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Rates Control Impracticable

23rd August 1935, Page 34
23rd August 1935
Page 34
Page 35
Page 34, 23rd August 1935 — Rates Control Impracticable
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Which of the following most accurately describes the problem?

says " &TR."

IDISAGREE entirely with the proposals embodied in the article entitled, " Statutory Control of Rates'?" which appeared in the issue of The Commercial Motor dated August .9. The scheme is, in my opinion, wrong in principle and, as such, is foredoomed to failure. Any attempt to implement it will be, in effect, to place an additional weapon in the hands of the railway companies, an additional opportunity for them to object to road-haulage licences.

It is economically impossible to fix rates for services which differ so widely in their essentials and in their cost as those offered by goods hauliers. Artificial restrictions of this kind invariably bring in their train complications and malpractices which ultimately produce a state of affairs much worse than that which it is sought to improve.

Some Major Difficulties.

It is difficult enough to enforce the maintenance of the prices of proprietary articles. An outstanding example of this problem comes almost within the purview of the haulage industry. I refer to price maintenance in respect of motorcars.

The Motor Trade Association, one of the most powerful trade organizations in the country, has been attempting to secure that aim for more than a score of years and the difficulties have not, as yet, been entirely overcome. How much more troublesome, then, is it going to be to maintain rates relating to services, the cost of which may differ from time to time and from locality to locality, and according to individual conditions, by 100 per cent. and more?

It is well known that a rate for haulage which, to one man, having in mind his conditions of operation, may seem to be an outrageous cut, will, nevertheless, bring more than ample profit to the operator who is doing the business. A certain amount of stabilization, a certain broad basis upon which rates should be calculated, is possible, and advisable, but no country-wide standardization. Even if there were not these overwhelming objections to the principle of the scheme proposed in the article to which I have referred, there remains the fact, almost as important, that any statutory fixation of rates will mean an addition to the already excessive number of grounds upon which the railway companies can object to the granting of licences.

.Railway Position Too Strong The railways are already in much too strong a position for the liking of any interested road haulier. They are, indeed, if it could be realized, in much too strong a position, for the ultimate good of the transportusing tradesman.

The railway companies appear to have a minimum of difficulty in obtaining licences for additional vehicles. There seems to be no argument which can be set against their plea that additional vehicles are necessary if they are to carry out their statutory obligations. Objections can, in any case, be made only by individual hauliers and, having in mind the financial backing of the parties concerned, is there anyone who can doubt that, in the long run, the railway companies are bound to win on that field of battle?

Promiscuous Railway Objections.

The railway companies, on the other hand, can, and do, consistently object to any application for additional vehicles for a road haulier. Their objections are not invariably upheld, but if comparison be made between the proportion of successful railway objections and the proportion of those by road hauliers against railway companies which are sustained, the can be little doubt as to the direction which the roadhaulage business of the country is taking.

The foregoing remarks indicate in brief the objections which I have to an attempt to plan a country-wide fixation of rates by any means, statutory or otherwise. The question naturally arises: what is the alternative? I would begin to answer that question by pointing out that hauliers are not being sufficiently patient in their expectation of the effects on rates of the Road and Rail Traffic Act. They are grumbling because there is, as yet, no positive diminution in rate-cutting. It is absurd to expect anything of the kind for at least another couple of years and, even then, there will only be a beginning.

It has to be remembered that the object of the Act in diminishing rate-cutting will operate in only one direction, and will remove only a certain cause of rate-cutting. It will not remove them all.

It will eliminate that particular weakness from which the haulage industry suffered before the Act was passed, namely, that it was possible for anyone with in his pocket, and a complete absence of business knowledge, to become a road haulier and cut rates as he pleased. If he went bankrupt, there were two or more ready to take his place and with nothing to prevent them from doing so.


When the Act came into operation, it quite rightly allowed all those who were in the business to stay. Those who persist in uneconomic rate-cutting throughout their activities must inevitably go out of business and, this time, it will not be nearly so easy for newcomers to take their places.

That restriction will gradually eliminate that type of rate-cutter. The process, however, must inevitably be slow and the true effect will begin to be noticed only when claimed tonnage licences have lapsed.

In my view, and I am sure that I am right, the only satisfactory line to follow is that of educating hauliers to an appreciation of their costs and of what is the true meaning of the term " net profit," of showing them how, in any particular case, to calculate a reasonably profitable price. If, after that calculation hag been made, other conditions, such in deliberate rate-cutting by a competitor who has vehicles standing idle, or is favourably positioned as re. gards return loads, this haulier still cuts the rate, then I do not see how he can be blamed. Nor, so long as his better-informed and more substantially backed competitors pursue the policy of adjusting rates in accordance with their own particular and momentary circumstances, do I see how a considerable percentage of rate-cutting will ever be eliminated.

To lay down a standard of rates will not have the desired effect. It will merely drive still further underground the rate-cutting that persists.

The standard rate will be quoted, but rebates, discounts and quid pro quos will be offered in lieu of a cut in the rate.

To attempt to stabilize rates on the basis of railway charges would be to play absolutely into the hands of the railway companies. As was observed by one of those who contributed to the article, there are times when business can be taken from the railway companies at rates considerably in excess of those of the railways.

This is possible because of the many advantages which road trans

port offers. Again, in cases where those advantages are of no avail, it is often economically and commercially practicable to quote rates less than those of the railways.

The underlying principle of trade and commerce is that of bargaining and, so long as those who are engaged in the bargaining keep their• heads and bear in mind that their principal object is to make a living, and, whenever possible, slightly more than a living, little harm will be done by the reasonable exercise of a little give and take, as between one concern and another.


Organisations: Motor Trade Association

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