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'Tomorrow's operations

20th September 1974
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Page 230, 20th September 1974 — 'Tomorrow's operations
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Which of the following most accurately describes the problem?

by E. M. Hains, development director, P. and 0. Road Services Ltd FIRSTLY I think I should define where I stand, I am a "hire and reward" haulier, and I speak only for myself — unless my views happen to coincide with those of my chairman, in which case they become company policy.

Any consideration of Tomorrow's Transport — which the theme of this conference embraces — must inevitably invite a measure of speculative discussion, since we are considering the likely impact of a very wide range of anticipated circumstances and influences upon an industry which is in itself a moving target, with a tradition and a healthy track record of resilience and adaptability and which has survived under a weight of statutory controls and recurring crises which would have suffocated those of lesser tenacity.

To this extent therefore, Tomorrow's Operations must invite a degree of guesswork, intelligent or otherwise — which gives me some Comfort since I may as easily prove to be right as anyone else.

The purpose in looking to tomorrow must be to plan our future and to prepare ourselves for change. There can be few industries where the complexity and fluidity of day-to-day affairs demands such close involvement of senior and middle management, with the accompanying risk of failing to sit back and look at the wider horizons of the future — fail* to see the wood for the trees. For this reason I hope I can use this session of the conference to help promote, or provoke, your discussion on some of the factors which may affect our industry tomorrow.

To put some order into this review, I suggest that the main areas of impact which will influence our future (not necessarily in this order, and clearly cross-fertilising with one another) will be: (a) The NEED for our services — the market in which we do our business.

(b) The TOOLS with which we work.

(c) The PEOPLE with whom we are concerned.

(d) The ENVIRONMENT in which we will operate, social, political and economic. (e) The MONEY for which we are accountable.

I take the NEED for our services first, on the concept that the customer is our raison d'etre: while he may sometimes be a damned nuisance, the whole business of haulage would fall somewhat flat without him, and it is incumbent upon us to anticipate the changing pattern of his demands and equip ourselves to meet him.

It is evident that as carriers there are already signs that our role is becoming less passive, and that progressive buyers of transport are involving their hauliers earlier in their own planning, to discuss and advise them on packaging, loading facilities, distribution patterns, break-bulk points, documentation etc, etc, long before the despatchclerk stage. This is a trend we must encourage. We can make a significant contribution to our customers' wellbeing in the reduction of pipe-line stocks, buffer reserves, plant handling, and many similar costs, and at the same time enhance our own strength in securing the benefits of continuity agreements, planned vehicle utilization, purpose-built equipment, and minimizing our dependence on the traditional uncertainties of casual spot-hire demands.

This same pattern of closer customer/ carrier involvement is further evident — particularly in Continental Europe — in the changing approach to the negotiation of contract agreements. For several years we have been accustomed to the "vehicle hire" style of contract, where specified vehicles were supplied and where the customer then planned their daily usage virtually as if they were his own. The selling points in favour of such contracts are well known — the principal benefit to the customer being the release of capital, personnel, and administrative resources, to concentrate on his prime business. All these factors are of course still valid and pertinent, but in larger organizations one frequently meets an interest in a deeper carrierinvolvement, seeking a contractual arrangement whereby the total distribution task is served rather than simply hiring machines and their operational back-up. You may feel this is an area which will extend, and which could cause us some major re-thinking of our organizations.

In this same context it is significant to note the attitudes of our major EuroPean counterparts, where the freight 'orwarder has long filled a role relatively unknown in UK, md where, particularly in Germany, the concept of ntegration between hauliers and forwarders is well idvanced. Obviously the background factors are lifferent, but it is a trend to which we should not close our ..:yes. and you may see some common ground between the `spediteur" and the more sophisticated clearing house.

The traditional beginnings of the small British road laulier have produced a style of management where a ingle individual was master of all the apsects of his pusiness. I believe we will need to take a fresh look at our 'uture structure, in acknowledging, at least in the larger ;roups, that . organizing the movement of freight is a p.ecia list field in itself, and making the wheels go round is mother. People with expertise in the former do not lecessarily have the ability (or the time) to suriervise the physical operation of a commercial vehicle fleet.

Getting into Europe

Those of us who are involved in serving Continental ind Scandinavian destinations will find many question narks in our crystal ball, not least being the political loubts, which are not a subject for this paper. Several nstances come to mind of operators who have ventured tcross the Channel only to serve the exports of their najor domestic customers rather than see the business as elsewhere. I acknowledge that many excellent partnerships and interworking arrangements between ;mailer UK hauliers and Dutch/ Belgian operators have ieveloped in this way, with a personal-service emphasis; levertheless I believe they will find it hard to develop in wale with the single-control multi-national operators.

Any serious venture into international haulage is ;ertain to involve very substantial formation and .quipment outlays, and will, in my view, give emphasis to :he specialists, whose traffic volumes can support the marketing organizations, multi-route services, and port/depot networks required.

Whether the future will see British operators succeeding within Europe, in intra-Continental carrying as wposed to cross-Channel haulage, is a very different matter. Apart from involvement purely by equity participation, which retains native management, I would question whether there is any major potential for us, ertainly not under present regulations, and I very much loubt whether there is much we can teach the Dutch haulier about this business.

Surveying the future

What new fields may we expect to develop? The answer must lie in a further question — what new needs will industry and society create? The retail distribution of frozen goods, the growing awareness of effluent disposal risks, the hypermarket concept, the road/rail/ road lobby, particularly for hazardous cargo, the acceleration of bulk replacing bags, the advances of prefabrication in various trades. There can be no standing still, and the haulier's reputation for adaptability will be tested to the full.

The TOOLS of our trade are well covered in this conference. I am sure that manufacturers are equally as anxious as operators to equip our fleets with the right vehicles for tomorrow's demands, and to see an end to the guessing game of anticipating regulations which may or may not materialize. How many of us in the past have seen vehicles made obsolescent by the stroke of a pen, or alternatively have bought more power, or more axles, than we needed, in what we believed was prudent anticipation, only to suffer a penalty in payload loss or initial cost burden. • Whatever may be the outcome of the various weights and dimensions debates, we must currently live with the rules, which are a little trying, to say the least, for the cross-Channel operator. Qne hopes that out of the various gadgets now being fitted to our vehicles — most of which are admirable but give grey hairs to maintenance men there will quickly be a really reliable safeguard, by in-cab warning, to reduce the over-load-axle risk which has brought many of us into serious troubles.

I believe we shall see, in the long term, a growing usage of box and canopied vans in trades where they are not currently common. UK customers (and operators) are gradually overcoming their longstanding reluctance to load them. Many European drivers have never encountered "sheeting and roping" which is an accepted daily routine in our own fleets. A number of British senders and receivers were horrified when TIR trailers or box containers first appeared on the UK scene, but now accept them readily, and appreciate their merits.

Cost levels tomorrow will demand even greater intensity in fleet utilization, and downtime will be an expensive catastrophe. There could be a growing tendency to shorter "first-line" life, and a greater demand for buy-back or replacement exchanges after 2-3-4 years. To what extent the "rural" operator, or the reconditioned export market, can continue to absorb these vehicles is a question for the trade, but all of us have some complex arithmetic to face in the question of optimum life, and depreciation/ maintenance formulae. Doubtless each of us has his pet theory, some will opt for a troublefree short life, others will prefer major rebuilds to prolong working life when faced with the high escalation of replacement. Either way it is going to be an important factor in tomorrow's fleet-planning.

Fuel costs need no emphasis today, and their importance is unlikely to diminish tomorrow. On a 50,000 annual mileage max-cap artic, fuel cost is running neck and neck with driver cost, and this factor will be of greater significance in vehicle selection than heretofore.

The study of driver comfort is no longer new and it will certainly gain emphasis. Good-class drivers can currently afford to be somewhat selective, and their preferences go beyond the wage packet.

I would expect that in some, but not all types of operation, electronic data recorders will prove their merit, both those which depend upon automatic input from tachographs, weight sensors, fuel usage etc, and those which require "press-button" feed-in by the driver. Cassette-type data prototypes of this nature are already well advanced and will feature in tomorrow's fleets not only in providing management information, but in primary accounting print-outs.

\ Premises and people

Premises are a tool of our trade, equally as important as our fleets. The back street railway arch may no longer be the hauliers' haven, but planners and environmentalists will never rate us highly, and our locations will not always be of our own choosing. Selecting sites for tomorrow's depots will need new considerations — driver mileage limits, urban restrictions, designated routes, and other uncrossed bridges.

The PEOPLE with whom we are primarily concerned fall into four categories — the customers — the employees — the shareholders — and the public at large. Each of them will influence tomorrow's operations, and if we abuse any one of them we shall be called to account.

The legislators, the Courts, and our own efforts will ensure that the general public do not suffer unreasonably in road safety or environmental nuisance: — the dissatisfied customer will deal with second-rate performance from his haulier in summary fashion, as he has always done; — the disillusioned stock-holder will bring us to heel by limiting the finance of development; — and the disenchanted employee will drift away from the industry, and will serve us ill while he is doing so.

All of which highlights the particular importance of people in our industry, and the need to give their interests high priority when we are planning for tomorrow.

Generalizations are always dangerous, particularly when people are the subject, but I think we can take some satisfaction that the level of employee morale in the road freight business is • well above that in some other industries; but that must not lull us into complacency, our labour relations are going to be a vital feature in "tomorrow's operations". Low morale on a factory floor invites malingering and second-rate production — how much more serious could such a decay be to ourselves, where the bulk of our work-force, who are in regular contact with our customers, are virtually out of our direct supervision for the most of the working day.

Employee morale is a mirror which reflects the quality of leadership in "the Boss". Let there be no mistake, so far as the man behind the wheel is concerned, the boss is his immediate local manager, whom he can praise, tolerate, or detest as the mood takes him, and it is at this level that his respect and goodwill are warranted, or otherwise. He is generally quite uninterested in the personalities of Groups, or higher management structures, and I believe the industry will suffer if we deceive ourselves and allow the so-called economies of scale to he over-rated, resulting in operating units of such size that "the boss" becomes impersonal to his own men.

On this same theme, I hope we are already seeing good sense prevailing in this new European passion for "harmonization", which seems to mean making all men equal. If anyone seriously believes that the work-style and rule-book of a driver in Naples is going to go down with a driver in, say, Aberdeen, then I fear there are some rude awakenings in store.

Tomorrow's leaders

Our middle management and supervisory staff will also shape our future, and it is to them we must look for tomorrow's leaders. Whether they will ultimately require to be personally licensed or not, it is essential we create and demonstrate a career pattern, always ensuring the proper mix of the experienced and the academic, for thrust, ingenuity and flair do not come in computer packages. I do not think we need fear on this score, it is already gratifying to note the appeal which the new professionalism in transport is providing, in attracting a quality of recruit who would have spurned us a few years ago.

The ENVIRONMENT in which we will be operating tomorrow is probably the most clouded area of the crystal ball. Questions hang over our heads both at home and in Europe, and they concern our customers as deeply as ourselves.

The possible impact of EEC regulations on our industry does not appear to arouse intense interest or concern among operators other than those immediately feeling the early influence, and one wonders why this apparent apathy exists.

Certainly it does not reflect any lack of interest by the two major trade associations. Perhaps it stems from hauliers' attitudes — an understandable reluctance to study the complex legalese in the lengthy draft publications — and a somewhat punch-drunk acceptance that further legislation and control are essential parts of our diet. Either way, the British haulier appears to be ignoring the preliminaries, well knowing that when the arguments are over, and the gentlemen in Brussels finally announce their commandments, he will receive them with tolerant resignation, proceeding to remould his business yet again, and will survive in spite of them. Meanwhile he closes his ears to the skirmishes and gets on with the job of carrying the bulk of the nation's freight.

At home we will continue to live with the antijuggernaut lobbies, and, I suggest, ask ourselves if we are not over-reacting to an emotional situation. I believe we are, as an industry, sensitive and responsive in our relations with the community, and as quality and similar controls bite deeper, the passions will subside — but at a cost.

Freedom or controls?

Whether our present liberal licensing system will change under EEC pressures, or resulting from political attitudes nearer to home, is a question which must concern us all. Arguments will long continue whether quantity controls of capacity improve the efficiency of transport, or whether restricted choice is to the detriment of progress. I do not think we are agreed among ourselves, but regulated access to the market is a basic 7rt of Community Policy.

At present the field ranges from liberal to ultrarestrictionist. Not by the longest stretch of imagination is West Germany likely to entertain the present UK system, nor we to welcome the controlled allocation system which regulates German haulage under an overall quota umbrella.

The MONEY for which we must account is by no means the least of our problems in Tomorrow's Transport. The demands which we face, and will continue to face, in the levels of our costs, will not only concern the intrinsic prices we pay for machines, materials, and services, but also the less evident costs which will be incurred to make our operations "socially acceptable" as indeed they must be.

Every impediment to maximum transport economy, however desirable, must be weighed against the additional cost. If our community demands a more genteel, unobtrusive, and acceptable haulage industry, then we will have to comply, but if we are still to serve the need which our society has created, then there is some arithmetic to be done.

Narrowing margins in recent years have not encouraged major investments, particularly in the nonspecialized areas of haulage, and unless we can show the stock-holder a reasonable return against his risk we are not going to finance the growing appetite of our capital demands. While there is always some room left for betterment in our productivity and efficiency, I do not think we can hide the fact that transport rates are going to change drastically to keep prace with tomorrow's costs.

I fear I may have painted a picture of gloom and doubt in looking at tomorrow, but I think we should take some comfort from our past history, and some satisfaction from the emergency of a new professionalism, and respectability' which is slowly changing our image.

believe that those who are not afraid to face the need for change — to make sensible and calculated investment, who cultivate staff eagerness and effort by their own example, and who justify customer support by their standards of service — they will succeed. Of this I have no doubt.

Tags

People: E. M. Hains
Locations: Aberdeen, Brussels, Naples

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