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RATES OF SUCCESS

13th April 1989, Page 35
13th April 1989
Page 35
Page 36
Page 35, 13th April 1989 — RATES OF SUCCESS
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Which of the following most accurately describes the problem?

Transport laws and the state of the economy help to set road haulage rates in different European countries.

• Britain's hauliers are suffering, and will go on suffering until our trade balance improves says transport expert Dr Jim Cooper. The balance of payments is one of an array of factors affecting the business available and rates paid to British operators as the UK nears the Single European Market of 1992.

UK consumers are buying more foreign goods than British firms are exporting. This is worrying for the Government and for international hauliers who depend on these exports, explains Cooper, who is writing a book comparing haulage rates in European countries and how deregulation will affect them.

Cooper, NCCS reader in freight transport and distribution at the Polytechnic of Central London, says too many hauliers are chasing too little business going to the Continent. European firms, exporting to Britain, tend to choose local hauliers to do their work.

When an economy is booming, as Britain's is, people buy more foreign luxury goods (French wine, German cars, Japanese video recorders), and this hits our trade balance, unless we can sell the same products abroad.

However, a healthy industrial climate also attracts foreign manufacturers. Toyota setting up in the UK is good for exports and for hauliers serving that market; cars and parts have to be carried around the country and abroad.

The economy is not the only factor affecting rates, though. Different laws governing entry into the industry in each country can determine how much domestic and international hauliers are paid.

Freight expert Jeronimo Maeso says British hauliers are the second worst paid in the European Community (next only to Greece) because of our deregulated transport market (CM 5-11 May 1988).

The 1968 Transport Act made it easier for owner-drivers to enter the industry, and today there are no real quantity controls on who becomes a haulier. Unlike Germany, for example, anyone here who proves himself fit to run a transport operation can seek work. Because there are so many firms competing for business, rates are driven low. In Gemiany, Maeso points out, a haulier earns 2750 for a 20-tonne load on a 500km trip. His British counterpart gets only 2320.

In Spain, a haulier is paid 2300 for a 15-tonne, 500Icm trip. In France, he might get 2430, in Britain, the rate is only 2270. A Spaniard will get 2180 for a 20-tonne/ 100km trip; in Britain, his counterpart could only receive £120.

Maeso completed his study into rates last year and presented his findings at the 1988 Road Haulage Association Tipcon conference. He is now working for NCCS in Spain, recruited as part of that company's drive to bring contract distribution to the Iberian Peninsula.

Cooper, however, says most of Maeso's findings still hold true and, though no detailed comparisons have been made this year, Continental hauliers can still, on average, earn one-and-a-half times as much as a UK operator for a nearidentical trip.

But, as Maeso has noted, the imbalance could mean great opportunities for UK hauliers after 1992. British operators, used to competing hard in a deregulated market here, should be able to undercut their German and French counterparts when cabotage becomes legal.

Germans and Italians, who make a cosy living from their countries' regulated industries, will have less incentive to steal work over here. They will be better rewarded at home (until competition allows German customers to lower their rates).

This is borne out by opinion expressed at a meeting last month between the RHA's international group and its German counterparts, the BDF and the DKS. The BDF admitted the German haulier enjoyed the benefits of a protected market and said there was a strong wish in the industry to retain its restrictive licence and tariff structure after 1992.

The DKS said cabotage would hit the German haulier harder than his UK counterpart, affecting rates and quality control. It added that cabotage might not benefit British operators, because they would not be able to take advantage of the current high rates (which increased domestic competition would force down).

But Maeso has also warned of another factor blocking Britons anxious to take advantage of higher Continental rates. Continentals are more used to working across international borders than British hauliers, he says. Many British hauliers are still ignorant of the opportunities 1992 will present.

Cultural barriers also come into play. It is no use a Manchester operator offering lower rates to a Munich firm than its usual German contractor charges, if the Briton is unsure of the language, customs and working pratices of the country.

Can you imagine a Bradford brick exporter awarding his custom to a Greek or Italian who spoke no English, had rarely been to this side of the Channel and took a two-hour siesta? It is hardly surprising that Continental companies take the same attitude.

British hauliers seeking work abroad will not only have to offer the right rates. They will have to convince their customers they can be trusted with their business and can understand foreign markets enough to know where to look for contracts and how to win them.

Here, the Benelux countries and Denmark have the upper hand. Most hauliers in these small countries are used to working internationally and speak foreign languages. Geographically too, Belgium and Holland will find themselves at the hub of Europe when the barriers come down.

Cooper points out that there will be a rationalisation of manufacturing plants towards northern Europe after 1992. With a free flow of trade, it will make less sense to base factories on the edges, where they will be harder to reach.

EXPERTISE

The emphasis will turn from freight to distribution. The hauliers which shippers and exporters use will thin out as it becomes less necessary to use general hireand-reward operators. Expertise and versatility will become as important as rates.

Ian Rycroft, managing director of Wimbourne, Dorset-based explosives haulier EC Transport, and a key figure in the RHA international group, agrees. He says smaller UK firms can be as successful as the giants by concentrating on specialist markets and becoming experts in their fields. In this way, they will be able to offset the effects of more competition and keener rates.

Several big British distribution companies, like NCCS and Wincanton, are gaining a foothold in Europe through acquisition of specialist firms with a niche market, and by introducing new concepts, such as supermarket contract distribution, to a foreign marketplace.

Many smaller operators also hope to build on business abroad which they are winning now. Many serving specialist export markets, like fish or seafood, are establishing vital contacts and securing regular return loads. They will be wellplaced to win extra third and fourth trips in these countries when cabotage arrives.

Meanwhile, hauliers here, dismayed that their Continental counterparts are being paid higher rates, have some consolation. Dutch and German operators in particular have much higher social costs to bear (obligations to sick workers, mothers, and injured staff, for example).

The RHA notes that while the trade press here is full of hauliers complaining about vehicle excise duty, foreign magazines have their counterparts moaning about mounting social costs. It says that comparisons of rates alone can be misleading. A host of factors, such as wages, costs, taxes and laws, have to be taken into account before anyone can judge how good a living a British haulier makes compared with his Continenal competitor. Oby Murdo Morrison


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