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A central hub is set up and independent hauliers with franchise areas ‘swap’ pallets each night for onward delivery. Get it right and the customer gets great service, fleets use less fuel and the network makes good money.
Need for change
It’s quite a success story. But it won’t last without changes. The model’s fine but the next stage of growth requires professional management, proper governance and access to capital. This isn’t universally in evidence yet.
Market interest
Phoenix was the first private equity house to take an interest in the sector, with Palletways. TPN, the industry number four, has just been bought by LDC. The deal took an age to close - this is an industry where investors need to check and double-check.
Pallet networks are in their adolescence.
Other companies such as Pallex, Palletforce and Palletline look like they’d make good investments, but first the existing shareholding structures need picking apart and new management brought in. That won’t be easy.
The pallet networks are in their adolescence – a time of great hopes and occasional excess. If wiser heads choose to wait who can blame them.
Tom Coates is a Partner of Credo.
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