The UK economy remains challenging. There are reasons for optimism, but growth rates are low and with interest rates continuing to rise to offset high inflation, this brings continuing pressures on consumer spending. In May a fall in inflation was expected but did not happen, with core inflation rising and as a result the Bank of England raised interest rates by a whole 0.5%.

Over the last year we have seen fuel prices fall sharply to levels below those experienced immediately before the war in Ukraine. However, vehicle purchase and component costs remain very challenging, alongside previously increased wage costs.

We said a year ago that we would look to avoid any in-year increases where at all possible, so that members avoided the need to continually re-address customer rates, that was achieved. Now we need to look forward to 2024, conscious that some networks are putting in more than one increase per year to catch up, whilst one network has held all rates for two years.

Our previously stated mechanism to raise IDT by CPI, followed over recent years, was relaxed as we faced up to double-digit inflation in 2022. Now with expectations of healthy falls in the inflation rate in the second half of 2023, and a return to the previous normal late in 2024, we think an inflation busting rise is not in the interests of the members when volumes in the pallet sector are slowly recovering. There is a case to do something more moderate than last year, and to also make some small adjustments where necessary for specific postcodes. Therefore, we are proposing something that gives every delivering member a deserved and necessary increase, allowing the opportunity to pass manageable rate increases on to customers.

From October 2023 UK and Irish service IDTs will rise by 3.5% across our network, with an additional and necessary very limited number of band changes to limited postcodes. Detail of those changes for October 2023 implementation are now available in the Member area of our website.

European changes will be notified in the next couple of weeks and will go live at the same time.

Central Charges

No different to members, Palletforce is also impacted by cost changes in exactly the same areas, and we also need to ensure that we continue to invest in our people, to recruit and retain the best, particularly our FLT drivers, so we will also be making necessary changes to central charges. By us continually investing in our infrastructure, we will continue to work alongside our members to ensure we remain the best service provider in the pallet sector.
From October 2023 the network hub fee will increase to £7.14, and the network IT fee will increase to £0.21 per pallet in and out.

The economic outlook remains uncertain. Necessary rises in IDT and central charges, although significant, do not fully mirror the current levels in inflation. The market remains turbulent; therefore, we will review the IDT and/or central fees independently again in March 2024, and respond accordingly should the economic situation dictate any further changes in 2024.

Regards, David

David Breeze
Network Development Director

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