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Small haulage firms likely to continue

24th September 1971
Page 31
Page 31, 24th September 1971 — Small haulage firms likely to continue
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Which of the following most accurately describes the problem?

• A research study on the small firm in the road transport industry, prepared for the Bolton Committee Enquiry on Small Firms, concludes that there is no reason to think that recent changes in legislation will radically affect the balance between large and small firms in the industry, nor is there any reason to think that change, brought about externally, is desirable.

With a wealth of statistics. Mr Brian T. Bayliss, author of the report, spells out the reasons for the predominance—measured in terms of numbers of operators—of small hauliers. Because small hauliers tend to specialize with respect to commodities carried, and because there are few genuine economies of scale, the small firms in the industry are likely to predominate in the future as they have in the past.

Mr Bayliss points out that it is in some ways misleading to think of the structure of the industry in terms of the size distribution of operators. Although 50 per cent of the operators (in 1963) had only one vehicle and only 2 per cent had more than 20 vehicles, this latter group owned 37 per cent of the total vehicle fleet (compared with only 11 per cent for the former) and the over-20 fleets carried 31 per cent of the tonnage (compared with 13 per cent) and performed 36 per cent of the total mileage (compared with 10 per cent). In terms of receipts—a better measure of output than tonmiles--the difference is even more marked, with fleets of more than 20 vehicles receiving 43 per cent of total receipts compared with only 7 per cent for one-vehicle fleets.

Forty per cent of full-time employees in road haulage for hire or reward were employed in fleets with more than 20 vehicles (compared with 11 per cent in one-vehicle fleets) and 43 per cent of the total costs incurred were done so by fleets with more than 20 vehicles (compared with 6 per cent).

Mr Bayliss quotes figures analysing road haulage bankruptcies in the competitive years 1921-38 which suggest that the bankruptcy rate was, if anything, slightly less than that of longer-established businesses such as bakers and greengrocers.

Licensing controls, however, helped the larger firms to expand and frustrated the very small operators. The ending of restrictions in the UK is likely to increase the tendency of the small new operators to counterbalance the increasing size of operating unit of existing hauliers.

The sire of operating units in four European countries was rather smaller than in the UK. In France and Germany, hauliers have been subject to much more severe regulations than in the UK but in Italy and the Netherlands regulations have been much more liberal than in the UK. Hence the author's view that the Transport Act 1968 will not greatly influence the structure of the British road haulage industry.

The idea that higher levels of maintenance will lead to concentration through the inability of small opertors to comply is refuted by Mr Bayliss. Small operators spend less per mile than large operators on spares, tyres and maintenance wages, partly because smaller types of vehicle are operated but also because much maintenance is carried out by the proprietors. Owner-operators, says Mr Bayliss. frequently do not differentiate between wages and profits, hence wages tend to be lower and profits higher in such firms compared with large firms. Forty-four per cent of the rone-vehicle operators studied had operating costs that were less than 75 per cent of receipts but no operator with more than 150 vehicles fell into this category.

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