cropper's column
Page 50
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Can haulage survive?
Complaints by the haulage industry on the problem of making ends meet are frequent and specially rife over the past two years. Haulage rates have been depressed, with constant pressure for further reductions. The unhappy practice seems to be gr6wing of traffic being offered by customers at rates they stipulate. This shows the desperate lengths to which the industry has been driven, for it should always be a first maxim for the haulier, as the supplier, to specify the price — after all, he is the one who knows the costs, or should do.
With rates so low, hauliers have to consider refusing work altogether. As one haulier put it to me recently: "If bankruptcy faces me on a choice between struggling on at too low rates, or putting my feet up on the mantelpiece, I definitely prefer the latter".
Let us define our terms. For this article, I exclude owner drivers and small firms and concentrate on middle and large firms. Can such firms, living on haulage alone, continue to survive? There are so many deaths in the haulage industry, sad to relate.
Firms which survive often do so because they have other operations or assets, to which haulage is ancillary. This is really the situation with smalls carriers, which rest on mammoth consolidation establishments with substantial depots and large portering staffs. The money involved in premises and depot personnel vastly outweighs the figures for road transport operations. Transport is a mere ancillary to depot working.
Warehousing becomes an increasingly important agent of survival for haulage firms. It has long been true for furniture removers, followed by general warehousing for other carriers. Recently, the storing of containers has become a valuable adjunct for many transport firms.
Some haulage firms enjoy a hidden revenue because they do not need to include a full and proper costing for the premises occupied. If its ownership was obtained many years ago at prices then. prevailing, they tend to include only a nominal costing for the premises against the haulage business. Because a full economic rental is not charged, such firms continue to survive; it enables them to work at rates which are really uneconomic, to the great detriment of the rest of the industry.
Until recently, there was another important factor in the solvency equation. The old carriers' licensing system provided a capital value for licences, in fact if not in law, which a bankrupt haulage firm could realize on and so bale out without too much suffering. This fall-back asset has gone.
The trouble with haulage is that it is a service which must be used for every hour of its working life. Hours not worked are lost forever and soon prove cripplingly costly, particularly for middle or large businesses engaged solely in haulage. The conclusion seems inescapable that, for survival, such firms have to obtain some ancillary activity to provide a balancing revenue to offset the losses on pure haulage.
Ralph Cropper