HAIR OF THE DOG
Page 82
If you've noticed an error in this article please click here to report it so we can fix it.
FOR -the Road Haulage Association to seek the verdict of the Prices and Incomes Board on operating costs and rates seems very much a case of "the hair of the dog that bit you". Further consideration indicates that there is a logical basis for the move. Hauliers believe that Mr. Aubrey Jones is the right person and perhaps the only person who can free them from the standstill imposed by the Board's report over a year ago.
From the hauliers' point of view the report deprived them of a procedure which they had found valuable and put nothing in its place. The detailed cost analyses which the Board suggested have been found impracticable and the Board itself was no more successful in its attempt to point the way.
Exhortations to improve productivity broke no fresh ground and had no effect on bodies such as the trade unions whose cooperation was essential. The "guinea pig" experiment may be as inconclusive as previous attempts to establish a starting point for discussion.
The Board might reasonably reply that it has not forbidden rates increases where the circumstances are appropriate. Its main objection was to general statements purporting to apply to so varied an industry as road haulage. It was for each operator to judge, said the Board's interim report, "in the light of his individual circumstances, and the increased efficiency which he individually can effect, the extent to which he should try to recover from his customers the increases he has borne in vehicle duty, and such increases as he will have to meet in wages".
Many of the customers who read the report apparently failed to get as far as this recommendation much less the later support for demurrage charges to meet the delays which were their responsibility. They were content with the earlier statement that the practice of general rate recommendation was not in their interest and should be abandoned, and that they should not accept the particular recommendation for a 5 per cent increase which the Board was considering.
Impossible
No haulier would claim that he was able consistently to apply the recommendations made over the years by the RHA. It is impossible to say whether the 5 per cent recommendation had any better fortune than its predecessors or whether it would have been more successful ,without the intervention of the Board. All that is certain is that it provoked a good deal more argument than on any previous occasion. The customer felt almost a moral obligation to query it even when he was prepared to pay it.
In the subsequent period all general price and wage increases have been subject to official scrutiny and often disapproval. In these circumstances the RHA might well have felt disinclined to issue further general recommendations even if the Board had not come out so clearly against the practice. The squeeze cannot continue indefinitely. Many items of cost have gone up sometimes by considerable amounts. A new and substantial wage claim has been lodged and is among the points which have been referred to the Board.
Abandoned
The RHA of the old carefree days would have felt almost compelled to make a recommendation. It has agreed to abandon the practice presumably for ever. Some other method must be found for announcing the necessity for a rates increase. If the Board will not allow the RHA to take the obvious choice they should in equity provide an alternative which is practicable.
One of the first things to strike the Board was the "extreme variety" of the road haulage industry. In the light of this, said the interim report, "the proportions in which different cost elements enter into total costs differ from case to case, from operator to operator, from operation to operation, from route to route". It was largely because of this variety that the Board found general statements on rates unacceptable.
Wide variety
What was not sufficiently taken into account was the equally wide variety of the methods by which hauliers establish their charges and are paid. Jobbing hauliers such as furniture removers make a separate estimate for each operation. It is to be supposed that the estimate is based on current costs so that any rise or fall is automatically taken into account. The danger of abuse is effectively prevented by the ability of the customer to obtain competitive estimates.
Some other hauliers with a wide variety of activities and of customers are in much the same position. They charge what the job is worth and are scarcely aware that in fact their rates fluctuate. Most operators work to a more regular pattern. They have schedules of rates whether they publish them or not. The regular customer can compare one invoice with another and will soon notice if the price has gone up.
Appropriate
Operators such as express carriers normally work to a fixed tariff which they send to customers. It does not easily reflect casual fluctuations in cost. Only when the accumulation of items has built up to a substantial increase is it worth while revising and reprinting the tariff. The adjustments can be varied so as to produce the total effect required. Activities within this field were possibly the most appropriate for the type of periodical recommendation made by the RHA.
Other operators work to a contract which specifies the rate, or for customers who dictate the rate, or for clearing houses who agree the rate over the haulier's head. Sometimes a single large manufacturer will offer work at a standard charge; sometimes as with the Milk Marketing Board the rate is worked out with the individual carrier in accordance with a formula. Some customers will meet certain costs themselves and deduct them from the rate.
Advantage
Although on different operators the incidence of an increase in costs is uneven it does take place and must be reflected in an economic rate. The advantage of the former RHA method, unscientific though it may have been, was that all operators were at least given the opportunity at intervals to put the case to their customers. The kind of advice which has so far come from the Board is not a satisfactory substitute.
The main suggestion is that the RHA should give members comparative information on "the relationship between costs, turnover, capital, profit margins, etc., in comparable parts of the industry". Each member could thus "judge his performance by the achievement of others". What the Board does not make clear is how the member can use this information to bring his rates to the right level.