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BUILDING A BIG PARCELS )RGAN IZATION

19th February 1937
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Page 36, 19th February 1937 — BUILDING A BIG PARCELS )RGAN IZATION
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Which of the following most accurately describes the problem?

ATone time it was a fair criticism of road transport that it had not made efficient provision for handling parcels traffic. It was at a disadvantage Is compared with the railways, in that it had no organized services for local collection and delivery, with appropriate

alearing houses, and no systematic and :o-ordinated method of linking all these

:Tearing houses together by trunk services. Notwithstanding that deficiency, busi

ness in parcels carrying was forced upon the road-transport industry. The flexibility of road transport appealed to customers. The customary will ingness of the road-transport operator to do his best to meet a client's particular wishes in respect of ordinary haulage and the freedom from hidebound rules and regulations, inclined that trader to the belief that advantage would accrue from sending parcels by road, M preference to any other method.

As the result, partly of that attitude, and partly because of the enterprise of certain stalwarts in the industry, there has of late years grown up an organization, composed of a number of separate units, which, in the advantages of service it offers, is supreme. It has left the railways far behind in all but a few routes, all of them long-distance point-to-point services.

This tendency to prefer the road is still growing, as is demonstrated by an inquiry which I have just received from a haulier whose main concern is medium to long-distance bulk haulage, but who is being pressed by his customers to convey their " smalls" for them. Some idea of the ambitious nature of the scheme may be gathered from the following summary of the haulier's requirements :— B18

He asks for rates for parcels graded in about 50 steps from 3 lb. to 5 tons in three classes : (a) Up to 1 cwt.; (b) from 1 cwt. to 1 ton; (c) from 1 ton to 5 tons, including a rate per ton for consignments in excess of 5 tons. These rates are for distances from five to 450 In his inquiry he refers to a series of three article's which appeared in The Commercial Motor on May 8, 15 and 22 last year. I then solved a problem of parcels carrying relating to a route 110 miles long. In the course of the article, in which I suggested a certain procedure and schedule of rates, I offered to deal similarly with any problem of the same kind which any other haulier cared to present. It is that offer which has encouraged this reader to put forward his own problem—a much more difficult one—with which, needless to say, I am pleased to deal.

The present inquirer has, in my view, no option but to provide for clearing houses to handle the parcels which he collects and delivers. The only way to solve this problem successfully is to treat. it fundamentay. We must begin at the beginning and to look at it, not as set out by the inquiry, but as regards the organization of parcels-delivery services generally, subsequently applying the general principles enumerated in this way to the particular problem as presented.

The simplest form of parcels-delivery service is one which is operated within a limited radius and, incidentally, this is the one which is most likely to be profitable. Such a service is the lineal descendant of the old-time carrier's service, operated by horsed van. The radius of operation is not normally more than five miles if the service is to be rendered by only one van. This is the owner-driver type of business. It does not offer possibilities of making a fortune, but can earn the operator a living. He is on a par with the small shop owner.

The radius can be increased to 15-20 miles, the actual figure depending upon the density of population and the frequency with which townships occur along the route, if several vehicles be operated from a given centre. That is, however, definitely the limit of practical and profitable operation, and an operator who can confine himself to what I might term a closed ring of these dimensions is to be congratulated. Unfortunately, it is not possible to limit the service to customers la that way. Parcels are bound to be offered for delivery outside the ring, and the question arises : What is to be done? To accept consignments which necessitate the vehicle going beyond the predetermined radius is to exceed the limits within which operation is profitable.

Some readers may have heard of the law of increasing and decreasing returns. It is familiar to students of economics, but its application to road-transport operation is not so widely appreciated as it should be. It is obviously not convenient here to explain the meaning of the expression in detail. It means, in effect, that in any growing business, one of two things is always happening. Either, as the business grows, the returns increase more quickly than the growth of the business, in which case the condition is one of. " increasing returns," or, on the contrary, extending the scope of the business does not bring proportionate growth of returns the increase in revenue is not proportional to the higher expenditure involved. That is the condition which is known as "decreasing returns."

A haulier who accepts the possibly growing demand that he should deliver parcels outside the abovementioned radius is likely to find that his enterprise is going through a phase of decreasing returns.

What should be done, then, when this inevitable condition arises? Some special provision must be made to deal with deliveries and collections outside the ring. The solution of this problem can be given only by describing the theoretically ideal parcels-delivery organization. In it the whole country would be covered by a series of collection and delivery areas, such as the one described, each having an approximate radius of 15-20 miles, based upon some important town as a centre, All collections and deliveries within each specified area would be conducted from the centre by speedy vehicles, and no parcels would be delivered direct from any centre to a point outside the area.

In conjunction with the foregoing, there would be a series of trunk services linking the centres of the areas. A parcel collected in any area for delivery outside it would be handed to the clearing house of the originating area, picked up by the trunk service and delivered to the central point of the final delivery zone.

Clearly, therefore, an efficiently organized parcels

service will comprise two principal component-a collection and delivery service and trunk service. The . advantage of road over rail for trunk service is the fundamental advantage of road transport over rail.

It follows, obviously, that any system or schedule of

rates must be similarly developed. It. will comprise rates for local collection and delivery in each al.ea, upon which will be superimposed, in the case of any parcel which must utilize the trunk service, an additional rate

for that service. S.T.R.

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