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Making up the numbers by Janus
IN whatever form of words the Road Haulage Association had chosen to make its recent announcement, the urgency of the message to hauliers could hardly have been obscured. They are being advised without delay to seek rates increases from their customers, and the figure at which they should aim should be something around 15 per cent.
Even the operator with a comparatively short memory can hardly fail to.realize that die advice, when it is boiled down, is much the same—one might say precisely the same—as he would have received several years ago before the Prices and Incomes Board pronounced sentence against what it called general rates recommendations—significantly the haulier has preferred to cling to his comforting "blanket" metaphor.
THERE is no substitute for a statistic. The most benighted haulier does not need to be told that his costs are going up; and the remedy is equally obvious, What he most lacks is a specific figure round which he can assemble such arguments as he is able to produce. A statement from the RHA which did not give such a figure would be of little use.
Strange as it may seem, the customers also often prefer to know what sort of increase is being generally canvassed. Like everybody else, they will have translated the recent statement into the only terms that interest them personally and will now be expecting a miscellany of rates demands. The strength of their resistance will depend on the extent to which a specific demand falls below or exceeds 15 per cent.
At the present moment the likelihood of a prompt approach is greater than usual. Recent events linking wage demands with rises in the cost of living may force the Government, even against its will, to consider some form of control. There is every inducement for the haulier to establish his rates structure on a firm foundation before some kind of official barrier comes down.
HAD the Government left well alone six or seven years ago, the urgency of the situation might not have been so apparent to hauliers. The Prices and Incomes Board and more recently the Centre for Interfirm Comparison have introduced considerations which many hauliers, at best, would not have been able to formulate clearly enough to make effective use of them.
A fashionable example is the calculation of return on capital employed. Last year the costs and productivity scheme (CAPS) sponsored by the RHA threw up the discovery that in none of the sectors of the industry under the microscope was the return as much as the normal 15 per cent on book values which had been found in other industries. In some cases the gap was substantial.
• The new PIB report on the National Freight Corporation also has a note on this point. It observes that the costs of BRS Ltd have increased in step with revenue, so that the company was no more profitable in 1969 than in 1966 "and the return on capital employed was only about 3, per cent". Clearly, this is something which the Board considers ought to be remedied by enhanced productivity if not by an increase in rates.
Every operator should be able to get some benefit from reading the Board's report. It agrees that the increases in NFC charges since 1968, "though very considerable, were necessary given the Corporation's circumstances and current levels of operating efficiency". It also says what the increases were.
FOR the period up to 1968 there was no general rates increase. In that year there was an average increase of 9 per cent in the rates of BRS Ltd and of 8+ per cent in 1969, followed by 9+ per cent in January 1970 and 9 per cent in July. This last increase was the one that prompted the Government to send in the PIB. Now that the Board's seal of approval has been given, if a little grudgingly, one must assume that BRS Ltd, in common with other hauliers, is already hard at work on a campaign for yet another rise. As the RHA is careful to point out, almost all the cost increases in 1970 took place in the latter half of the year, that .is to say after the BRS Ltd rates increase last July.
With BRS Parcels Ltd the situation is even more difficult. The rates have gone up five times since the beginning of 1968 and are now 49 per cent higher. Over half the increase has come in the past 12 months with rises of 12+ per cent in January and 10 per cent in July last. Revenue has not kept pace with these rises because of a decline of 4 per cent a year in the volume of parcels traffic. A much higher drop of 9 per cent in 1969 is said to be due in part to a
three-week strike in certain depots in November of that year.
Statistics in the report also show a decline in the number of packages handled each year by National Carriers Ltd and even by the railway's express parcels service and the Post Office. There has to be a presumption of a continuing fall in parcels traffic handled by the public sector carriers.
THE report admits that there is no conclusive proof of a decrease in the potential market for parcels carriage. "It may be that public sector carriers have simply been losing their share in that market". It so happens that the CAPS reports will give no guidance on this point. The sectors of the industry which they cover are long-distance operators, "general" operators, a category which combines these two, tipping operators and agricultural carriers.
Inclusion of express carriers might have brought the average above the stated figure of 15 per cent. The RHA statement that some operators would need substantially more should be taken as something different from a mere customary gesture in that direction. There may be an unusually large number of members not directly covered by the CAPS reports—and BRS Parcels Ltd would be among their number—who can justify a rates increase well above the normal.
PART from this, the RHA may seem to
be taking a more definite line than it has for some years past by the firm assertion of 15 per cent as the 1970 increase in costs—and by inference in charges. It rests on the authority of a CAPS report still to be published. A not unreasonable inference is that the figures for the various sectors are not far removed from the generai average.
This ought not to be surprising. Although the incidence of particular items of cost falls unequally on different operators, the tendency is for the differences to cancel each other out in the final analysis.
ACCORDING to reports, this was almost invariably the experience in the days before the PIE when a committee of hauliers drawn from various areas and various sectors of the industry would meet once a year or so to compare their costs and to decide whai recommendation, if any, they should make for a general increase in rates. The member! of the committee were regularly surprised a. the near unanimity of their findings.
For the PIB this was probably too mud of a coincidence. In spite of this; the Board while criticizing the hauliers for theh slipshod methods, did not seriousll challenge the end product of thc calculations, any more than it has suggestec that last year's NFC rates increases wen not justified. There can after all often b found a long way and a short, simple wa: of achieving the same result. .