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More Profit, Less Traffic

15th January 1954
Page 61
Page 61, 15th January 1954 — More Profit, Less Traffic
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Which of the following most accurately describes the problem?

NORMALLY, the first thing anyone wants to know about a business he is buying is whether it makes a profit. In this respect, British Road Services appear to be a much better proposition now than at any other time in their existence. There were net traffic receipts of Dim. in 1951 and £14m. in 1952. Against these figures must be set the proportion of the British Transport Commission's central charges attributable to B.R.S., so that up to the end of 1952 the position could not be regarded as entirely satisfactory.

Prognostications for 1953, however, give a net revenue of Dm. The figure awaits confirmation in the Commission's annual accounts, and if it is true provides a good reason for their publication at the earliest possible date. Evidence of a profit last year should stimulate the bidding for transport units. B.R.S: have done remarkably well. There may be a number of explanations for the better results, and it will be remembered that hauliers have postulated an annual aggregate profit of £10m. for the undertakings that were acquired.

But explanations and hypothetical comparisons are of little account beside a solid achievement, and B.R.S. can afford to let the statistics tell their own story. When the question of transport comes up, as it ,very likely will at an early date after Parliament reassembles, the Opposition will make the most of the £7m., and will certainly be justified in placing it on the credit side of nationalization. Those Conservatives who may feel that a retort is needed will obviously refer to the substantial increase in production last year, compared with 1952 and even 1951.

Assumed Profit The point is one that the prospective buyer will have in mind as well as the assumed profit of B.R.S. He knows that industrial production has traced a welldefined pattern over the past three years. In 1951 it reached a record level, shown on the official index as 17 points above the basic figure of 100 for the year 1948. A drop in 1952 to an index figure of 114 has been followed by a rise in 1953 to a new record of -118 or 119. The buyer who is also a haulier will know that his business conformed pretty closely to the pattern of industrial production, and the net revenue figures give the impression that the same applies to B.R.S.

Other available figures, however, do not all corroborate the impression. For example, gross receipts of B.R.S. for the three years beginning with 1951 were £784m., £774tn. and (estimated) £784m, respectively. In other words, they have scarcely changed from year to year, although since 1951 there were two rates increases, of 74 per cent. in February and 5 per cent. in December, 1951 A striking contrast is given by railway revenue for freight, parcels and mails, which was £261m. in 1951, £287m. in 1952, and (estimated) £293m. in 1953.

In the records published by the Commission, the nearest equivalent to a statement of the amount of traffic carried by road is the figure for tonnage. Here again, it is interesting to note the figures for the past three years. .47m. tons being carried in 1951, 42m. in 1952 and (estimated) 39m. tons in 1953. The number of vehicle-miles has also declined, making possible con siderable economies. I he size of the B.R.S. fleet has shrunk from over 41,000 vehicles at the end of 1951 to barely 35,000 at the end of 1953. There has been a steady drop in the number of people employed.

During a period when industry generally has had a setback and more than recovered, B.R.S. have failed even to hold the traffic that once was theirs. It is difficult to avoid the conclusion that the proportion of all the country's goods carried by them is now substantially less than before. The buyer must do more than transfer to his own vehicles a share of the B.R.S. custom, perhaps in the hope that ,he will automatically acquire a share in the £7m. "profit "—at an average of £200 per vehicle. Profits are not transferred on this mathematical basis, and no doubt the customers, when the long-distance monopoly of B.R.S. has been broken, will expect keener rates.

Greater Freedom The buyer must look for more traffic from other sources. He may hope to abstract some from the railways, although the miniature " square deal' that slipped into the Transport Act,1953, almost Without anybody noticing it, will give the railways greater freedom to compete, in spite of the new wage burdens and the almost inevitable rise in standard railway freight rates. Some traders without transport of their own are finding various, and in some•cases dubious, methods of getting their long-distance traffic carried without taxing the resources either of the B.T.C. or of free-enterprise' hauliers with permits. Most of that traffic will go -to the new operators of transport units, although there is no way of telling how much it amounts to.

The bulk of the extra tonnage that the buyer will need to keep his vehicles busy must come, as far as one can see, from C licence holders, or from new businesses that will turn to C licence operation unless they see good reason to do otherwise. The buyer may therefore like to run his eye over the figures showing the increase in the operation of C-licensed vehicles in recent yeafs. At October 31 last there were 430,756 operators and 861,953 vehicles. More than half these vehicles were of an unladen weight of less than 14 tons.

More significant is the fact that the increase in the number of vehicles was 8 per cent. in 1951, 5 per cent. in 1952, and not quite 4 per cent. in 1953. Last year, for the first time since the war, the percentage increase has been no more than the increase in the index of industrial production. With some reservations, this can be taken as an indication that the impetus of the rush to the C licence has expended itself. The task of the present and future hauliers will be to hold it in check, perhaps even to reverse it.

The buyer may feel more confident of doing so if business is good generally. He would naturally like to know whether to expect a continuation in 1954 of the favourable trend in 1953. The economic experts have recently given voice to a few warnings by way of propitiating the fates. In many industries there is unrest, coming to a head in wage, claims and threats of strikes, mass tactics and guerilla tactics. In the U.S.A. there is some talk of recession.

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