HIRING For Lnd Against
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Direct Ancillary Operation is Applicable When Fewer than a Dozen or More than 50 Vehicles Can be Employed: the Professional Haulier, However, Can Provide Specialist Services Solving the Problems Of the Carrier
THERE has lately been a growth in the number of traders, formerly hauliers' customers, who have purchased vehicles and are now running their own transport. : That. came about, in some mai, because the traders were not satisfied with the service they were getting from nationalized transport. It is therefore useful to consider the subject from the point of view of the haulier who has acquired some vehicles and licences from the Disposal Board and wishes to get some of those customers back on his books.
There are two matters to be considered. The first of these lies in the immediate future. It arises from the steps which miist now be taken to stabilize rates for certain traffics throughout the country. It is inevitable that many of the rates now current will have to be increased, some of them substantially. I am referring to the rates which hauliers charge, not the B.RiS. rates.
Hauliers will be looking back through some of their old ledgers and so will the customers. Those old rates will not fit into present-day conditions and if either think that they can be resuscitated they are in for a surprise.
In effect, there will appear to be a redaction of the margin between a contractor's charges and the direct cost of operation of ancillary vehicles. Faced with a realization that his costs of transport are going to rise, the ancillary user is going to look, more closely into the question of costs of operation to see whether or not it is advisable to continue to use his own vehicles or rely on hired haulage.
It often pays the trader to have his goods delivered by his own drivers, thus cementing good relations and making customers realize that in dealing with the driver of the vehicle they are dealing with their supplier's representative, a convenience which is sometimes important.
It is unfortunately difficult to discuss the relative merits of ownership and hire. There are often overriding conditions either way. So far as it can be' done, however, I propose to deal with the matter briefly. First consider the advantages of ownership. Perhaps the outstanding advantage is absolute control of the vehicles. Most contracts for haulage it is true, give almost complete freedom in that' aspect of hire, but there is just a shade of difference which sometimes is sufficient to turn the scale in favour of ownership. It is nevertheless important to keep in mind that' 'only a minotity of the work done by hauliers for ancillary users is under direct contract.
Secondly, the cost of operation of owned vehicles is likely to be less than that of hired vehicles. It has to be admitted, 1332
however, that there is some justification for argument here, as the cost depends on a variety of conditions. It is possible .10 state that the ancillary users' costs can, in favourable cases, be lower than the expense of hiring transport.
In the case of owned vehicles, the drivers areactually the employees of the user and, in those circumstances, arc inclined to take a more personal interest in business affairs than are theiemployees of a haulage contractor. When the deliveries are made direct to customers this factor may be important.
When the ancillary user is a manufacturer of a variety of different goods, it is hail, to train hauliers' drivers to become so familiar with-the goods as to be able to handle deliveries and collections to the complete satisfaction of the hirer. If the ancillary user's business is one which calls for the employment of salesmen as drivers, it is probably better for that trader to own his own fleet, and maintain close contact with his salesmen,. Friction and disagreement might arise if the salesmen employed by the ancillary user were, in some degree, supposed to be responsible to a haulier for the way in which they used the vehicles.
Advantage to User
In this same connection must be mentioned that class of delivery in which, although the driver may not operate as a salesman, he nevertheless effects his deliveries in such a way that there is some advantage to the ancillary user in the contacts made.
The advantages of hired transport can be defined in such a manner as to serve to illustrate the disadvantages of direct ownership. It has to be recognized that today road transport is a highly specialized industry. It can effectively and efficiently be handled by none but experts. The ancillary user is a specialist in some other trade or industry and he is best advised to direct his energies in that direction and to turn over the conveyance of his goods to a specialist in transport. The result will, in all probability, be economical; the work will most likely be better done and the vehicles will be more wisely chosen and better kept, with less liability to be off the road because.of poor maintenance.
The elimination of inconvenience is an important factor. The contractor relieves the user of all the responsibilities of the traffic Acts and the thousands of regulations. He take; from the owner the incubus of dealing with drivers' hours and records; he takes care of insurance. registration, recording fuel and oil consumption; the routine involved whenever an accident occurs: and he deals with the many and diverse troubles-which 'require the services of a specialist.
These points alone have, many a time, turned the scale in favour of hiring as against owning and they will again, especially if the haulier is able to put his case before the potential customer in a persuasive way.
When the traffic of the user is such that there are wide fluctuations in the tonnage carried, as in a seasonal business, the problems which arise can be treated by the .contractor with the minimum of trouble to the user, and with a diminution of cost. Such conditions must, in any event, be met by hiring to cover peak periods of tonnage.
In such cases, the haulier is ill-advised to complain of his treatment by his customer, as I have heard many a time, saying that the customer is taking for himself all the easy traffics but leaving the difficult and urgent jobs for the haulier, That is the way many hauliers live, by taking the rough work. If, instead of grumbling, the operator devotes his energies to carrying out the work that is given to him with a maximum of efficiency and economy, he is halfway towards being given all the traffic of that particular customer.
Distribution from a wide variety of centres and depots, inevitable in some trades, and involving decentralization of control, adds to the difficulties of the ancillary user who endeavours to run his own transport. A haulier, however, can take such troubles in his stride. He is organized and equipped to deal with them: they are no more than a matter of routine to him.
In the event of a vehicle being involved in an accident, or breakdown resulting from any cause, or when vehicles are laid up for major service operations, the onus of providing spare machines falls upon the haulage contractor. He is in a favourable position to deal with it because he has a fleet of vehicles from which he can draw, and, if for that reason alone, he can deal with the problem more economically than the user. For an aneillary user to keep spare vehicles for the same purpose would involve high costs.
The ancillary user who places his traffic in the hands of a haulier avoids labour troubles with drivers. If and when they arise they are no concern of his. The haulier must deal with such troubles in a way that does not materially affect his contractual obligations. I am aware that the usual form of contract contains a clause worded with the object of relieving the contractor of such obligations in the event of a serious strike. Nevertheless he will, for the sake of his goodwill, do his utmost to relieve his clients of any anxiety or loss on this account. Generally, too, he finds a way to do so. The contractor must also make arrangements for relief drivers to be available when the regular man is sick. on holiday, or otherwise absent.
Perhaps the most important factor, and one which cannot bc dealt with simply by way of discussing the pros and cons of the subject, is the size of the fleet. This affects the question inasmuch as it determines whether it is economical to operate the vehicles without much expenditure in additional clerical staff and without engaging technical assistance.
Part-time Clerical Work
Briefly, the situation as regards fleet dimensions may be regarded in this way. It is assumed that there are no serious fluctuations in tonnage from year to year. If fewer than a dozen vehicles are operated, it is likely that it would be economical to own. Under those conditions the clerical work can be dealt with as a part-time occupation by someone in the general office, provided that he is given a little training and instruction in essentials. The maintenance of the fleet can be entrusted to a garage foreman and one mechanic.
With fleets larger than this and up to about 50 vehicles, it is usually preferable to hire. There is, in such fleets, hardly justification for the engagement of an expert indoor staff. On the other hand, there is too much work involved for it to be within the capacity of part-time working by one of the clerks.
When the number of vehicles in the fleet exceeds 50, the question becomes an open one. There is, in a transport department of such magnitude, justification for the establishment of an organization to deal with it. In some cases, individual circumstances, such as the difficulty of housing the fleet, may make it desirable to have the work done by a contractor.
There is another way too in which fleet size is of importance. A haulier can buy his supplies, even his petrol or oil fuel, on better terms than the owner of a small fleet. That and the consideration of the spare-vehicle problem are often enough to provide the haulier with substantial part of his profit. Where there is no binding contract, the haulief can frequently employ the same vehicles for several customers. and by spreading his overheads among them, effect savings which are beyond the capacity of the ancillary user.
In these circumstances, the balance of expense turns in favour of hiring, and that is additional to all the other advantages described above. S.T.R.