Big Units Wanted in Haulage
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Disposal Position Should be Rtconsidered, says Mr. Quick Smith : B.R.S. Should Keep Vehicles Remaining After Small Men's Needs have been Met
APLEA for the retention of large units in road haulage was made on Monday by Mr. G. W. Quick Smith. a member of the board of management of British Road Services. -He was delivering to the Institute of Transport the 10th Henry Spurrier Memorial Lecture entitled, "Road Haulage—a Re-appraisal."
Urging the need for political stability after vacillations of policy extending over 25 years, he asked: "As a first step towards stability, would it not be wise to reconsider the disposals position?" _
There was, he said, a body of informed opinion that believed that irreparable damage might be done if the Transport Act, 1953, were not realistically re-examined in the light of events.
"The proposition has been canvassed that, if there are no buyers for large general haulage units, then, 15,000 vehicles having been allocated to small units for the purpose of giving the small man a reasonable opportunity' in accordance with the Act, and other known requirements having been met, B.R.S. should be left with the rest; this would equip them with a fleet rather smaller than the equivalent of what was organized in larger units before nationalization."
Shorten Uncertainty Such a course would shorten the period of uncertainty, and would preserve the advantages of large-scale organization without sacrificing the benefits of competition. One section of the industry would then be sufficiently large to undertake technical and operational research, to explore further the undoubted potentialities of co-operation between road and rail, and to continue trunk and regular services. The remainder would provide the spur of competition.
"Another suggestion which has been canvassed," said Mr. Quick .Smith, "is that private capital might be infused into the nationalized road haulage undertaking, e.g:, by inviting the public to subscribe for shares in subsidiary companies which would otherwise be wholly owned by the Commission. The idea deserves consideration but, despite the precedents which can be quoted against me, I have considerable doubt whether the proposition is as attractive as it might seem at first sight.
" Apart from the all-important question of the controlling interest, the use of public money must always be subject to controls which are not applicable to private capital, and to divide the equity capital between the State and private subscribers would present obvious complications. "Moreover, conflicting interests could well arise if there were circumstances in which the Commission desired to pursue a policy which served their wider interests, but which might be unacceptable to shareholders whose concern would naturally be concentrated on the dividends paid on their own shares."
Denationalization might produce even more small units than existed before the war. Few of the ex-owners whose businesses were nationalized were buying large units. Demand was largely from existing operators, who wished to add one or two vehicles to their small fleets.
If the sale of small units continued, the 18,000 vehicles contained in undertakings of 50 vehicles or more before nationalization would be replaced by two units, B.R.S. and the parcels network, each operating some 3,500 vehicles. The remaining 11,000 vehicles would be split up over a large number of small owners.
"The small unit has its place in the industry, but so surely has the big unit," remarked Mr. Quick Smith. B.R.S. had shown that a big undertaking could do certain things which a smaller one could not. An obvious example was the organization of trunk and regular services, and the network of parcels, services.
Protection Needed
There were already signs that when B.R.S. and independent hauliers were in open competition providers of regular services would require protection against competitors who took the cream of the traffic.
Apart from regularity of services, a large organization could do much in the way of research that was impossible for a small undertaking, and from which the small operator _eventually enjoyed the ben'efit. Mr. Quick Smith claimed that B.R.S. had been instrumental in the reduction of the unladen weights and the increase of the payloads of current vehicles, in improving braking, particularly on articulated outfits, and in developing trailer and semi-trailer design. They had also investigated the relative merits of different types of vehicle for different kinds of service, and by their very size had been able to telescope the experience of years into a few months.
Much more was now known about the use of articulated vehicles, and the extent to which two tractors could be made to do the work of three vehicles, and save time into the bargain. Mr. Quick Smith listed other developments which B.R.S. had piloted.
The Ministry of Transport survey undertaken in 1952 showed that B.R.S. vehicles over five-ton payload capacity. averaged 677 miles a week. " This," said Mr. Quick Smith, " is a high average judged by any', standard, without drawing any unfair conclusion from the corresponding figure of 493 miles for A-licensed vehicles, and 464 for C-licensed vehicles.
"13.R.S. vehicles ran 77 per cent, of their mileage more than half full and the comparative calculations of tonmiles per week give 5.945 for B.R.S., 3.070 for independent hauliers and 2,647 for ancillary users, but there are very many factors affecting these figures which must be taken into account in drawing conclusions."
Fallacy in Overheads
It was a fallacy to say that a large undertaking could not compete successfully because of the cost of its overheads. A big business might, of course, fail to control its overheads, but that was another matter altogether. If the principle was followed that every Lk spent on overheads must save or produce at least 211s.., it would be true to say that the greater the overheads, the greater the profit. Experience of B.R.S. went some way to prove that The trading surplus for 1954 might be not much less than the figure of nearly £9m. yielded last year, notwithstanding the contraction in the fleet and the shock to the systemcaused by disposals.
"In the past two years, increases in costs have been absorbed without any adjustment of rates and the day might well have come when further improvements might have made possible a general reduction in rates," Mr. Quick Smith said. "My. own view is that B.R.S. have only just touched the fringe of the possibilities of large-scale organization—they are only now beginning to give a practical example of what can be achieved by a large, well-organized fleet."
Traffic Coming Rack
He was certain that much C-licence traffic would be won back by the public carrier.
Reviewing past and present efforts to secure co-ordination in transport, he said that the 1953 Act had, broadly speaking, given effect to the railways' original Square Deal proposals of 1938, which sought freedom for all in the matter of rates, but had taken no account of the railway companies' second thoughts evolved after joint con
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saltation with road interests. The policy of integration had been abandoned,, and with certain exceptions, road and rail were free of the control of rates.
It had been said that co-ordination would he achieved through competition, but in their present context, competition and co-ordination were nearly mutually exclusive terms.
Mr. Quick Smith could find nothing in the reports of the Royal Commission on Transport, or of like bodies in the past 25 years, which suggested that cornpetition was an instrument to be used to achieve co-ordination. On the contrary, at the root of all thought on the subject appeared to be one common factor—that competition must he curbed to achieve co-ordination. The 1933 Act, in its first step towards co-ordination, employed the weapon of restricting competition by licensing.
He did not, however, suggest that co-ordination was impossible under conditions. of competition. The extent to which it could now be achieved depended very much on what the British Transport Commission were able to do within the limits imposed on them.
With their new charging powers and their greater ability to pick and choose, the railways would be able, to compete freely with hauliers and to go all out for the, traffic which they were hest fitted to carry. They should be ready to relinquish that which was unsuitable, and probably therefore unremurierative.
The deciding factor in unsuitability was not necessarily distance. Although the prima facie advantages of the railways increased with the length of the haul, it would he wrong to assume that given traffics were more suitable -for carriage by rail merely because the distance exceeded an arbitrarily selected mileage.
Transfer Hampered A fifth of railway traffic was carried for less than 40 miles. Some of it must he more suitable for transport. by road, but with a limited B.R.S. fleet subject to licensing, short-distance traffic could 'not be so easily transferred from rail to road, within the Commission, as previously.
The objective should be to use the railways to link large centres with fast trains hauling heavy loads and to feed the rail arteries by railway-owned road transport. Above all, still more attention should be given to means by which road and rail could work in co-operation, such as technical methods for the quick transference of traffic from road to rail and vice versa, and the development of both the design and use of containers, With their combined resources, the Commission were well placed to exploit the advantages of co-operation between all forms of transport for the benefit of users, even within the restricted.scope of the 1953 Act.
New thinking and a bold approach were needed to enable the railways to make the best use of their freedom, otherwise the familiar pre-war difficulties would return. The existence of
the B.R.S., fleet opened up important avenues, not yet . fully explored, of Co-operation .between road and rail.
Cautious hopes held out for co-ordination by means of the 1933 licensing system had not materialized in the way. expected. Was this, Mr. Quick Smith asked; because the Government had controlled vehicles, instead of going to the' heart of the matter by controlling services and rates?
The control of rates could be designed for one or more of three main purposes: to protect the user, Or the operator, or as an instrument of policy to divert traffic to the form of transport for which it was best suited, to attract population or industries to undeveloped areas, or for strategic reasons.
Over the years the control of rates had vacillated between one objective and another. It had now settled down on a free-for-all basis, with competition as the principal protection for users and survival of the fittest as the rule of the day for the providers of transport.
Rates Structure Impracticable
Mr. Quick Smith had never been convinced of the practicability of a rates structure in an industry made up of So many small units. Market conditions determined charges, and they varied from time to time, from place to place and from commodity to commodity.
The railways were not in an easy position. Their ceding was the market rate for transport by road. Their bedrock should he direct cost, which was not easily ascertainable. They had to develop the art of pitching rates at a level between these two points that attracted the traffic which they were best suited to carry, in sufficient volume to cover the cost of their whole system and to leave an adequate margin for interest and central charges.
• If, however, there was a slump, road rates might for a time fall below costs. It was in slumps that rates dropped and the road-rail problem reared its head. In times of prosperity there was traffic for afl, rates held firm and little was heard from operators of the road-rail problem, although those concerned with a long-term view could not be . deceived into thinking that the problem had been permanently solved.
Charges and Co-ordination
In a world of free competition, changing volumes of traffic and changing levels of rates, the extent to which charges could be used as an instrument of policy to achieve co-ordination was limited.
No one could say that the final solution of transport problems had been found, or that legislative changes would not be necessary, but an effort ought to be made to keep these matters away from the fire of political controversy. There was no better way of doing so than by preceding legislation with an impartial inquiry. Its deliberations should include a review of recommendations made in the past—a matter that tended to be overlooked.