Balancing Service, Cost and Responsibility
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In determining a suitable transport policy, traders and industrialists have now to include Common Market implications in their considerations
IN the immediate post-war years, and particularly with the advent of nationalization in 1947, many traders and industrialists had occasion to reassess their transport requirements with the return to peace-time conditions. Claims have been made that many resulting decisions were largely conditioned by a political approach according to the opinions held as to the merits, or otherwise, of nationalization of a substantial proportion of transport services in this country.
The substantial rise in the number of vehicles operating on C licences which occurred after nationalization has, in some quarters, been considered justification for such claims. Whilst this contention may be valid in some instances, there are several other reasons of a more factual nature and, because of this, they are more likely to determine the opinion of hard-headed businessmen.
Because transport is a service to trade and industry it follows that if it is to continue to contribute efficiently to the national economy it must readily adapt itself to changes in customers' requirements.
Due to the continual rise in the cost of both basic materials and finished products, there has been a consistent demand from industry and trade for quicker and more regular transport services. This post-war trend has undoubtedly adversely affected those forms of transport, and in particular the railways which, because of a more permanent physical or administrative structure, were unable to meet the new demands.
But even when it had been determined that goods should go by road because of the advantages of door-to-door delivery and the opportunities for direct control which this provides, alternatives in the form of transport service are still available to the customer.
Basically such alternatives are inherent in the licensing system, which provides for the issue of a carrier's A licence when goods are to be carried for hire or reward as is undertaken by the general haulier, or a Clicenee when the customer's own vehicles are to be used.
TWO further alternatives are provided, arising from the ownership of the vehicles operated, to meet more specialized needs. Where the circumstances are such that the customer feels he needs the exclusive use of a vehicle, but otherwise wishes to keep his responsibilities to a minimum, the present licensing system provides the opportunity for him to hire a vehicle exclusively for a minimum period of one year from a professional haulier, who also supplies the driver, operating under a Contract A licence.
Whilst such an arrangement may fit the customer's needs admirably in certain circumstances, on other occasions it may be essential that the driver should be in the employ of the customer. Particularly does this apply on retail delivery, when sales may be substantially determined by the efficiency of such drivers. If, however, it was not wished to take on the full responsibility of selection, purchase, operation and subsequent maintenance of one's own vehicles, a particular situation might best be met by the running of vehicles on a C hiring margin. Under this arrangement the customer has direct control of the operation of a vehicle and its driver (who would be his own employee) whilst the contractor, for an agreed and fixed .B40 hire charge, would take responsibility for the supply and maintenance of the vehicle.
As already mentioned, because of the special conditions applying in the immediate post-war years, the opportunity was taken by many organizations to review their transport policy. Now that a formal application by this country for membership of the Common Market has been made the present and immediate future are appropriate times for a further reappraisal of transport requirements, and the suitability of the available transport services to meet them.
RECENT political announcements have emphasized that this country is at this moment involved only in the initial stages of entry into the Common Market and that several years •must elapse before the full effects on trade and industry are felt, even should the application for membership be accepted. As was shown in the recent series of articles in The Commercial Motor on the prospects arising from entry into the Common Market, a substantial rise in Continental ferry traffic by both
semi-trailers and lift vans was revealed. This increase is expected to continue but must obviously be restricted until the full benefits of membership are obtained by trade, industry and transport operators.
In reassessing the likely effects on transport services in this country, should membership of the Common Market become a reality, the significance of the final delivery of the finished product to the ultimate customer should not be overemphasized so as to ignore the importance of the several movements of basic materials and semi-finished products which invariably have to be made before the final stage of manufacture is reached.
Precisely because the end product of one manufacturer might be considered the raw material of his customer, the ready division as between raw material, semi-processed products and the finished article can seldom, if ever, be made. But nevertheless, the general haulier is dependent for a substantial proportion of his total traffic on the first two groups. it therefore follows that even if a haulier decided that he did not wish to undertake the responsibility of Continental collections and delivery, acceptance of this country into the Common Market could very substantially affect his business, nevertheless. Some sections of his customer's traffics might increase considerably and others decrease, whilst at the same time the flows of traffic, even in this country, might change completely. The manner and extent of such changes could hardly be determined at this stage, but undoubtedly flexibility will be at greater premium than ever. Fortunately for road transport flexibility is an inherent asset.
Even so, increasing concentration of responsibility at the top of an organization could largely mitigate this initial advantage which road transport possesses. The new and additional problems which Continental movements of traffic would involve could encourage the tendency to over-centralization, unless adequate steps were taken to prevent it. If they were not taken, there would be every possibility that the standard of service would deteriorate so that a previously advantageous position relative to other forms of transport would have been lost. Despite differing opinions which have been ventilated as to the effects of entering the Common Market, there is general agreement that trading conditions will become much more competitive. Not only will there be a tendency for a lowering of prices, but also an insistence by Continental customers for compliance with agreed delivery dates and provision of whatever after-sales service they had previously been accustomed to—two aspects which are often criticized by overseas buyers for their alleged inadequacy. The solution to these problems will inevitably result in increased and more exacting demands on road transport services.
BECAUSE of more competitive prices, the post-war trend of reduced stocks will probably be increased. Such stocks will not be limited to those at the end of the chain bf manufacturers' distribution, but also at the several intermediate points at which semi-processed materials are passed from one manufacturer to another. In addition to more frequent deliveries which reduced stock would necessitate, the elimination of unnecessary labour costs involved in traditional packing and handling would be demanded. According to the type of traffic, these demands would necessitate more palletization or bulk containers in one form or another.
In order to augment still further the more frequent delivery services which have already been provided by the road transport industry in this country during post-war years, any further substantial increase in the transport requirements of particular industries favourably affected by entry into the Common Market may require a complete reappraisal as to the opportunity, and maybe the necessity, for extending double or even treble shift working. In any event, this trend might be accelerated not only by an increase in the volume of goods to be moved, but also a further deterioration in road traffic conditions during daytime.
Transport is, of course, only one of the problems which a trader or industrialist has to deal with and, indeed, is often considered of secondary importance. It therefore follows that any trader or industrialist who is particularly involved by the entry of this country into the Common Market, will have many new problems in his own particular sphere of manufacture and merchandising to handle. As a result, and even if he already operated his own ancillary fleet to effect distribution in this country, he may well come to the conclusion that the whole of his financial and administrative resources will be fully employed in the prime function of his business. In consequence, it is likely that he will be more ready to pass—and pay for—that responsibility to be undertaken by a professional haulier.
Relative to service and cost, and irrespective of the effect of .entry into the CommOn Market, it can sometimes arise that an efficient service can paradoxically result in overall inefficiency. Such a situation can only too readily arise On the acquisition, or expansion, of a C licence fleet, as did in fact occur in some instances in the immediate post-war years following nationalization.
It was then found that to the competitive assets of the price and quality of a product could be added the frequency—and certainty--of the delivery service. For example, where it has previously been customary to maintain a weekly delivery,' the operator of a C licence fleet might find comparatively little difficulty in doubling this frequency.
Whilst any such improvement in delivery service would obviously always be acceptable to the customer, the trader or industrialist later realized that he was at the same time educating customers as to their minimum requirements in terms of frequency of .delivery.
To quote a specific example, one large company with a nation-wide distribution made a comparison of their customers' requirements as regards delivery in 1948 (immediately following nationalization) and again in 1953 (on denationalization) when, at both dates, the company concerned considered it appropriate to reconsider their transport policy. It was found that whereas in 1948 more than half their customers placed their orders one week for delivery any day the following week, by 1953 approximately 60 per cent. of customers were ordering one day for -delivery within 48 hours, in some cases specifying the hour of delivery. Even after allowing for the previously mentioned trend of reduced costs, it is a valid point that to some extent these more exacting demands in delivery times had in fact been encouraged by the ancillary fleet user himself.
WHILST admittedly throughout trade and industry there is this persistent problem of determining the correct balance between service and cost, it is unfortunate that as regards frequency of delivery services a reliable yardstick is not always available. Even though,a comprehensive recording and costing system may be maintained to cover the operation of an ancillary fleet, it is not always possible to quantify exactly the difference ill cost per unit distributed relative to the frequency of service. Moreover, the many incidental and additional expenses incurred in effecting an urgent delivery to a particular customer will almost invariably be swallowed up in the overall costs of the transport department. Therefore, if the whole cost of that department is ultimately met indirectly by the cost of delivery included in the price of the products, then the more considerate customer who orders well in advance is subsidizing other customers who habitually demand special deliveries. In some instances a solution to this unfortunate situation has been found by the rationalization of distribution following subsequent mergers of what were previously competing traders or manufacturers.
Therefore, should membership of the Common Market become a reality, it is vital to the prosperity of all concerned that such a situation should not be allowed to arise in connection with Continental traffic. On the one hand, as has already been stated, it can be anticipated that there will be fiercer competition both as regards price and standards of service. But there will nevertheless have to be a prior recognition that no matter how competitive any particular market may be, there is a point beyond which the standard and frequency of a delivery service must be uneconomic. Where an ancillary fleet was operated, arrival at such a decision could be delayed because excessive costs involved in any particular delivery might be absorbed and obscured, at least for a time, by other costs. Where the same delivery was effected by a public carrier the actual cost would be more readily noticeable, which might provide yet another reason for the trader and industrialist contemplating Continental deliveries to shift the responsibility for providing transport services to the professional operator.