THE 1933 ACT ENCOURAGES R
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Solving the Problems of the Carrier
EVERYONE now agrees that the Road and Rail Traffic Act needs a thorough overhaul, because it is not bringing about the conditions which it was intended to create. Particularly is this statement true with regard to the much-desired co-ordination between road and rail. With the railway companies objecting, rightly or wrongly, to almost every application for licence renewal, the suggestion that there is any goodwill or desire to co-ordinate becomes ludicrous.
There are other ways, too, in which, in practice, the Act is failing to reach one or another of its numerous
objectives. A case in point relates to rate-cutting, which the Act was presumed to eliminate. One outcome of its operation is the creation of conditions which make operation at uneconomic rates not merely desirable, but almost indispensable, to the success of the haulier.
In effect, rate-cutting has become, in some quarters, a recognized method Of providing justification for licence renewals—only renewals, mind, not extensions or additions. Why this should be so is easy to see, given only a slight knowledge of the procedure which is usual when dealing with a request for the renewal of a licence. An important question, upon the answer to which much depends, is that concerning the tonnage carried during the period for which the licence has been current.
Lancashire is a case in point, and especially on the Liverpool-Manchester route, which is a most unhappy hunting ground for this kind of thing. The B26 distance between these two important industrial cities is about 40 miles. There is reasonable time for collecting a load, its transit and delivery during a morning, leaving a fair opportunity of picking up another load at the other end of the journey and bringing it back well within the limit of hours of labour.
Now, a minimum profitable rate for the transport of a 6-ton load (in a 6-ton vehicle) from Liverpool to Manchester, or vice versa, assuming that no provision be made for a return load, is 72s. or 12s. per ton.
The rate quoted is being obtained by first-class hauliers working for good firms and carrying materials of a grade that justifies the price. Given that rate, it would be reasonable for the haulier concerned to return at' once for more loads in' the same direction, leaving work in the contrary direction to his contemporaries in the city at the outer end of his journey.
Is that the custom? Rarely. A big factor in influencing the haulier to obtain a return load at any price is the desire to increase his figures for weekly tonnage for the reason described. As a result, loads. between these two cities are being carried as " returns for 5s. or 6s. per ton. Actually, 4s. has been mentioned' to me in this connection, and I can accept that figure' as being one which, in the circumstances, many hauliers are likely to take.
The existing method of renewing licences is an almost irresistible incentive to the haulier who will, in the circumstances, regard a job at any price as better than no job at all. His attitude is summed up in a form of excuse for rate-cutting which is often made to me.
" I took the job at £2 10s." a haulier will say, "although I know it does not show any profit and may do no more than pay the cost of operation: of the vehicle. I did so for two reasons. First, because I must •keep up my tonnage and, secondly, because, at the rate quoted, I did at least lose nothing, whereas if I had refused the job I should have lost the equivalent of the stand ing charges."
• It is difficult not to sympathize with t h i 4 point of view. The fal lacy of the procedure is, nevertheless, obvious. The alternative attitude does pay, as may be demonstrated by quoting a case of a haulier who, confronted with similar conditions, refused the cut rate and eventually was better off. This case arose when an old-established customer presented the haulier in question with a quotation from a rival, which was well below his own and, obviously, would not show a profit.
He asked his customer: "If I don't conic down to this price am I going to lose the work?"
"Yes," was the answer. "The rate has been quoted us, so far as we know, in good faith, and we are practically bound to accept it."
"Well," replied my haulier friend, " whatever I do is not going to make much difference to me. The result is only a question of time. If I refuse to work at these rates to-day I lose the work at once. If I accept them, I shall lose the work in a couple of months or so, because they will not pay my cost of operation, might just as well face the matter now and refuse. Besides," he continued,. "the other fellow will have to give up the job in a couple of months or so. Supposing that he does do so, will the work come back to me? "
"Certainly it will," came the answer. Eventually that happened. The competitor who had quoted the cut rates found himself, after a time, unable to continue and the customer, in fairness, felt that he was obliged to revert to his original operator and to give him the fair price which had been current for some years.
These are the two ways of dealing with the same difficulty. The latter method is obviously the better. To be able to proceed in that way requires two qualities, namely, pluck and an accurate knowledge of operating costs.
The first of these attributes is essential to any business man who is going to make headway. The second, in the case of a haulage contractor, is obtainable from The Commercial Motor Tables of Operating Costs and, incidentally, this particular haulier uses the Tables as a basis both for his costs and charges.
The real evil of rate-cutting lies not so much in its immediate results, in the loss of an occasional load-by a haulier who finds himself ousted by a competitor who temporarily or permanently is operating at uneconomic rates. It lies in the broad effect of gradually bringing all rates below the economic level. This fact applies no matter how rate-cutting is effected'.
Customers with loads at either end of such a route naturally learn that there are frequent opportunities, of placing a load on a lorry at a very low rate and they begin to look out for such occasions. The real significance of this circumstance can be appreciated only if an effort be made to understand the points of view of the Liverpool and the Manchester haulier.
The Liverpool man, setting out from his own town with a load at a fair rate, does not make trouble for himself by accepting a back load at a low rate for Manchester; similarly with the Manchester man who accepts a load at a low rate from Liverpool. What each is doing is making trouble for the other operator, hut as each is poaching into the other man's country the ultimate result is inevitable trouble for both.
It is true that customers with loads appreciate that they cannot always be fortunate enough to find someone who will accept the traffic as a back load and at a cut rate, but the argument is available as a means for bringing down the rate of the local haulier who is not looking for a return load. Nevertheless, it needs but a few months of this process for the outward rates, formerly fair, to be reduced to an uneconomic figure. S.T.R.