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BANKERS in the U.S. have recently Paid tribute to what one of them called the" financial sophistication" of the road haulage industry in that country. The expression wasapparently intended to mean that,in contrast to the position only a few years ago, hauliers have won the confidence of financial institutions, who are more and more willing to put up funds in expectation of a satisfactory return.
The occasion for this expert praise was the annual meeting of a body known as the national accounting and finance couneil. of American Trucking Associations. There is probably no equivalent function in Britain at which the same comments could be invited, but there is no reason for supposing they would not be forthcoming if the opportunity arose. Most hauliers are on very good terms with. their bank manager, and the comparative few who have turned themselves into public companies find no lack of
support on the market. .
The high opinion that experience has shown to exist is not borne out—or so it would seem at first sight—by the latest issue from the Board of Trade of their annual melancholy review of bankruptcy. The report for 1961 conceals a fair slice of human misery beneath a few impersonal facts and statistics. There were about 3,500 receiving orders, an increase of about one-quarter on the figure for 1960. How they came about, how the people involved felt and acted, what might be done to reduce the total in the future —on these and many other questions the report is naturally silent. .
POSSIBLY the Board of Trade consider that the responsibility of bringing about some improvement rests with the\ trade or industry concerned. If this is so, it may be time for the road haulage industry to take some notice. No fewer than 215 of the failures—that is to say, about one in every 16 or 17—is described as a road haulage contractor. In fact, road haulage holds the unenviable place of third in the list of industries. Only builders (346) and hardware and electrical retailers (217) had more bankruptcies.
Comparison with the previous year brings little satisfaction, for in 1960 road haulage contractors were sixth in the list, with only 90 failures. Why the figure has doubled might well merit further investigation, possibly through the office of the Inspector-General in Bankruptcy. In the meantime, there is a little evidence available that might be found helpful. If nearly one per cent. of hauliers lind themselves in Carey Street during the course of 12 months, there must be a considerable number of references in the Press to individual cases.
Most of us will have noticed some examples. The public examinations to which reference is made below all took place in the same week. Their number is not sufficient to provide a completely accurate sample, but even so they may provide some indication of the lines along which a full-scale inquiry might proceed.
The first case concerns an operator in Leicester who set up in business early in 1960 with a capital of £100. He was soon behind with the instalments on his single vehicle, which was repossessed. Subsequently, he borrowed some money and obtained three more vehicles, with the same result but on a larger scale, so that he had, no alternative except to file his petition, el Another operator in Halifax .began business on his own account in January, 1961, with £150 capital. With this sum as deposit he bought a second-hand lorry, and later in the year traded it in for a second vehicle, which proved unsatisfactory. , According to his statement during the examination, he had hoped that by buying a newer lorry he would get out of debts that he had incurred.
Lack of work at the Spencer Steelworks, Llanwern, among other things, was blamed by a Cwmbran man for the failure of his. business. Other. reasons he gave were low haulage rates, lack of work for the two vehicles that he was operating, losses incurred through the repossession of the vehicles, and inexperience in comparison with established contractors. Told by what he regarded as a reliable source that there would be two years' work at Llanwern, he went into business with his first lorry in January, 1960, and later employed another man to drive a second vehicle. He found that in fact there was hardly eight months' regular employment.
MY last example is of a Brighton man whose original business was nationalized. To buy back part of the assets in 1952, he used partly borrowed money and partly the residue of what he had received as compensation.. An exclusive contract helped him to the position in 1953 when he was operating some 50 vehicles.. The contract ended last year, and the business subsequently earned very little.
The obvious moral of this case is not to put all your eggs in one basket. There are advantages in working for a single reasonable customer;but there are also risks. The remaining cases fall into a different category. Among the factors they have in common are the small size of the businesses and their short life. Even from the laconic reports, it is evident that none of them established itself, or seemed likely to do so.
The general impression is that these factors are widely characteristic, that prospective operators are finding it too easy to get into road haulage, or at any rate into certain branches of it, and that they make their entry without sufficient care and without sufficient capital. There is support for this view in the low average assets of less than £500 for the hauliers who went bankrupt in 1961. The amount is even less than the average of £700 for each of the 49 road transport employees who also had receiving orders in that year.
ESTABLISHED operators may feel that all this has nothing to do with them. They cannot ignore the problem completely.. The high position their industry holds in the table of bankruptcies is not exactly flattering to them or to their vocation. The continuous creation and suppression of small businesses which, while they last, are scratching more and more desperately for traffic at whatever cost, must have a depressing effect on rates. The sole beneficiaries are probably the more unscrupulous type of clearing house, or the kind of firm that offers to supply vehicles with traffic. The prudent course for hauliers is to examine more carefully the conditions governing entry into their industry, in order to see whether it is possible, in some way or another, to protect the inexperienced newcomer against himself.