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'Many haulage companies are in dire financial straits or recovering from them'

12th May 1994, Page 62
12th May 1994
Page 62
Page 62, 12th May 1994 — 'Many haulage companies are in dire financial straits or recovering from them'
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Which of the following most accurately describes the problem?

(W

ithin a few years the independent truck and small fleet operators will not deal directly with their customers but will work indirectly through the large logistics and haulage companies to whom they will be transport-only sub-contractors. The evidence points in this direction. Many haulage companies are either in dire financial straits or recovering from them. Those problems are not due to poor management or financial ineptitude but oversupply of vehicles in a reduced marketplace. Many operators have generated cash flow only by cutting rates. Some have fallen by the wayside or left the industry while others have queued to take their places. The barriers for entry are low—a used truck, a mobile phone, preferably a licence, tax disc and even insurance and a new operator is born. Even large operators have had to compete increasingly with the cowboys who have almost no overheads, fixed charges or taxes and can move out of the market if debts get too high. I am exaggerating—but not by much.

One result has been to starve companies of self-generated funds to develop the business services required by their clients. Many industries seek to return to their core businesses and buy in services, including advanced loc,istics operations.

So where oo we go from here? Users of road haulage and other logistic services—

warehousing, timed delivery are not too concerned who provides the elements of those services, provided they are tightly managed to specified quality and price. A wide range of services will need to be co-ordinated and major organisations will provide that facility. They will need to protect individual profit opportunities and will create a barrier of entry. Their fleets will run at full capacity and additional capacity will come from small, good quality operators which have achieved and maintain the industry standards. The bar to entry will be information technology—an advanced booking and monitoring system of electronic links with clients and with suppliers—the coordinating system to bring together the Iwo sides of the equation will give a powerful position in the marketplace. And vehicles will be subcontracted. This is the role I see being occupied in the future by the owner-driver and the small fleet. A specialist haulage-only subcontractor to the logistics network. The individual haulier will, I suspect, be closely vetted for stability, reliability and quality as well as technical competence. Small operators will form strategic alliances rather than a contract with the network which will co-ordinate the sale of their services, but with no guarantee of work. A small haulier could well belong to several alliances of this sort.

Vehicles will, I believe, be leased from manufacturers on a maintenance agreement, either directly or through their dealers. Co-ordinated networks and IT systems will mean empty backhauls could be o thing of the past. Many hauliers come into the industry to be their own bosses. The set-up I propose would be the end of a dream. But can we afford those dreams of total independence as the industry moves towards 2000?

• If you want to sound off about o road transport issue write to features editor Patric Cunnane.

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