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The Folly of Rate-cutting

" A Cautionary Tale of Two Operators Who Fell By the Wayside While Another Haulier Progressed Through Keeping Proper Accounts and Maintaining Fair .Charges

WHEN describing throne-book one-vehicle system of recording costs in my previous articles I stated-that, to my knowledge, 'there was no book published which would be suitable for such accounting. I was wrong. The Charnwood Publishing Co., Ltd., Coalville, Leicestershire, have sent me a copy. of "-Vehicle Maintenance Record," which might have been prepared especially to meet

the requirements of my system. —

Properly used, it provides a life history of a vehicle-from the date of its purchase onwards.. Although its title might lead one to assume that -itprovides for recording maintenance expenditure only, it actually has provision for detailed records of tyre changes and consumption of fuel and oil. It is of foolscap .size and has 20pages for maintenance records, four pagesfor tyre records and -eight for records of fuel and oil consumption.

The inner page of the cover is designed to record particulars. of the vehicle to which the accounts apply, as I recommended in my articles. The book is substantially made and the Cover is of tough material—as is necessary for a book which may actuallY be in use for 10 years or more. The price is 4s. 6d., including purchase tax and postage.

Traffic Taken Away

I have been discussing with some friends of mine that everlasting subject: rate-cutting. Among the views expressed during these conversations was one which I have always held, namely, that in the long run good ,service to the customer will survive where rate-cutting will fail. Or, to put it' another way, failure to render the kind of service the customer requires will cause the customer to take his traffic away, even if he may have to pay more than the cut rate.

No haulier can get away from his responsibilities in respect of his vehicle, particularly as regards its mechanical ' condition, nor, in all but a few instances, can he avoid the necessity of keeping up appearances. These things may be neglected for -a time, but, sooner or later, the effect df any neglect makes itself evident.

Avoidance of expenditure on maintenance enables some hauliers to carry on with the practice of cutting rates— ignorantly or deliberately—for longer than would otherwise be possible. If they spent appropriate amounts on that work, as and when theexpenditure became due, they would the Sooner appreciate that the rates they were charging were insufficient, c.44

The results a their negligence aresometimes brought home to them in unexpected ways, causing damage to their businesses which cannot always be repaired and which, in any case, is bound to involve considerable monetary loss.

A responsible haulier, however, who has resolutely held out for proper prices, giving at the same time good service and establishing a solid foundation of goodwill among his customers, as well as in and about the neighbourhood of where he works, invariably reaps the benefit when his competitors fail behind in respect of their neglecting their vehicles.

The .other day I met such a man. He is established in a country district in the Midlands and, after a somewhat disheartening start a short time ago, is now reaping the benefit of a consistently sound policy in respect of service and the maintenance of a scale of fair rates and charges. He is an old friend of mine, a man who carne to see me some years ago when he started in business.

Sure of Success His original call was to ask my advice in connection with the keeping of accounts, and I outlined for him a scheme similar to that which I have recently described in these articles. He came again the other day to compliment me on making the system public and to tell me that I was sure of success, as were those hauliers who adopted it, for he assured me that in his case at any rate he had found it most useful.

His recommendation is really valuable, for he happens to be the sort of haulier to whom that series of articles was addressed, or at least he was typical at the time when I first met him and when I gave him the equivalent of that series in the way of personal advice.

He had at that time just concluded two or three years of roaming about the world, doing a variety of jobs., In that period he had succeeded in refuting the truth of the old maxim that a, rolling stone gathers no moss, for he had managed to put together a useful little sum, which he proposed to invest as the capital outlay on a vehicle, complete with special A licence, with which to start in business on his own account as a haulage contractor.

He had worked for several years as a motor mechanic in a large service depot, where he had gathered a great deal of experience in connection with the handling of heavy vehicle chassis. Leaving there, be was engaged as a driver by a large concern of haulage contractors, with whom he

remained for six years. When he came to me, therefore, he had ample knowledge of the maintenance and driving of motor vehicles and knew more than a little of the snags which are encountered by a haulage contractor.

He is a canny chap and before committing himself by Investing his capital in the project he had in mind, he determined to obtain a little information as to the clerical side of the business.

He had already realized the need for keeping full and accurate records, but had appreciated from an article which I wrote for The Commercial Motor about that time, that there were certain unexpected items of expenditure. He came to me to find out how he might take some precautions against being caught unawares. It was in answer to his inquiry that! devised this scheme of setting down average figures for expenditure on maintenance and tyres, and on account of depreciation.

As he had come to see me again, I decided to improve the shining hour by getting to know how he was going on and learning what snags he had encountered and how he had overcome them. That, I decided, would be the sort of thing which would interest most readers of these articles, and I tackled him accordingly.

"What sort of work have you been engaged upon all this time?" I asked him, "You are in a country district, aren't you?"

"Yes, five miles from a railway station," was his almost unexpected answer. "The work I do is nearly evenly divided between carting cattle, sheep and pigs to market and bringing loads back for the farmers, and picking up goods at the station for general distribution."

"What sort of rates do you get? 7 "Oh, as a rule they work out at about Is. 3d. per mile, which isn't bad for a 5-tonner running a fairly big mileage, say 600 per week on the average."

"No, that is not at all a bad rate, especially for rural work. Have you always been able to get that price and do you suffer sometimes as the outcome of operations by ratecutting hauliers?"

"I've not had much trouble in that line since two out of my three competitors went out of business."

"Went out of business! How did that happen?"

General Slackness

" As the direct outcome of unpunetuality, caused in the first case by general slackness and in the other by failure to keep his lorry in good trim."

"That sounds rather interesting. Can you give me sonic more details? "

"Yes, if you like. One was a young fellow to whom the business had been left by his father. He was slack and apt to let things slide. Ile never turned up on time, or perhaps I should say hardly ever. He used to keep his customers waiting and let them down until, at long last, the time came when none of them felt able to trust him.. In the end the business was sold up." "And the other fellow?"

"Oh, he was a man after your own heart. He started about two or three years ago with a couple of lorries in good condition. He was doing the same sort of work as I am doing now, that is to say, carting agricultural produce, cattle, sheep and pigs between the 'farms, stations and markets, but his charges were really ridiculous.

"In one particular ease a load from A to B, a matter of, .15 miles was carried for 15s. As he had no certain prospect of a return load, that meant that he ran the risk of doing a 30-mile run for 15s., which is no more than 6d. per mile— and that for a 5-tonner. However, he continued in that way, and seemed to be making a success of it. His service was good and he seemed satisfied, so that a competitor who asked higher rates really hadn't a chance."

Isolated Example

"But surely that's an isolated example. All his rates were not as low as that?"

"No. There was another job about which I was told. This man carted timber all day for a farmer who was building an outhouse. He had to engage a man to help load and in the course of the day he covered 30 miles. When the farmer asked the price for haulage my competitor quoted 30s. If you reckon that he paid the loader 14s. or 15s. for the day out of the 30s. you will realize how profitable the job was.

"And again—this is really almost incredible—there is a big public school nearby, and whenever a team goes away to play rugby or cricket, a local haulier is engaged to carry the luggage down to the station. This had previously been done by the local coal agent, who supplied coal to the school and took on this job as a matter of course. On one particular occasion the coal agent couldn't do the job and asked this man to do it for him. The coal agent told him it was a cash transaction. He said: 'The price is a guinea. You will be paid at the station!'

"Well, this man did the job, saw the luggage into the train and, when he was asked the charge said: 15s., please.' " "But obviously he couldn't go on for long in that:way? "

"He went on quite long enough for me at any rate. You see, the cost of living in this part of the country is low, and he was apparently quite content to get enough to keep himself in food and clothes. I myself was really beginning to wonder whether I ought to try a NA of rate-cutting myself when the crash came.

"His lorry stood him in good.stead for a couple of years. I should mention that he never used the second vehicle; when he tried to run it it broke down: he'd been had over buying that, like he was over everything else. He rather prided himself on being a mechanic and had enough skill to carry out decarbonizing, brake adjustment and greasing, and things like that, and so long as that was all that was needed he was all right. As long, that is, as there was no extra expenditure on new parts, he got on well.

"It was when the brake facings wanted renewing and one or two other parts had to be bought that the collapse came. Because he had fitted new tyres almost immediately before these renewals became necessary, and as he was already financially involved in respect of those tyres and other items, he just couldn't find the money for the spares.

"It was while his lorry was in that state that he tried taking a 6-ton load down a fairly steep hill. The brakes wouldn't hold and the lorry, load and driver went through a hedge into a field. That finished him as a competitor."