The new world of road transport
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THE "customer-oriented" attitude of the Transport Development Group was clearly illustrated in last week's article reporting on an interview given by Mr. P. S. Henman to the editor and myself. Mr. Henman, it must be stressed, spoke to us in his personal capacity. (He retired as chairman of TDG in ApriL) Abstract ideas such as the national pallet pool, which might have been given a boost had TDG felt able to deploy its resources to help get the pool going, make little appeal. "It may be a good idea", said Mr. Henman to the Ministry of Transport, "but we just don't think so. We tailor-make our service to our customers' requirements. We do not make them conform to patterns that we think are good for them_"
In the same way, although TDG warehousing companies are interested in metricafion as applied to transport they do not see it as part of their business philosophy to try to persuade customers to rationalize pallet sizes or types. Mr. Hellman agreed that with everything the Group owned the "maximizing of space and the convenience of the space" was vitally important. It was not the Group's pigeon to "push" industry-wide schemes of rationalization.
Managers were all basically profit-motivated, said Mr. Herman. 'Our X-ray daily piatures of the workings of our companies which are in the hands of all management show them first and foremost the return on the capital which they are sitting on and this is the biggest incentive because it enables them to deal with the weak pockets or the things that are not making the return or things that were empty and not being used." Empty vehicle mileage was not liked. "We never want to go one way only, we want to go full both ways if we can: that's part of our system."
Efficiency
It might have been thought that the road transport operations of the group companies could have been made more efficient by a centralized transport office organizing return loads, use of Freightliner services, etc. Was there any centralized booking of Freightliner movements?
Said Mr. Henman: "No, there is no centralized booking, there's no centralized labour arrangements, there's no centralized finance excepting that we do have an arrangement whereby all our balances total up in the hands of the banks to our advantage, but this is an internal arrangement. "We also have an arrangement with the petrol companies whereby we get substantial discount on our total gallonage, but every man buys from local suppliers. Whatever arrangements are made at headquarters the subsidiaries still have complete freedom to choose those who give them the best service."
Was there not a case, from now on, for TDG to integrate the traffic side in more detail, particularly as regards Freightliner movements and return loading of vehicles?
Reciprocity
"Every operator in our group," said Mr. Henman, "has a brochure detailing all the other operators, their names, their telephone numbers, their locations—whether in Manchester, Bodmin, London or Glasgow. The operators know just where they can go to get all the help that's available. They know the pattern of operations and if it's profitable to them to arrange reciprocal services, it is done."
Mr. Henman said that if a Southern TDG company sent six Freightliner containers from London to Glasgow or elsewhere the terminal delivery could be done by another group company, by an outside haulier or by the railways. There was no pressure on them at all.
Managers were operating business and
using from £50,000 to Elm capital as independent companies and were measured at headquarters by the return on capital they achieved. There could be losses through such things as strikes. Safety regulations had to be conformed with. Managers operated within the rules and within common sense and had complete freedom to deal with situations as they arose, to engage staff and to discharge staff.
Was there any central guidance about the new weight regulations, plating and testing, and the criteria for operators' licences?
Mr Henman said it was the responsibility of all managers to interpret current regulations to the best advantage in the same way as they controlled drivers or warehouse staffs to the best .advantage. A managing director would invite serious criticism if his company was in breach of regulations. It was not for the central headquarters to be involved in internal disciplinary matters at a group company; such troubles as pilferage in a warehouse, were entirely a matter for local management.
Although TDG has grown to be the largest free enterprise road transport set-up in this country by its own unaided efforts, so much is done nowadays by governments to foster amalgamations and mergers that it is conceivable that a future governnient could encourage TDG to expand to two or three times its present size. On the analogy of BBC and ITV, there is much to commend the idea of roughly comparable undertakings, in terms of size—employees, assets employed, vehicles operated—being promoted as an aid to overall efficiency. In such a framework it would be possible, perhaps, to judge the efficiency of the NFC road haulage undertakings with greater realism than is now possible.
Mr. Henman found this idea of interest but he looked at it from a somewhat different angle, considering the possibility of a third organization of size and responsibility. "A major problem in the conduct of road haulage has been the fact of living with so many small fish, none of whom have been quite sure whether they're making a profit, loss, or what they were doing."
Stability He went on: "I personally would have thought that if there were, say, two large private undertakings which together were about equal to the public sector of road haulage, that might perhaps be a good balancing factor. It could provide a measure of stability and, if I may say so, service of a very high standard which would be good for the industry as a whole—good for its name and good for its image."
At one time. as is well known, TDG was faced with a queue of road haulage operators almost clamouring to be taken over. Mr. Henman, reiterating that he was no longer chairman of TDG, said he would have thought that the Group had now got as many people with whom it was talking about mergers as at any time. "Plating regulations, testing regulations, managers' licences are really almost the last straw that broke the camel's back as far as so many businesses are concerned, coupled of course with taxation and other things, particularly when the proprietor is past the middle years of life.
"Many such people just want to get their cash and their estates liquid to deal with death duties and all the rest of it, which you can't do in the context of a small business."
He continued: "A new world has been created in transport as a result of recent legislation. At one time people sold entirely on their licences: their licence was an asset of considerable value. Today their licence isn't worth anything at all so there has been a complete change. This sinks in slowly, very slowly, particularly with smaller people. They still think of the days when they could measure it all in another way and so in those circumstances there is a bigger gap between the buyer and the seller.
"The gap has been so substantial until recently—which explains why we have waited to see whether the gap would close. It is closing now and there are more realistic understandings. The education has been slow and one has had to wait for it to take effect. In the same way you've got to wait for perhaps another year for equity shares to reach their bottom against the impact of the last Budget and other things." fairly optimistic about the effects of the Transport Act, though with reservations about some aspects, such as special authorizations.
"There are some things about it which I don't like and have never liked but there are good things in it," he said. "You cannot operate on a public highway with a lethal weapon without being prepared for some regulations for the safety of all who have the same right to use the highway. When you think in terms of drivers' hours, maintenance, or inspection, providing the regulations are reasonable they must be accepted as a quid pro quo for the facility of operating as freightmovers on a public highway."
The new regulations have caused TDG subsidiaries—and other prudent companies—to step up their depreciation very considerably. Mr. Henman stressed that the secondhand vehicle market had practically disappeared. But "we think, given a period of time, financially we shall be better off overall because earlier replacement of vehicles will lead to lower maintenance costs and quicker realization of the operational benefits of new types of vehicle".
Whereas one of the initial effects of the Transport Bill was to discourage many road hauliers from business expansion, the more optimistic mood today seems to be resulting in larger order books for manufacturers. While the final result about special authorizations was not known Mr. Henman suggested that a far-seeing operator would operate normally and would expand normally, taking the view that if catastrophe came, or anything unexpected came, that because of his new depreciation terms he'd be all right with his assets. He'd get their value back and dispose of them and meanwhile he would expect to make a good profit on what he's doing.
In a general summing up of the place of road haulage in the nation's economy, Mr. Henman saw the industry as the essential filling in between the ports and fixed lines of communications like the railways so that there was a viable, quick, efficient service direct between where the goods are made or stored and where they have to go— whether to ports or manufacturers and so forth.
"The road haulage industry which will continue to change has a very bright future as far as one can see," he said.
-No amount of aeroplanes can affect an island like this unless we get a very cheap form of helicopter, but the load lifting would be so small as to be of no consequence. However, the shipping lines and the airlines may be in sterner competition with each other as the planes get bigger and fly faster because in all transport what succeeds best is the method that is most flexible from point A to point B. That has been proved many times.
"The reason that the tramways went out was because they were tied to the lines, and the buses came in and they could weave their way in and out of the traffic and the traffic moved faster. But that is only one of many points; when the aeroplane can pick up goods at Heathrow in their new cargo depot and deliver them straight into Australia, maybe into Melbourne in a mat
ter of 24 hours at a reasonable rate, that I think is going to tell very much against traditional routes."
Underlying all problems of transport organization the all-too-topical matter of labour relations is crucially important. TDG could not have succeeded so well if its management was not soundly based in this regard. Said Mr. Henman: "I think the secret of good labour relations is that there must be some very clear communication between the chief exeCutives of the company and the men. Now if we put everything at htadquarters this would be the end of the line.
"Instead, we have competent managing directors in our companies all over the country who know most of their men by their Christian names. We have put our communications system on a realistic basis in the sense that distances are short and interchanges are direct.
Decentralization
"This is the secret of our decentralized scheme of management and [can't see how great organizations, with great conglomerations of labour, with management centralized at headquarters far from the scene of operations, can hope to have good labour relations unless they can establish better communications. I find that if you can talk to men and meet with them and they know you, you've got your best chance of good relations. They want to know what's going on."
Few people in road haulage would refute the idea that parochial organization of staff contributes to happy relations at depot level. But large organizations cannot avoid levels of management, although, as we have seen, these are relatively unobtrusive within TDG so long as profitability ratios are maintained.
But staff at all levels in a large transport organization must be assured of career pfospects: the industry cannot expect a bright future if it does not offer sound and exciting careers to the talented. It will never get the talent to begin with if youngsters have any doubt at all abolit career opportunities.
Within TDG every vacancy in the whole organization, every move upwards, is available to the right man. Mr. Henman referred to a chartered accountant appointed to the board at the early age of 31 after a number of accounting and administrative appointments of increasing responsibility with subsidiary companies. "He's come up from the ranks and is our newest recruitment to the board. The board is open, there are no directors' sons, there are no relatives, nothing but the factor of brains determines promotion."