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Watch What the Railways Do!

23rd January 1953
Page 35
Page 35, 23rd January 1953 — Watch What the Railways Do!
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Which of the following most accurately describes the problem?

Says Ralph Cropper, M.Sc.(Econ.), BA., A.M.Inst.T.

ROAD transport operators can easily overlook the importance of the clauses in the Transport Bill providing for the revision of the principles governing railway rates, yet the proposed changes are farreaching and, if exploited to the full, may substantially alter the competitive relationship which has long existed between road and rail.

In the past, hauliers have benefited from two serious defects in the railway rating system—enforced publication and inflexibility. Hitherto, any citizen could demand to know the rate that the railways were charging for any particular traffic and the information would have to be supplied. This applied to every class of traffic and every category of rate, whether standard, exceptional or agreed.

An Open Book No trader could keep secret what he was paying for rail carriage and the haulier was thus always aware of what he was up against in the way of railway competition. He could always find out what his customer would have to pay if he changed over to rail; or, if he were seeking rail-borne traffic, he knew the price the trader was meeting and this gave him a measure for the amount of his own quotation.

Not only did the haulier know the railway rate, he also knew that there was small likelihood of it being revised. In any event, this could not be done quickly. Inflexibility arose from the doctrines of non-discrimination and the avoidance of undue preference. The railways were forbidden to vary charges among different customers, who had the right to enjoy terms equal with those of their competitors.

If the railways reduced one rate, they might have been forced to cut a number of others. All charges were locked together in an amazingly complicated way with recognized parities and equivalents. It needed only one trader to satisfy the Railway Rates Tribunal that he was being discriminated against, and it would order rates to be reduced to obviate undue preference.

Exceptional Rates .

However, it is true that the railways did introduce numerous exceptionally low rates to meet road competition and attract back business, but before any reduction could be decided upon they had to make thorough investigations to find out whether other cuts would result because of traders' representations to the Tribunal. This was often a deterrent to tariff reductions.

The new Bill relieves the railways of almost all their legal obligations regarding publication and inflexibility. There is to remain only the duty to publish maximum charges and some protection to traders whose traffic can be carried only by rail. This is a clean sweep, and it goes further than the railways dared to claim in their Square Deal campaign in 1939.

What are the likely effects on road transport? Now, the railways would not have pressed for freedom for so many years if they did not expect to gain from it. Obviously, what they want is more traffic and more revenue, and they clearly anticipate that most of this extra business which they hope to win will he abstracted from road transport.

In future, railway rates will be secret. The continued publication of maximum charges will not vitally concern the haulier, who will want to know the specific rate to which to adjust his own. He will have to rely on what his customer tells him, but, of course, the trade will often " bargain " in an effort to depress the price.

The haulier will therefore be in the dark when making his quotation as he will not know the railway charge. Again, the railways will be free to adjust any rate to, meet competition without the necessity of considering repercussions on other charges. But the railways are still unlikely to become as flexible as road transport chiefly because Of their great size.

Results of the provisions of the Bill will depend upon the extent to which a commercial outlook can be instilled into the railways. Business acumen is required to find a balance between adjustments of rates to meet competition and gratuitous reductions to curry favour, and it is not easily developed in a large organization composed of a hierarchy of salaried servants. Moreover, in spite of the lip service paid to the desirability of railway decentralization, it is unlikely that the British Transport Commission will put forward anything more than a half-hearted scheme to achieve it.

H.Q. Control of Rates ?

If, as seems likely, the headquarters will retain control of rate-fixing, delay iri deciding charges will be caused arid responsibility for taking decisions will be removed from the local men in touch with the commercial activity in their districts. This is one of the inevitable penalties of a large concern, which must have a big measure of central direction.

It is a tremendous problem for policy controllers to arouse a sufficient sense of responsibility at district levels to enable bold on-the-spot decisions to be taken, yet not diminish their own authority. Indeed, the main task of the railways in the future would seem to lie in the relationship of headquarters with local personnel. Ways must be found for evoking a loyalty among middle ranks so that they can act. in the interests of their employers through their own freedom of action.

Hauliers will do well to watch railway developments closely. The railways may be the sick man in the transport industry, but he could recover, given a sufficiently stimulating dose of commercial enterprise, and he has the constitution to give road transport some smart blows. Furthermore, he will be better able to administer them when unfettered from his bonds.

Hauliers Will Suffer

Ancillary users, however, may derive some benefit when the railways come to seek their traffic because they can insist upon quotations being lower than the operating costs of their own vehicles. The professional haulier is lirely to be the chief sufferer as the railways will be able to reduce their rates progressively, in regard to a selected traffic, until the road operator can cut his no further. So long as the rate is higher than the direct operating costs, the railways will argue that they are justified in doing this.

Perhaps the day will come when hauliers will be keen to reach tariff agreements with the railways in order to discourage rate-cutting. 'What a reversal of the situation which led to the setting-up of the road-rail conferences this conjures up.


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