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. part of a national plan to rationalize rates'

6th November 1964
Page 78
Page 78, 6th November 1964 — . part of a national plan to rationalize rates'
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Which of the following most accurately describes the problem?

IT may seem surprising that only now have hauliers as a body decided to tackle the subject of demurrage. Waiting time has always represented a far more serious problem to the road operator than, for example, to the railways. The road vehicle is an expensive piece of equipment to be kept idle for a long period, especially if a driver has to stay in attendance. The use of trailers may help but is not appropriate in all cases.

Standing charges are normally regarded as responsible for anything up to two-thirds of the weekly cost of operating a goods vehicle, which is earning money for the user only when it is actually running. Other difficulties which it may not be possible to measure precisely in financial terms arise when it is taken out of circulation for any reason, whether it be an accident or an inordinate delay in turnround. More often than not the organization of the business will include plans for the future use of the vehicle.

Apprehension of what the customer might say has not been the only reason why hauliers have hesitated to embark on a straightforward policy of demurrage. There is no satisfactory method which will fit every case. It may be comparatively simple to work out the appropriate charge but not so easy to apply it. Some operators prefer to include the cost of waiting in their rates and to allow the customer a discount if the vehicle is turned round promptly. Hauliers who serve the docks see that there is wisdom in a scheme which would provide different rates for the first and the second half of the loading period of a vessel.

The confusion over demurrage is symptomatic of the general lack of any system in fixing rates for the carriage of goods by road. A first step towards providing a better system might well be the decision of the ,Road Haulage Association to work out a national scheme for demurrage. It could become part of a national plan to rationalize rates in general.

For many years there has been little attempt to build the foundations needed for a durable rates structure. Specimen schedules devised for specialized groups or even for operators in general have usually been based upon what is already being charged. Known increases in costs have been matched by the recommendations of a national committee for an overall increase in rates. Existing schedules and guides have been adjusted accordingly. A line has been drawn in the ledger and operators have sat back to await the next turn in the wheel of fortune or the inflationary spiral.

An Incorrect Picture The superficial impression has been of a stable industry set on an even course which changes only when outside circumstances make it necessary. Everybody knows that this picture is incorrect. There has never been a common denominator for rates. They vary widely even among operators engaged in exactly the same type of work. There are also differences in the extent to which operators are able to put up their rates in conformity with the periodical recommendations.

A theoretical steady increase in rates has been offset by a D4 decline resulting from the natural disinclination of the trader or manufacturer to pay more for his transport than is necessary, coupled with the willingness of too many hauliers to cut rates at the first sign of trouble or in order to get traffic. Two main factors have kept the road haulage industry solvent, or barely solvent in some cases. On the one hand operating efficiency has improved because of better methods, better vehicles, increased speed limits and so on. On the other hand a reduction in efficiency has paradoxically enabled a small minority of operators to survive. They have abused their vehicles and the law.

Signs are that the natural advantages of the road vehicle can no longer be taken for granted. Congestion and delays are increasing and will continue to increase unless countervailing action is taken. Better vehicles and higher speeds are being cancelled out. In addition, regulations which virtually encouraged overloading have been revised so that the payload will more nearly suit the capabilities of the vehicle. Public attention has been drawn to instances where vehicle maintenance has been grossly neglected and the driving regulations disregarded.

Increases Needed The relevance to rates should be obvious. Operators no longer able to get the increases they would like can no longer comfort themselves with the thought that the future is automatically on their side or with the even greater illusion that they can cut down their costs. They need the increases more than ever. The main task is to convince the customer that the situation has changed. The haulier who has been reasonably successful in explaining that a recommended rise of, say, 5 per cent is reasonable now has to argue that in any case the basic rate is wrong.

The extent of the problem can be divined from the reaction which recently greeted the bare suggestion that the haulier who spent more on maintenance to improve vehicle standards would have to find the extra money from his customers. The logic is unassailable, the public response almost one of horror. The same thing will happen when plating brings about the situation where operators who have been carrying loads greater than those suggested by the vehicle manufacturer, although still within the law, find that they are not allowed to take so much on a single journey.

Unlike a general increase in, say, wages or fuel tax, congestion, delays, maintenance of vehicles and changes in permitted payload cannot easily be transformed into an appropriate percentage increase in rates. All the same, these items, and especially the first two, are very much in the minds of hauliers. The only possible approach is to take each item separately and work out as good a method as possible for ensuring that the cost falls upon the people responsible. In due course it may be found that the whole method of assessing rates and rates increase has drastically altered, one may hope for the better. In particular, a really satisfactory scheme for demurrage should persuade trade and industry to cut out delays. Hauliers would prefer a situation in which they had no need to charge demurrage.

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Organisations: Road Haulage Association

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