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The Rates and Co-ordination Problem What is the Solution?

13th September 1935
Page 45
Page 45, 13th September 1935 — The Rates and Co-ordination Problem What is the Solution?
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Which of the following most accurately describes the problem?

Four Methods Whereby Rates for the Conveyance of Goods by Road and Rail Might be Controlled and a Certain Measure of Co-ordination Secured

FOLLOWING upon the recent articles which have appeared in The Commercial Motor regarding the control of road rates for the conveyance of goods, it seems opportune to survey the lines of action that can be taken in an attempt to stabilize rates and to secure a certain measure of co-ordination, the latter being the main object of the Road and Rail Traffic Act, 1933.

The first method is to adopt the policy of laissez-faire, and allow the 1933 Act to have a thorough trial before attempting to stabilize rates in any shape or form. This policy was admirably discussed by " S.T.R." not long ago, and it would be futile to indulge in mere repetition, except to state briefly that it is the considered opinion of numerous authorities that the wages, fitness of vehicles and drivers' hours clauses, together with the fact that the industry can be defined as being a sheltered one, will in time have the effect of automatically stabilizing rates.

Codes of Fair Competition.

Seeondly, the industry can attempt to stabilize its own rates, ostensibly on similar lines to those adopted by our American contemporaries under the National Recovery Act, whereby it was agreed to adopt the Codes of Fair Competition, the codes being enforced by representatives of the industry itself and backed by Government authority. The Codes of Fail' Competition were primarily designed to eliminate rate-cutting and other undesirable practices, and the scheme outlined in The Commercial Motor on August 9 is practically identical with this.

Thirdly, road rates can be subjected to control by legislation on a similar basis to that of the passenger side of the industry. This would definitely be undesirable, as at present the railways can create enough havoc with the agreed or flat rate even when their competitors ear adjust rates to suit, and the position would be a great deal worse should road rates be controlled by legislation. Alternatively, a special body could be brought into being to control both rail and road rates or the Railway Rates Tribunal could assume jurisdiction over road rates.

Undoubtedly this would be a retrograde step and one that tn-ust be avoided at all costs, as such action would tend to freeze road rates at

railway levels, and traders would lose one of the greatest advantages of road transport, namely, its essential cheapness in dealing with certain consignments. This would automatically be followed by a general rise in prices. The tariff systems adopted by road and rail respectively are incompatible; the railway method of charging what the traffic will bear is only suitable when a monopoly is in existence.

Lastly, there is the suggestion greatly favoured by economists—the division of function. It is a fairly general opinion that the successful co-ordination of road and rail transport cannot be secured by the control of rates, owing to the two entirely different methods of charging—the railway, on what the traffic will bear, and the road, on the cost of the service. It is commonly held that only the division of function, whereby certain classes of goods are handled by rail over distances exceeding a predetermined figure and goods, over shorter distances and cross-country routes, are handled by road, will successfully solve the problem.

The Trader's Choice.

The essential idea is to obviate two forms of transport providing practically the same services between the same points. Even so, if the trader is to be deprived of a choice as to what form of transport he will utilize, then it is fairly safe to assume that he will have recourse to his own means for transport.

Having examined the four possible lines of action that can be taken, it remains to determine the most suitable course to adopt so far as the road-haulage business is concerned.

I think we can disregard the division of function as being definitely premature; it may look well cm paper, but it would virtually demand a revolution in the inland transport of the country to attain its ultimate goal. For further legislation to be introduced to control road rates would be a calamity ; the industry is already suffocating under a welter of

hasty legislation, which will need revision from time to time before any semblance of working order can be secured. Any attempt by the industry itself to stabilize rates will, in my opinion, invite further Government control.

As mentioned previously, the scheme suggested for the industry to control its own rates closely resembles that established in the U.S.A. under the National Recovery Act. An article of mine entitled "American Road Transport Faces the Crisis," which appeared in The Commerczal Motor on May 17 last, explains how the industry in the States in an effort to avert Federal regulation adopted the Codes of Fair Competition. This article contained the following statement ;—" Nevertheless in many countries an ounce of railway propaganda is worth a pound of road-transport fact, and I do not think that the U.S.A. experience will prove contrary to the general rule."

Playing Into the Railways' Hands.

It has not done so. An Act passed the Congress on August 5, providing for the control of road rates by the Interstate Commerce Commission, the regulations to become operative on October 1. If such a scheme as the Codes of Fair Competition were established in this country, I feel confident that it would ultimately be attended by the same result. It would provide only another steppingstone for the railways in their campaign of agitation for the stringent regulation of road transport.

Having disposed of three of the four lines of action, we are left with the remaining alternative, that of leaving well alone for, as " suggested, at least another two years —until the full effects of the Road and Rail Traffic Act can be felt. Operators who have weathered the _storm until now can look forward to a much brighter future, in which the most important factor in road transpert, namely, tariffs, will be free from the deadening hand of legislation.


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