
It’s a crucial time now to negotiate the terms of our exit, and the Government has a job on its hands to ensure relationships with the countries in which we operate are not tarnished. I urge our politicians to listen to the concerns of firms both large and small throughout the process – particularly those organisations which rely on a robust export model.
After all, if you’re going to work in Europe, you first need to know how Europe works. At Pall-Ex, we don’t just parachute in a UK team to enforce a UK model on different countries. We work with experienced national partners who know their territory inside out and they are supported by a bilingual team back in the UK, and it is this nuanced and informed approach I would like to see upheld during our negotiations to exit.
SHD: What are your fondest memories of the past 20 years?
HD: The difference we have made with the Pall-Ex Penny a Pallet scheme has been great. This sees Pall-Ex donate one penny for every pallet distributed to charity, raising over £300,000 to date.
Working with other charities and worthy causes is also something I am very passionate about, particularly as vice president of The Princess Royal Trust for Carers and patron of The Stroke Association.
Ultimately, I am incredibly proud of the network we have created, comprising the country’s best hauliers. Many of them are small, family-run businesses, some of which have been with us from the very start and continue to lead the way in service excellence.
SHD: What sort of business do you think Pall-Ex will be in 20 years’ time?
HD: 2036 sounds like a long time away and I’m prepared to wager there will be an unimaginable number of changes to our industry.
However, to sustain our future operations we’ve worked tirelessly to create a robust system to ensure members remain successful. The support network at Pall-Ex is unparalleled, with a strong team of network managers, sales support managers, telesales agency and marketing team.
There’s also a “let’s muck in and help” attitude which will always prove invaluable – historically we’ve even seen regional managers with a licence rolling up their sleeves and getting behind the wheel to help with member deliveries.
A big focus for Pall-Ex over recent few years has been moving away from the trend of price undercutting, in the hopes of encouraging the wider industry to follow suit. What is more sustainable is always aiming for additional investment and consistent provisions of quality to create long-lasting, mutually beneficial relationships between network, member and end user.
Pall-Ex’s core value is to share success with its members and this trend of squeezing hauliers with price reductions threatened that. Instead, we took a bold approach to raise prices, with the understanding that eventually this would need to happen across the board in order for the hauliers and services to survive.
Our work is not done. There’s still more to do and reinvestment to increase quality remains an important part of our strategy for 2017 and beyond. But whatever challenges we see in the next 20 years, we will tackle them head-on with the strength and collaboration that a network like ours can provide.
SHD: If you could do it all again, would you do it any differently?
HD: It’s true, hindsight is a wonderful thing, but from a business perspective, there’s nothing I would have done differently. It’s of paramount importance to experience obstacles and learn from them. All of our most famous and successful entrepreneurs, whether in logistics or other sectors, have made mistakes at some point in their career and they have embraced them, learned from them, and moved on to become incredibly successful.