Match Charges with Costs
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ONE of the tasks that hauliers must undertake in the New Year is to try to equate rates and costs. That is easier to say than to achieve, but if some operators are to survive, hosts and charges must be brought into a proper relationship.
The rising trend of costs during the past 10 years is analysed in this issue and to study it is salutary. The cost per mile of operating a maximum-load rigid eightwheeled oiler is now 81 per cent. higher than in 1948, and of a petrol-engined 5-tonner, 75 per cent. greater. Insurance premiums on maximum-load vehicles have more than doubled and wage costs have risen by 63 per cent. It is significant, however, that the increase in operating costs per ton of payload is smaller in the case of larger vehicles-than of lighter models.
Urgent Attention Needed Problem of Raising Rates Meet Higher Costs
Costs Up: Values Down
Side by side with advancing costs the value of the pound sterling has dropped by 28 per cent. since 1948. Yet there is a good deal of traffic still being carried at the 1948 level of rates. This is particularly the case on the main trunk routes, where the standard of revenue is further debased by uneconomic competition for return loads.
To the uninformed, it might appear that rates in 1948 were unnecessarily high. This is far from being the truth. It has been possible for operators to continue in business on -a 10-year-old rate scale only by accepting the most meagre margin of profit, by making better use of better vehicles and by carrying more traffic. Between 1948 and 1956 industrial production rose by 36 per cent, . and hauliers have been able to spread increased cos. ts over a larger tonnage of traffic.
The raisingof maximum legal gross vehicle weights has enabled greater payloads to be carried and the improvement in design and manufacture of vehicles has. ensured that operating costs have not advanced in proportion to payload. Thus, hauliers have to some extent been able to offset the march of costs, but the general level of rates is still far from satisfactory.
It can be corrected only by close co-operation between hauliers through the extension of interworking and by clear understanding between hauliers and approved clearing houses. The new code of Conduct for longdistance hauliers which the Road Haulage Association
to arc preparing should assist in this
to direction, although too much must not be expected of it.
It is impossible to -establish a national rate scale and to specify charges that would be economic to all operators. Any undertaking that a haulier may sign to charge only economic rates must be tempered by his own judgment and circumstances. Nevertheless, the code is an earnest of the Association's desire to improve the standard of the industry.
Their attitude and that of individual members must inevitably be influenced by the keen and increasing competition in road haulage, created partly by the facility with which C-hiring work and contract-A licences may be surrendered in favour of -open A licences. There is a growing tendency among manufacturers and traders to give up contract haulage in favour of public transport in an effort to secure lower rates. The validity of this wish has been accepted by the Transport Tribunal and it is now relatively easy to enter road haulage by the back door. This threat can be met only by solidarity, among well-established hauliers.
There are at least two promising outlets for the energies of well-organized operators. One is in warehousing and distribution on behalf of the manufacturers of consumer goods, and the other is in international haulage.
Scope for Hauliers Direct services from Britain to the Continent are increasing in number, range and frequency. Because of the complications of the work, it is possible that Clicensees generally will not wish to undertake it and hauliers who make a serious study of it and enter the field .early are likely to gain permanent new and lucrative traffic.
On the passenger side of the industry, the problem of relating revenue to costs and finding new business is no less pressing. The statutory machinery that governs increases in coach and bus fares is both a help and a hindrance. It gives legal force to necessary adjustments of fares, whereas the haulier has to bargain—often with little success—for any improvement in rates that he requires to keep himself solvent. The process is, however, too slow in action.
Perhaps the best case in favour of conferring on bus
companies power to make small temporary increases in charges, subject to later ratification by the Traffic Commissioners, was presented by Mr. J. S. Wills, chairman of East Yorkshire Motor Services, Ltd., in his address to the shareholders just before Christmas.
He pointed out that to raise fares to match costs was difficult and delicate on account of the keen competition provided by private transport, by the railways in some areas, and by the growth of home entertainment in the form of television. Bus companies were forced to do so in the most unfavourable psychological circumstances several months after the increase in costs that created the need for greater revenue had occurred. By then the cause was half forgotten.
In the interval, other advances in prices had probably taken place and when the claim for higher fares was presented, public exasperation found its only available outlet. The result was a shoal of objections to the application. Public resentment against inflation became centred on the bus industry and an often considerable amount of bad publicity gave passengers an exaggerated idea of the extent of fare increases.
This is a situation which only the Government can change and they should do so speedily. As publicutility undertakings, the bus companies have always shown a strong sense of responsibility and conscience, and they should be placed in a no less favourable position than the railways or London Transport, who already have power to raise charges by up to 10 per cent., pending a public inquiry.
It must be accepted that the peak years of public road passenger transport are over and bus companies must accustom themselves to the thought of retrenchment. This does not imply a policy of defeat, but one of scrupulously adjusting services to the traffic available and to the ability or inclination of the public to pay. Within those limits, it will be necessary to give the highest quality of service in order to retain e4isting traffic and to attract new passengers to replace those who provide their own transport.