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by Roger Howell Freightliner break-even

22nd November 1968
Page 35
Page 35, 22nd November 1968 — by Roger Howell Freightliner break-even
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Which of the following most accurately describes the problem?

• That Freightliners Ltd. was to be registered as a limited company on Monday was revealed by Mr. T. G. Gibb, general manager, BR Freightliner Division, to delegates at the seventh one-day course organized by the Sheffield Division of the Institute of Transport last week. Thus accounts would have to be published at the year end, and he estimated that an average 75 per cent load capacity was required to break even.

Rates were not published but the apportionment between rail and haulage was no secret since the between-terminal tariffs were the same for everyone, said Mr. Gibb. Hauliers who used Freightliners for their trunk hauls knew the rates and, indeed, gained discounts by guaranteed usage of two or more containers daily.

Hauliers' traffic was welcome, he said. "We realized that the system was not going to be fully loaded unless the hauliers brought us their business.They had never canvassed a haulier's customer direct who was in turn putting the traffic on Freightliners. Only if he discontinued so doing would they go direct. Everyone thrived on competition and they would only be seeking business lost to road many years ago.

Freightliners were a major step towards modernization of transport in this country but the development of containerization was world wide. The 8ft by Bit module had been internationally agreed but now some people were trying to extend the dimensions which, if accepted, could have serious consequences for our rail system.

Problems had arisen and pioneer terminals were having to replace cranes which were not strong enough or which did not have sufficient container-storage adjacent to them. Still being sought was a method of getting a terminal started with basic and flexible equipment which could be expanded or contracted without vast capital investment.

Freightliners were mainly running full at night but day. services were often badly loaded. Overnight delivery was now "in our blood", but Mr. Gibb wondered whether a discount should be offered for traffic to go on the first available train and keep the standard rate for pre-booked guaranteed space.

Transport had been, in 1968, as much of a political cockpit as steel had been previously and if it had not been for political dogma the 1968 Transport Act might have been something people in transport would have welcomed, said Mr. J. H. Osborn MP. Road hauliers had asked whether it would be worth while staying in business: he was surprised at their despair. He felt haulage would withstand competition on efficiency grounds for sometime to come.

It had now been decided that transport managers' licences would be divided into five grades but the loT had an important part to play in the establishment of criteria for them.

JUST ISSUED by Integrated Container Service Inc. is a booklet, ICS Container Equipment Pooling, giving concise details of its container pool system which has been developed since 1963.

ICS stresses that its business is to provide a service to carrier organizations and that it is not interested in actual freight or transportation operations as such. Basis of the pool system is that participant's outlay is directly related to the number of containers in service at any one time, rental starting the day equipment is taken on and ending the day it is transferred to another participant. Furthermore pooling permits an operator to vary his container fleet according to demand.

Two pricing schedules are in fact offered. The basic pool schedule stipulates a fixed daily rate per item of equipment and is directed to carriers who have not yet developed a long-term need for a constant container supply. More sophisticated is the Pool Plan which requires carriers to subscribe to a minimum number of 25 containers for at least one year, rates varying with time commitment and level of interchange. A carrier who subscribes for three years pays daily rates of approximately 13s to 18s, the actual figure being based on the percentage of total containers allocated taken into, or out of, service in a given month. Permitted inventory limits widen as the contract period increases and while a carrier taking containers on a one-year commitment can vary 15 per cent above and 15 per cent below his quota and pay the same daily rates, a carrier on an eight-year commitment can vary 40 per cent either way.

In estimating the savings offered ICS stresses that apart from equating container supply with fluctuating demands, operating costs can be substantially reduced through elimination of empty running. When a carrier has finished with equipment contact is made with an ICS regional interchange office which will arrange transfer back to ICS or to another operator in the area requiring extra capacity. The carrier giving up the equipment generally pays the cost of delivering to the next carrier. Both parties endorse an interchange form giving equipment details and take-over condition. Obviously as containerization extends and the number of subscribers to the pool increases transfer of surplus equipment will be possible even away from the main port areas and centres of population.

Other claimed advantages of pooling are elimination of obsolescence risks inherent when equipment is owned, or on long-term lease. ICS emphasizes that shipping and the government requirements relating to container equipment are constantly changing and that equipment can hence be rendered obsolete long before it is fully depreciated. Illustrating the flexibility of the pool system, ICS equipment which was fully appropriate in the North Atlantic trade in 1963-66 has now been transferred to other less automated routes.

The ICS booklet is one of the few we have seen referring to actual container control. No doubt large container operators have control systems, perhaps sophisticated ones, particularly where substantial capital has been invested in the equipment. However, from past road haulage experience it would appear that very few operators—British Railways apart! —manage to keep an accurate check on individual container location, usually because of the administrative burden placed on traffic staff.


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