RATES FLUID in the North-west
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Ashley Taylor, A.M.I.R.T.E.
Questions Hauliers and Traffic Managers on the State of Competition and Finds :
SQUAT figure with a some what dusky jaw faced me across the table at my first call in the process of investigating the rate situation in the north-west. This is a man who has worked his way up in the road transport industry, starting from a scat behind the steering wheel. Apart from knowing all the answers from the working driver's angle, he differs from many other good workmen in that he possesses great business acumen. His conversation can be summed up in one of his own pithy sentences: "Permanently agreed rates are bunk."
Got What They Wanted
Before we go on to consider the remark in detail let me paint another picture, that of a well-groomed figure, well away from the dirty end of transport but with an encyclopxdic knowledge of the job. As an industrial transport manager he says: "The hauliers wanted free enterprise and have got it. The present set-up suits the trader. Why should the operator complain?"
In the Lancashire industrial districts, especially, hauliers have not found things so straightforward during the past two years as have their opposite numbers in the Midlands, whose difficulties were described in The Commercial Motor a fortnight ago. The Midlands would seem to have been thrown into a state of despondency by the rocks that have shown up under the surface of the automobile industry.
But textiles long ago came face to face with troubles which have not been without their effect on the associated transport. Strongly competitive conditions definitely reasserted themselves in the north-west soon after the start of denationalization.
Individual Negotiation
Over a long period from 1936 there was a measure of agreement with the cotton industry on road transport rates. Then the arrangement lapsed_ Latterly, endeavours have been made to obtain some stabilization of the main rates, which are now reported to show a decided tendency to waver." However, I understand that the master cotton spinners, through their association, have indicated that such matters are regarded as a subject for individual arrangement between hauliers and the mills immediately concerned.
Why are so many people against fixed rates? The trader obviously hopes for a bargaining advantage. What, then, can the haulier have against the idea? To find the answer I will go back to the man mentioned in the opening paragraph.
Roughly, as he expressed it, if one defines rates one is faced with the task of defining the precise amount of service that is to be provided in exchange for the figure quoted. That, many will agree, is an almost impos sible task. Take a rate for a set mileage, perhaps within a given area, and a whole series of questions arises.
Vital Questions
Is the customer's convenience in the matter of collection times to be studied to such an extent that it will prove impossible to work backloads? Will consignments have to be delivered to some remote portion of the factory? Will extended credit be given?
Al! these matters may be lumped together under the euphemistic title of "good service" for the agreed charge_ If that is done, what about the load that is ready for collection at a time to suit the carrier, that only needs dropping on the loading bank, and is paid for the following week? The customer in that case is slow if he does not demand a healthy discount.
If this argument seems to be getting us nowhere, it is because that is precisely what is happening to so many hauliers. Too many sound, practical men lack the commercial ability which would enable them to appreciate that they do both themselves, and others, an injustice if they are cajoled into combining topquality service with rock-bottom prices.
In war-time, when even the least efficient had to be given an incentive to work in with the rest, any approved minimum rate had to be fixed at a generous level—an unfair preposition for the buyers who. in the long run, were usually the great British public. Much has happened since then and, although the scales common during and after the War allowed a wide margin for trimming, the process now shows signs of being overdone.
Free enterprise meant competition but only desperate men indulged in the beggar-my-neighbour game that was said to have developed on some routes, observed one operator with who% I discussed the question. To judge by a cross-section of opinion which I have obtained from the haulage world in the north-west, however, there are many operators who are workffig steadily for reasonable rates.
Tail-waggers
But for an appreciable minority conditions are difficult. Perhaps they will improve after the holiday period is over. If not, the section concerned may well prove to be the tail that wags the carrying dog. Significantly, while examining the present position, I have received more than one hint that owners of apparently substantial businesses would gladly discuss selling out.
One of the most bitter complaints to be heard at present is connected with the efforts to win traffic at all costs made by certain operators from outside the north-western area. They are reliably reported to be willing to accept return loadings at 20 per cent. below the most optimistic quotation that could normally be envisaged. As there can hardly be this margin of profit above the operating costs involved, the outward run must clearly be made to subsidize the return.
Less Traffic Answers to all my inquiries point to there being a severe drop in the total tonnage of traffic available in the long-distance haulage field and it would seem that a shortage of work on the main routes has driven a number of trunkers on to middle-, distance traffic. This development has perturbed the operators affected, who ordinarily are well aware of the directions from which keen competition is to be expected.
On one such route, so I am told, the accepted figures have fallen from 27s. 6d.-26s., to 25s., 24s. 6d. and 24s.; they are now coming down by odd pence. Owners of smaller vehicles are philosophically resigned to the fact that British Road Services and some other operators of maximum-load lorries will be able to handle certain types of load more economically.
In cases which I examined, where 52s., say, may be quoted for large consignments, smaller firms were making their 54s. 6d. a ton for similar traffic when called upon to move lots appropriate to light vehicles.
On one principal route where 10 years ago the rate was 37s. 6d., it stood at 50s. in 1954. Now, I am assured, operators are fortunate if they secure 40s.
1 asked a haulier who complained about being " compelled " to work for low rates, what was the compelling factor. His reason, he said, was the necessity of keeping his drivers in continuous employment. Had they
been employed on a day-to-day basis —which he would never have favoured in any event—he would have let the vehicles stand idle rather than run " for fun," as he put it.
Obviously, operators are loth to admit that they have facilities unemployed, but there is little doubt that some vehicles in the north-west are standing idle; whether through absolute lack of traffic or through the unattractiveness of the remuneration on offer, it is impossible to discover.
As a Road Haulage Association official put it to me, the belief that the "other fellow " is cutting rates is an occupational disease among hauliers. but until recently it has not been liable to have fatal results. With competition on the present keen basis there may be transport managers, and clearing houses, who will play one operator off against the other.
When this takes place, particularly where one is a local man and the other is from some distant point, there is every possibility of a sort of Dutch auction developing in which the trader stands to win. Bidding mania, in which one contestant tries to beat the other at all costs, is a dangerous game. In the transport world, as in the auction room, business acumen is an invaluable asset.