Is Rates Stabilization Possible ?
Page 28
Page 29
If you've noticed an error in this article please click here to report it so we can fix it.
IHAVE received a letter from Mr. G. W. Irwin, hon. secretary of A.R.O. Cambridge and Ely Sub-area, who enclosed minutes of a recent committee meeting, at which the problem of rates stabilization was discussed. Very little progress was made, but, states Mr. Irwin. – . . it was felt that there must be a solution somewhere. If there is, maybe ` S.T.R.' knows it and will publish it in. The Commercial Motor, always bearing in mind that 50 per cent, of operators . . . do not know their costs and do not want to know them, neither do they keep any recognizable accounts."
The immediate answer to Mr. Irwin's suggestion is that, had I a perfect solution of this outstanding problem of the industry, it would have been divulged long ago, and by now everyone would have been perfectly happy. I can at least state, with absolute confidence, that The Commercial Motor Tables of Operating Costs embody the principle which ultimately must underly any satisfactory scheme.
What are the obstacles in the way of the adoption of a scheme embodying these principles? The first to my mind, the biggest is suggested by the above extract from Mr. Irwin's letter, when he points out that 50 per cent, of operators do not want to know anything. The fact that the difficulty lies there is further emphasized in the report of the committee meeting. A footnote urges members to tackle the problem for themselves and to come to the meeting to aid in finding a solution.
Now I have said, at most of the meetings which I have addressed and at scores of little conferences held outside, that I am firmly convinced that if I could make direct personal contact with every haulier, explain to him exactly what his costs are, and demonstrate by actual figures what his minimum rates must be, to cover those costs and show a sure profit, then rate-cutting would practically
cease. I have that belief in my knowledge of human nature, I aril certain that no man, once he -has been shown that he is working for nothing, will continue to do so. The first thing, then, is to make provision for this almost house-to-house canvass of all hauliers. The second is to apply the principle of the time and mileage charges given in The Commercial Motor Tables ofOperating Costs. If used with reasonable discretion, the method provides 'a basis for determining fair rates under all conditions and for all sizes and types of vehicle.
Now, the committee meeting to which Mr. Irwin refers in his letter discussed most carefully what was described as "a head office circular headed 'Suggested Machinery for the Stabilization of Road Haulage Rates.'" The discussion turned on these pointssi—(a) The desirability of such a scheme. (b) Any possibleweakness. (c) Suggestions for improvement.
As the outcome, the committee put forward 11 objections to the plan proposed. It was, nevertheless, agreed that a scheme for rates stabilization was desirable and
that further attempts should. be made to that end. No doubt Mr. Irwin's letter was one outcome of that decision. What I propose to do is to examine these objections to learn whether they carry the same weight if applied to my own scheme.
The first drew attention to the fact that other trade organizations, better placed than A.R.O., had attempted to stop price-cutting, but without success. It pointed out that where rate fixing has been successful, it has been through small groups of concerns which have controlled the bulk, if not all, of the trade. The road-haulage industry is composed of innumerable small operators; moreover, it comprises only 25 per cent, of the total operators of commercial vehicles.
My answer to the first part of this objection is road haulage is in a better position to control its rates than is any industry: It is now, with the operation of the Road • and Rail Traffic Act, a closed ring. It may not be possible ever quite to eliminate a certain amount of ratecutting, but it should be possible, with the limitation of numbers of vehicles, to reduce it so that the harm it can do is negligible.
The complaint of non-rate-cutting hauliers used to be that, no sooner did one rate-cutter go out of business because of the error of his ways, than two more, equally ignorant of costs and rates, took his place. That difficulty has been eliminated. All that hauliers have to do, it seems to me, is to agree among themselves to use my basis for rates assessment and to abide by that agreement. If the majority do so, " including all operators owning large tonnages, then the depredations of ratecutters outside the agreement will not matter.
The harm which they can do is limited : it is known— because the tonnage operated and licensed is known— and their fleets cannot be increased on the basis of ratecutting. On the contrary, there is the possibility of their tonnage decreasing. That is what I mean when I say that the road-transport industry is in a better position than any other in checking rate-cutting.
The second part of this objection, in which reference is made to the fact that "road transport "—by which I take it "road hauliers" is meant—comprises only 25 per cent, of vehicle operators, is, I imagine, intended to imply that the operations of ancillary users are likely to upset any scheme of rates stabilization.
This is a bogy with which hauliers frighten them selves. It has always been the case that ancillary users could operate commercial .vehicles at a cost substantially less than the figure which they must pay hauliers to do the work for them—provided that the Work was constant and the traffic consistent in bulk throughout the year. At the present time, owing to the fact that the conditions relating to wages dio not apply to ancillary users, they are in an even better position to operate at lower cost than hauliers. Yet the truth is that never before have ancillary users shown themselves so ready to transfer their transport to the professional haulier. That tendency is likely to increase as regulations become more and more complicated and onerous.
There are two reasons why traders, manufacturers and merchants of all kinds prefer to utilize the services of hauliers, rather than operate their own fleets. First, there is the question of traffic fluctuation. It is uneconomic to maintain sufficient vehicles to deal with maximum traffic. The courses available are to operate vehicles enough to deal with a little more than minimum traffic and to contract with hauliers for the transport of the rest, or to hand all the work over to haulage contractors. There is a strong tendency to-day, among those who follow the first plan, to change to the second. Secondly, there is the desire to be rid of the responsibilities and inconveniences of dealing with road-transport matters, as well as users' own particular businesses. Expansion of busi ness, demanding the extension of premises, often makes it impossible to provide garage accommodation. That is a frequent cause of change. Difficulties with staff are another source.
Here the very thing that hauliers object to, namely, the absence of wage stabilization for ancillary .users, is itself a condition favourable to a change from operating their own fleets to utilizing hauliers' services. Drivers know that better wages can be earned by going over to A and B-licensees, and are not slow either to take advantage of the fact, or to claim wage increases from ancillary-user 'employers.
The difficulty of complying with the regulations concerning drivers' hours of work is no less in the case of C-licensees than it is with A and B-licensees. Then there are drivers' logs, petty police persecution and all the other difficulties which have to be,faced by hauliers and ancillary users alike. For hauliers, however, there is no escape; for the ancillary user there is the option of throwing the onus on to the haulier and paying him for it, In this connection, the haulier who is inclined to take too seriously the bogy of competition from the Clicensee should bear in mind that it is a fundamental condition of all industries that, more often than not, a small increase in cost is much more acceptable than any increase in inconvenience.
It is not true, either, that most C-licensees object to paying the haulier a fair and reasonable rate for his work. I could quote innumerable instances to show that fair rates are offered, but I can do no better tha.h refer to the previous article. S.T.R.