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Keeping out of Carey Street by Janus
ONE result that might have been expected from operators' licensing and its concomitants was a sharp reduction in the number of road haulage bankruptcies. For many years they were invariably somewhere near the top of the list in the returns by what used to be called the Board of Trade. In 1967 and 1968 they were fifth in this somewhat depressing league table; and in 1969 they were still prominent although the classification had
changed. .
Familiar explanations have been given in the courts. On the strength of unreliable assurances that work would be forthcoming. the operators have made the first payment on a vehicle and have later found themselves drawn into other commitments. The prospects have not materialized, or the rates have been too low, or liabilities have accumulated too rapidly for the operator to cope with them, or he has merely proved to himself at considerable expense that he was not cut out to be a man of business.
IN the last year or so the hazards must have increased. It is no longer sufficient if the operator by some means or other manages to keep his vehicle running. Apart from the need to submit it for an annual test, there is the likelihood or at least the possibility that his licence will cover only a limited period after which he may be called upon to explain his conduct while holding it.
Perhaps an even more important obstacle is the right which the Licensing Authority now has to inquire into the financial resources available to the applicant for a new licence. The right is being exercised and has been the basis of at least one appeal. Hauliers who had feared a tidal wave of indigent newcomers once the limits of carriers' licensing were removed ought at least to recognize that safeguards still exist.
As so often happens, circumstances change and the old fears return in a new form. It is the general economic situation that must now be causing concern to many hauliers. When the rate of increase of industrial output has slowed almost to a stop--it was a mere f per cent in1970—road haulage is one of the first industries to feel the effect. There are particular reasons for concern at the present time.
The survey made for the RHA by the 'Centre for Interfirm Comparison has come up with a figure of 15 per cent for the general increase in road haulage costs during the past 12 months. This estimate seems to conform very closely with the individual calculations made by hauliers themselves.
A year or so ago it was made equally clear that the return on assets was much lower in road haulage than in other. industries. Separate confirmation of this came in the recent report by the Prices and Income Board on British Road Services. The clear inference from this is that hauliers in lean times must not expect that they can live on their fat.
Unless they can improve their productivity, they must put up their charges. Until recently, the first alternative was not unpromising. It was often possible—as no doubt it still is—to achieve economies and to increase efficiency. What was perhaps more important was the continuing opportunity to win more traffic from a growing total volume of industrial output.
IF extra traffic is no longer available, hauliers must aim to recover their costs entirely from higher rates. Many of them have succeeded in this, but there are many others lagging behind in spite of encouragement.
They have been unable to free themselves from what they regard as their normal practice. At one time the national assessment of total cost increases over a period was used merely as a strong bargaining counter. The haulier who doubted the extent of his power over his customers would reassure them that whatever the official figure might be, he was asking for substantially less. By this means he at least obtained some financial relief and—what seemed more important to him—kept the traffic.
Admittedly, what looked like a ruinous and shortsighted manoeuvre often succeeded simply because of a natural increment in the traffic. The chances are much less today. The haulier who does not continuallycompare his rates with his costs may soon find himself running into trouble.
RESISTANCE to his claims is growing. Trade and industry are feeling the pinch. Whether or nut bankruptcies among hauliers are increasing, insolvency over industry as a whole has reached the highest level for many years. There were 4907 insolvency orders during 1970, as compared with 4549 in the previous year and only 2800 in what must seem in retrospect an untroubled 1960. EXPERIENCE has shown that, when firms become fearful about their future and cast around for economies, one of their first targets is the transport department, There is perhaps an unexpressed conviction that, because there is nothing to show for it at the end, transport is a luxury which can be pared to the bone with no effect on the excellence of a company's product.
Where this is the mood in the boardroom, the haulier needs all his eloquence to persuade his customers that they must spend at least 15 per cent more on his services in the coming year and that even this substantial increase is not the end of the line. There are plenty of other rises in costs that the customers find more urgent and indeed inevitable.
They are inclined to look for alternatives as with any other source of supply. In fact, the search is no more than commonsense in the present circumstances. The revolutionary changes brought about by recent legislation have naturally prompted trade and industry to consider what advantage' they can reap as well as any new difficulties which may face them.
WHAT they are all well aware of now—although it may have taken some time to penetrate into the boardroom—is that their own vehicles can be a source of revenue and not merely, as in their heart of hearts they may believe, a liability.
The subsequent enhancement of the status of the transport department and its staff can do nothing but good. The effect on hauliers may not be so welcome. The trader can easily underestimate the costs which should be set against earnings from his vehicles and indulge in 'schemes which produce apparent economies at the expense of the quality of service.
If this process becomes general, hauliers are bound to feel the pinch. Their best hope may be that sq many traders are taking the transport problem seriously enough to support courses of study designed to equip them with the facts. Once the customer appreciates the problems, he may be less inclined to make light of them.
ALSO working for the haulier is the fact that possible new competitors, including the customer himself, must be prepared to meet• the new and stringent requirements laid down by the law. There are one or two signs that the legislation is beginning to bite. For example, Mr Eldon Griffiths, Under-Secretary for the Environment, has told the House of Commons of an apparent and substantial reduction in the number of unlicensed, Uninsured and dangerous tipping lorries.
A little earlier there was less welcome news of an increase in the number of light vehicles with an unladen weight of no more than 30cwt. It is from these vehicles that growing competition may be coming for some hauliers, and it may also happen, of course, that the operators of these vehicles may in future become the most frequent road haulage candidates for the bankruptcy courts.