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What the future holds for the haulier...

27th September 1974
Page 68
Page 71
Page 68, 27th September 1974 — What the future holds for the haulier...
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Which of the following most accurately describes the problem?

When that seasoned "hire and reward" haulier Mr R. M. Heins, development director, P and 0 Road Services Ltd, addressed the conference on "Tomorrow's Operations", he stressed that road hauliers might think they were the salt of the earth but they were not God's chosen people who could divorce themselves from economic stringency. Ninety per cent of road hauliers operated fleets of under 10 vehicles. Such operators were unconcerned with such notions as infrastructure cost, but in the

difficult climate now afflicting the countr small operators would need to "call in thi doctor" and not just to solve ternporar financial problems.

In his group of companies, said M Hains, there was a happy blend a traditional transport management witl academic expertise. There was consider able local autonomy as the group believe in letting young managers manage. Theo

was no alternative to the use of local initiative but sophisticated management aids should not be despised. Managers must constantly monitor costs and margins and not shrink from being "unpleasant" if targets were not achieved.

On the environmental pressures, Mr Haims thought that it was for the community to decide what measures must be undertaken by hauliers to make themselves socially acceptable. It was for hauliers to decide how they recouped from customers the heavy costs that might be incurred.

Operators must recognize that a tractive unit replacement today might .lost double its purchase price a few years ago. "Do the arithmetic and see the extra margin you will need," counselled Mr gains. Those who argued for short life Nith rapid replacement must face the )roblem of the finance needed for `requent "topping up" operations. surveys of optimum vehicle life could be Jseful. It was for hauliers to decide Nhether to achieve their profit targets by 'eductions in operating costs or by ncreased revenues.

On the effect of EEC legislation, Mr -lains referred to tarification and larmonization ideas. All we could hope Or he felt, was that harmonization rules .ihould be implemented only where this

as essential for the Community's needs. -le warned any young operators who saw pot of gold from European operations hat disillusionment was all too likely. load haulage operators would, in his tiew, hold their own if the Channel runnel was built, but in the future he fore;aw many very big operators, probably nostly shipping unaccompanied trailers, ind a steady growth in multi-country ransport groups. There would be a clear livision between the big and small hauliers in Continental operations.

Mr L. A. Richardson (group transport manager, Bradford Group of Companies) suggested that the high cost of vehicle renewals meant that cost budgets should be updated to cater for this. Mr Heins agreed, but the old rule-of-thumb methods whereby a vehicle was written down to nil (book) value at the end of its working life was no longer adequate. Cost escalation had taken this question out of the hands of hauliers. He doubted if sufficient regard was paid to this aspect in transport rates.

Mr J. H. Adler (chief engineer, SPD Ltd), said Unilever's house rules compelled managers to take account of replacement cost factors. In retail distribution work he felt that a vehicle's revenue earning capacity and its fitness for its task were more important than a long vehicle life.

Mr J. Burrill (company motor engineer, J. Sainsbury Ltd), said his company wrote off vehicles on straight-line depreciation for a number of years and then ran them for a bit longer — not from choice but because of supply difficulties.

Sir Reginald Wilson (retiring chairman of Transport Development Group and a former chairman of National Freight Corporation) agreed that cash flow was very important. Operators should charge as much as possible to generate the cash to renew their vehicles, but this was increasingly difficult as inflation rates increased. A depreciation rate adequate for replacement cost in one year could not compensate for inadequate provision in earlier years. Operators working profitably must remember that the profit figure was bogus to a degree: as much as possible should be transferred to reserve to cater for expensive replacements. There was really no way in which orthodox company accounts could be reconciled with rapid inflation.

Mr Hains stressed the problem of hauliers in a competitive industry. If their rates were not keen they were wasting their time, but many small operators who failed to accept that the rain was coming clipped rates right, left and centre. When the storm burst it would be healthy for the industry if many operators went to the wall.

He went on: "For many years the 10vehicle and under fleet haulier in charge of a family business has not known his real return on capital, but he's been able to enjoy a good style of life despite ignorance of costing. Such hauliers must now charge truly professional rates for their own salvation and raise the rates plateau for the salvation of all of us."

Mr E. R. Durham (director and general manager, Keith and Boyle (Transport) Ltd), thought the road haulier's image needed improving. Mr Heins agreed, and wanted British hauliers to enjoy the respect afforded hauliers in Holland. Young graduates in Britain were now seeking to get into road haulage and as long as the balance was kept with experienced men of the old school he welcomed this.

Rounding off the session, Sir Daniel Pettit invited vehicle manufacturers to put their viewpoints; it was, he felt, important to foster a balanced view and encourage liaison.

Mr Douglas Ball, of Vauxhall, and Mr B. S. Pickup, of British Leyland, responded to the invitation. Mr Ball thought manufacturers were often misunderstood; he suggested they might be given a platform to put their case. Mr Pickup thought operators faced greater problems than manufacturers; his company accepted its responsibilities to the transport industry, and had set up liaison machinery.


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