STABILIZED RATES DISCUSSION WARMS UP
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The Problem of Routes on which Traffic is Comparatively Thin and Return Loads Few. Should Rates Be Assessed on a Mileage Basis or from Point to Point ? T_HIS is the third of a series of articles devoted to an argument r had with a. couple of reputable and successful haulers, both good businessmen, about the schedules of rates whieh
are so prominent, a topic of conversation in the industry Both, apparently, regard me as archconspirator, if not' the actual instigator, in many of these schemes. I am not that, of course, although it is true that I am doing a good ,deal of work in that connection. Their attitude was that I must be persuaded to alter, my methods and, change my views on the subject of rates standardization.
One haulier attributed his success to the fact that he was selective in choosing his traffic, taking only that along routes likely to ofFer'return loads. He also asserted that, by reason of a combination • of careful organization and bating supplies in the best markets, he was always well placed to meet competition when it arose over the routes he regarded as his own. The other haulier, too, operated over only well-chosen routes on which the traffic was dense. He was careful of his operating costs and had certain strategic advantages derived ftom the location of his premises which enabled him to work at costs, and to charge rates, much lower than those of most operators.
Both admitted that they had the reputation, amongst hauliers in general, of being rate-cutters.. This they denied,
first on the ground that, inthe absence of any standard
of rates, rate-cutting was impossible, because what does not exist nnot be cut. They pointed out that they did not even cut rates in the ordinarily accepted meaning of the term—in the sense of working at uneconomic prices: Both had consistently made profits throughout Icing terms. They both held the opinion that statutory rates schedules would encourage (rather than deter) rate-cutting, that the publication of such rates would indicate to every haulier not, as was'eintended, the rate which he should or must charge, but that which he must not exceed.
They pooh-poohed the suggestion that any Government would interfere with that procedure by hauliers and said that any statutory schedules of rates will be maxima.
Preferable to Lose Licence One of them even went so far as to state that if lie were , to attempt to operate at scheduled rates much higher than those he now had in force he would lose so much business that, notwithstanding the increased rates., he would, as the result of the diminution in the bulk of traffic carried, be operating at a loss. He would, in the unlikely event of statutory rates being minimum rates, defy the authorities and lose his licence, as being preferable to the slow strangulation which would ensue.
On the other hand, it is particularly important to note that both these-operators confine themselves.th routes Which are particularly favourable, routes over which traffic is dense and return' loads regular. That point I brought to their notice immediately. following that part of the .threecdrnered conversation which eitas related at the close of ray preceding article.
"It's all very well for you fellows to take up this obstructive attitude," I objected. " You are all right. You are operating over picked routes, with everything in -your favour, What about the many others who are not so advantageously situated? It would be impossible for them to operate at the same rates as those you are charging. 'They -do not carry enough traffic to earn a living at your rates, and the back loads they obtain are either so few, or involve so much empty running to find them, that they cease to be profitable anyway.
" They may -he as clever as you aree inasmuch as they 'appreciate that the way to make money in road' transport is to go where the traffic is thickest, but may, at the same time, be unable to put their knowledge to profitable use because their licences confine them to these routes and bar others to them, "I seem to remember, in pre-war days, how quickly men like you used to complain to the Traffic Commissioners ii one of these operators dared to go outside his prescribed route and trespass upon yours."
" Why, of course," in duet, carne`the reply. " Operators over those routes .roust be allowed to charge higher rates."
Distance the Basic Factor "That is just our point," canitinued Bill. " In all the rates schedules which have been published, distance—and distance only—has been the basis on which the rate has been assessed. No one seems 'to have thought it worth while th take inhe consideration the fact that a rate which is profitable over, say, 100 miles in one direction may be quite unprofitable over the same distance in another direction."
"Do you mean," I asked,, that in your view any practicable rates schedule railist be on a town-to-town basis, and not merely on .distance only? " "Emphatically so. That is just my meaning," said "I agree, all the way." said Charley. "Let me get this straight," I said. "Now, Charley, your rates and .costs are more nearly normal than Bill's. What would you regard•as a fair rate to Birmingham?"
"Twenty-eight bob," came the answer.
" II'm," I said. " That's a bit better than you used to. get three years ago."
" It, needs to be," said Charley.
" Now what is the rate to Carlisle?" I asked. " It's about the same distance as from here to Birmingham."
" Carlisle," said Bill, " I'm afraid I can't tell yon. I've never travelled that way. What about you Charley?" "Neither have I," said Charley. "I don't go that way.
There are no back loads 'along that route." . " I. see," I said, ," so that if it were left to you two. no one in Carlisle would evet receive any traffic by road from here."
"Not at rates I alai accustomed to ebarge," said Bill. "It wouldn't pay me."
" Let's ring up Tom. so-and so," said Charley, "he runs to Carlisle, perhaps he will tell us what the rate is."
'That's no good," said Bill, "Old Tom never has twopence to speed. He's an owner-driver and has never been out of trouble since "he's been in the business, and that's as long as I have. Any rate he gets wouldn't be worth quoting."
" Well then," I said, ," let's try and get at it another way. What would you want to take a load to Carlisle? Quote the a rate." " Well, I don't. know," Bill said musingly. , "I should think a quid would cover me on the return journey. Say fifty' bob. What do you think Charley?"
"AbOut that," said Charley, " or perhaps forty-eight bob. You might be able to pick up a bit of a load back coming via Preston or Lancaster."
"Not worth wasting time on," objected Bill. "Cheaper to run straight back and get on to a paying route again," "Aire, perhaps you're right," said Charley, "Say fifty bob then."
" So you suggest that, over a route 110 miles long, carrying similar traffic, and in the same type of vehicle, there should be two rates, one 28s. per ton and the other 50s.?"
" I don't see any other way yOu can do it," said Bill. " Nobody's going to run' to Carlisle for the Birmingham rat, and if you were to try to charge the Carlisle rate for traffic to Birmingham you wouldn't last five minutes. Even if any trader would 'wear it' there would be some cuts -by other hauliers. What do you think, Charley? "
"I can't see any other way," said that worthy.
Rates Scheme that Is Unacceptable ,
" That, as a principle," I said, "will never be acceptable in reference to any rates schedule which a Government of the future will sanction. On the contrary, this present Government has under consideration a scheme which goes much farther the other way. It is a plan which makes my idea of charging the same rate per ton for the same distance look simple. I will tell it to you, as a' bit of news. It has been suggested, and the idea is being seriously discussed, that rates should be the same for all distances. '
" What ! The same rate for 10 miles as for 100? "
'4 The same rate for one mile as for 300," I answered.
" Well, that's just Socialism gone mad," said Bill. "What's the idea, and how on earth do they think it's going to be done, short of nationalization?"
" It's not Socialism, and it's not crazy,' I said. " There is a reason for it, and I don't see why it should not be practicable. Indeed, it can he worked by the same rnethod I have in mind for evening up profits on different routes— the one I described to you Charley, before Bill came along."
" You mean the idea that the same rate per ton should he charged for the same distance and that hauliers on the goo4 paying routes should subsidize those on poor routes, through a Sort of pool?"
" Exactly.. But let me tell you what is the idea behind
this flat-rate scheme. You will then realize that there are good reasons' for it. One of the things which this and future Governments would like to stop, or at least diminish,
is the drift of the population from the co4ntry to the towns. It is thought, rightly or wrongly—and I think wrongly—that one important factor which encourages people to go to, certain towns is that commodities are cheaper there, as well as more plentiful and available in greater variety. Furthermore, and this is certainly correct, it is believed that the principal -reason for that condition is that transport flows more readily in certain directions, so that its cost is :ess. You see ,What I mean; transport flows more easily from here to Birmingham than from here to Carlisle?
" Furthermore, the cost of transport from here to Carlisle, by road at any rate, tends to be more than it is from here to Birmingham."
" We can't deny that."
"Very well, then, that means Vat but for the railways, there would be fewer things going to Carlisle than tb Birmingham, and what things did go would be dearer in Carlisle than in Birming ham. People naturally, therefore, will tend to prefer Birmingham to Carlisle, because there are more things to be had at. less cost, apart from other attractions in the way of bright lights and entertainment which Birmingham may have.
" But the idea goes farther than that. Even if you fellows were made to charge on a mileage basis, so that the cost of transport to Carlisle was the same as it is to Birmingham, there would still be the difficulty that, say,, imported apples coming in to London would cost more for
/ conveyance to Carlisle than to Birmingham, because the distance is greater."
" Yes," chimed in " how are you going to get over that? Your own pet scheme of a flat rate per mile irrespective of route won't solve that problem," •
, Principle of Agreed Charges
" I know that," said I, " but let me finish my story. The idea is that a pound of apples should cost the same for transport no rnatter how far it is carried, whether it is from the London Docks to Wood Green, or to Wigan or even John o' Groats." •
"But it simply can't be done."
" Oh yes it can," I said. "Have you never heard of the Railway Companies' Agreed Charges?"
Yes, of course, we have, but they apply in only special cases where a firm has a big output to deliver or collect."
" Quite, but that is so merely because it happens to suit the railways to apply the principle of agreed charges to traffic of only that kind and to no other. There is no logical reason why it should not be made to apply to allhousehold commodities at any rate. And if the railways were compelled to do it so would you be."
" Seems crackers to me," Said Bill.
"Couldn't he done," said Charley.
"That application of the principle of agreed charges need be only part of the scheme," I continued. "No doubt it would be linked up with zoning, the sort of control that is being exercised now, whereby, for example, one maker's biscuits are to be sold within only a limited radius and those of other manufacturers similarly within other zones, thus cutting out waste of transport."
"But you 'don't mean to say you think that sort of control is going to be continued after the war?"
" I shall, be surprised if it is not, and if it is, you see haw transport costs will beslevelled, don't you?
"However, we are getting away a bit from our subject.
Let's get back to it." S.T.R.
(To be ,continued)