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'A growth industry'

10th November 1984
Page 23
Page 23, 10th November 1984 — 'A growth industry'
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Which of the following most accurately describes the problem?

RESULTS for UK international hauliers seem impressive. They have reported increases above the EEC average in international activity since 1981. The graphs below show a notable difference between the performance of the UK and EEC as a whole, in driver recruitment and investment levels.

Admittedly, these levels are for international hauliers, but they are likely to be a reasonable barometer for the state of the whole haulage industry too.

The 1984 Keynote Report on Road Haulage, An Industry Sector Overview, published in association with the ICC figures on the English haulage industry (CM, November 3) states: "Despite the recession, road haulage remains a growth industry." It continues that in the UK and abroad, road haulage has continued to take a large share of the freight market since 1980 — the year the market collapsed.

So if haulage is a "growth industry" and suffers fewer bankruptcies than construction, textiles and clothing, where is the problem? I phoned hauliers whose accounts figures in the ICC reports showed that there was a problem.

A spokesman for P. 0. Middleton, Sheffield, explained his company's losses simply: "Sheffield's a dying town. With the number of hauliers around, the fight for survival is so keen that to make a profit is a miracle." He claimed he had rung hundreds of people for general haulage work, but that every market was saturated.

The market was "dog eat dog", and if he asked for higher rates from a customer he would be told that the work could be done for less elsewhere. The main culprits were one-man operators who worked with lower overheads. Rates were "very, very low" he said.

Middleton's spokesman went on to attack the Road Haulage Association. He said it did not actively help even though it had recommended rates increases.

Three years ago Middletons employed 33 drivers, but now with only 14, the situation is little healthier. Apart from the lack of market demand and increased costs, cash-flow has contributed greatly to the company's losses.

The spokesman stated: "The bigger they are the longer they won't pay." He said that he had a bill from one customer from last May. British Steel Corporation, the life-blood of Sheffield was a slow payer too. He said that it took between six and eight months to pay.

Another Sheffield-based general haulage firm Warrington's Transport, was just as gloomy when asked why it had doubled its losses to f30,000 in 1983. Mr Warrington said that the area was very tough — totally steel related and suffering from overcapacity. He could see no improvement for at least a year. The miners' strike had depressed demand even lower, he said.

Mr Warrington said that customers' rates had not increased to any degree for five years. But he would not expect his drivers to work for wages be low the union rate. This would "not do the industry any favours in the long term." When wages drop, rates drop too and nothing is gained, he explained.

Warrington's Transport has reduced its driving workforce from 25 three years ago to 15.

A. Neely, the Birmingham based company, owned by RHA national chairman Bert Neely has also suffered severely in the recession. Both 1982 and 1983 were very bad years with recorded losses of £16,000 and £6,000 respectively. But 1984 has seen a return to a profit of around £17,000, Mr Neely said.

He had seen a general improvement but admitted to "working from a very low base". Customer bankruptcies had been a major problem contributing to losses and to cope, the number of drivers had been .pruned from 30 three years ago to the present 17.

Mr Neely said: "The Midlands are as depressed as anywhere," with an unemployment rate of over 15 per cent.

Defending the RHA, Mr Neely said that it had tried hard to say: "Look at your costs and do not beat your rates down." He admitted that this was difficult to accept by the average haulier. But he thought that hauliers prepared to run their vehicles at a loss to help cover fixed overheads had realised that this was a short term option which only leads to losses.

Another Midlands haulier, Capels Transport from Coventry, reported "very much a day-today business, one day busy, the next it has gone again". A spokesman said that it was just managing to hold its own, but that there did not seem to be any sign of improvement.

Its business had been tied up with the motor trade. It was very difficult to replace the lost business as there were no new manufacturers, he said.

Despite cuts in overheads — driver numbers had fallen from 50 three years ago to 15 — the company was still only just in profit in 1983.

In the West Country, H. C. Cutler of Poole, explained its losses simply: "Too many people are cutting the rates". A spokesman said that the position seemed to be easing very slightly and that it was hanging on "until the stupid ones leave the market." It could then run for decent rates. Costs had risen and rates were the same as two or three years ago. In three years drivers had been cut by a quarter to 36.

Industrial Transport Services based in High Wycombe, Buckinghamshire, said that it is one of the only four major carriers existing there. Three years ago there were at least 10.

Frederick Moreteon said that "cut-throat business" and oneman operators whose overheads were less, were the cause of its very high losses.

Mr Moreteon admitted that if Industrial Transport Services had not been amalgamated into the Hollis Group this summer, it would have gone bankrupt. With the group investing in new vehicles the future looks brighter he added.

Thirty per cent of hauliers are in the loss-making state, according to the ICC surveys. But others appear to be on the move, even if slowly; 71 per cent of hauliers increased their turnover from last year, and around 81 per cent increased their profit. It's growth, but from a very low base.


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