Own-account business scope
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THE POTENTIAL for cooperation between ownaccount operations is very great, Peter Land told the conference. So far, he said, fairly small developments in mail order and book distribution can be seen.
Mr Land, formerly director of corporate planning at the National Freight Corporation and now group managing director of British Transport Hotels Ltd, gave a paper on -Business problems of transport in tomorrow's world."
He said physical distribution management has taken enormous steps forward in the last 15 years; changes for the next 10 years will be nothing like so great. Development of ownaccount operation has radically changed its position relative to the hire and reward sector.
Ten years of the liberal policy created by the 1968 Act have established this position, he said, and legislation to change it is most unlikely.
He felt that the hire and reward sector may respond to its present relative position by broadening its product base into the skills needed before or after the actual transport skill.
"The development of the person in charge of transport with a much broader responsibility than managing vehicles will continue and there will emerge in all organisations a manager responsible for movement who is capable of
operating, hiring, subcontracting, co-operating and buying," said Mr Land.
''Income must exceed expenditure: the problem is to decide by how much. Income is influenced by competitors' prices — or the cost of the ownaccount operator — and expenditure is influenced by operating efficiency, administrative costs and the cost of obtaining vehicles.
"The least discussed element is the cost of having a vehicle that you could operate if you so wished. Hire and reward have tended to own our fleets, but over the years different ways of having a vehicle have emerged. 1, use your own funds to buy; 2, borrow to buy; 3, lease; 4, contract hire.
"Presuming an operator can
operate and administer his bu ness as well as his competit, the key factor in the total cost transport is and will continue be the cost of having a vehicIE -Where a business invests own funds to purchase vehicl it is important that it preser% the real value of its original vestment by earning sufficiE to replace the vehicle at t appropriate time. Against this money is borrowed to obtain t vehicle then there is the need earn sufficient to repay the loz In times of inflation these sitt tions will be quite different.
"The choice of financing ci be greatly influenced by the i cidence of taxation and by t1 cash flow problems of the bu ness, but the total cost of trar port will be materially affected different stages in the life sp, of the vehicle by the resour financing method. This proble will not go away and tl selected decision will be i fluenced by opinions in rate inflation; confidence of ability