THE TIP-OFF FOR TIPPER OPERATORS
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Mr. Samuel-Gibbon's investigation holds lessons for tippermen everywhere
ALARGE section of the road goods industry still does not realize the havoc which may be wrought in its midst next year. So many and so stringent are the individual inspection points to be applied at the official tests of heavy goods vehicles that lorries and vans, basically sound but faulty in details, could be refused certificates—and thus put off the road—in their hundreds.
I have heard it argued very cogently in recent months that A, B and C operators can blame the Licensing Authorities for a large part of whatever fate awaits them. Why? Because the LAs have for many years had very wide powers concerning vehicle condition and economic rates of operation, yet have applied them so seldom and so gently that the industry has been lulled into a false sense of security. There is, I think, something in this, but it is going too far to blame the LAs for operators' shortcomings—and the LAs have lacked enforcement staff and have not been backed by the public or political pressures to encourage severity.
This situation is changing. For more than a year, penalties under Section 178 have been frequent and more severe—though revocation is still too seldom used, in my view, for the blatant and persistent offenders.
If Mrs. Castle's licensing plans are implemented, then the LAs will have an even more onerous share in controlling road transport. But in the next year or two—and especially the next few months—they have the opportunity, the power and, I would say, the duty to alert the industry to the new conditions which will apply from 1968 onwards.
Four or five Authorities have already given operators in their areas a real shakeup. But I think the prize for the most constructive and pertinent move to date must go to Mr. J. R. C. Samuel-Gibbon, the Western Licensing Authority, for his document on tipper operations.
Summarized in CM last week, it is well worth more detailed study, and I am therefore printing a large part of it—in the LA's own words—on these pages:—
"Everyone concerned with or affected by the rates paid for haulage of materials quarried on Mendip is faced by a real practical problem. A high proportion of the output of the quarries takes the form of road-making materials and much of it travels over fairly long distances. By its very nature, this traffic is and must always be comparatively low-rated traffic in the sense that the ratio between the cost of transport and the value of the load ex-quarry is and must be comparatively high. Quarrying, like road haulage, is a competitive affair and a quarry master who wishes to stay in business cannot afford to pay more for haulage than is paid by other quarry masters with whom he is in active competition.
There can be no doubt that this has resulted in depression of the haulage rates paid for this type of traffic. In 1965 this led to the widespread withdrai.val of vehicles, on July 14. Thereafter interim rates schedules were negotiated and brought into use. Operating costs, however, continued to rise and although two small percentage increases in the scheduled rates were conceded/ the objectors maintain that those schedules, as so increased, do not suffice to cover the cost of providing the facilities to carry the traffic.
Hoping for guidance
In these circumstances, some at least of the various parties concerned are hopeful that I may be able to take some action which will assist in solving the problem. That the objectors and also some of the quarry masters would welcome any constructive help which I may be able to give has been made abundantly clear. Moreover, as each of the applicants is, or is hoping to become, an established tipper operator on Mendip, most if not all of them probably realize that their interests are, in the long run, not widely divergent from those of the objectors.
In the first place, Part IV of the Road Traffic Act, 1960, confers upon me no power to fix haulage rates.
On an application for a Contract A licence, I am bound by the provisions of S.174(2) of the Road Traffic Act, 1960. If an applicant discharges the burden of proof laid upon him by that subsection, I have no option but to grant the application, unless I am satisfied that, having regard to his previous conduct as a carrier of goods, the applicant is not a fit person to receive a carrier's licence.
In considering the burden of proof laid upon an applicant for a Contract A licence, I have been urged by objectors to hold that any contract relied on must be rejected unless it is a lawful one in the sense that it can be performed without breaking the law. That much I accept and I so hold.
In connection with contracts incorporating any current variant of either of the rates schedules now commonly referred to as the Mendip Tippers Interim Rates Schedule and the Cheddar Valley Rates Schedule, I am urged further to find that the rates prescribed by those schedules for journeys to destinations more than 50 miles from the quarry are inadequate to cover the cost, though on journeys of up to about 20 miles an appreciable profit margin is obtainable, and 1 am urged also, if I make that finding, to hold that every such contract is therefore unlawful and must be rejected.
In one form, as I understand it, the argument derives from and is based upon S.178(1Xe) of the Act, which sets out one of the grounds upon which a licensing authority may, in his discretion, revoke, curtail or suspend a carrier's licence.
In the case of a would-be new entrant to the industry, this argument advances matters only if it enables me properly to take into account future conduct of the applicant. If the terms of the contract were such as to render inevitable on the part of the applicant conduct such that I should, within a short time of the grant, have no option but to give under S.178(1)(e) an essentially discretionary direction revoking the licence, the argument would be strongly persuasive, despite the fact that it would involve acting on the basis of conduct other than "previous conduct".
To refuse the grant of a Contract A licence on that footing would, however, be to tread debatable ground. I see no reason to accede to that argument here, and several sound reasons for not acting upon it. At present I need state only one of these.
Even if I find, as I do, that the rates at one end of these schedules are uneconomic, that fact alone does not in my view render discretionary revocation inevitable. I cannot prejudge the extent if any to which a new entrant would, over a period of time, operate at those rates. In my view the right approach is to issue a warning that such a contract of itself constitutes a prima facie case calling for future investigation under S.178(1Xe) and that when the time comes for such an investigation I shall exercise my discretion in the light of the facts as then revealed—unless the negotiation of fresh schedules makes this unnecessary.
That warning I now give to those of the present applicants to whom I am making a grant.
Figures of earnings need careful scrutiny. The rates schedules which I have to con sider are, I understand, worked out in terms of 9-ton payloads. Until recently many people believed and others professed to believe that the maximum lawful payload of an unplated four-wheeler could be ascer tained by deducting the unladen weight of the vehicle from the maximum permitted all-up weight of 14 tons. This, however, is a misconception, in that it overlooks the facts that tare weight and unladen weight differ and that the maximum permitted axle weights have also to be considered.
Mr. Samuel-Gibbon then gives examples of payloads which cause axle overloading (see CM last week).
He follows by tackling the limiting factor of driving hours and permitted maximum speeds. And the LA quotes the case of one applicant who, with a new Commer 16 ton-g.v.w. tipper, had covered 4,340 miles in 18 working days—an average of 241 miles a day. Another, with a six-year-old Bedford, covered 2,490 miles in 13 working days (191.5 a day).
A third operator managed 4,000 miles by averaging 200 miles a day for a six-day week. This, says the LA, is "a form of productivity which I would not wish to encourage."
He then goes on:—
"On the evidence so far before me, my view is that a figure in excess of 1,000 miles per week would be unrealistic as a basis of calculation.
Another aspect of the schedules before me is that they contain a considerable ele ment of taper: the rates per mile are higher for the shorter runs. The object of this, at least in part, is no doubt to enable the quarry masters to compete further afield than would otherwise be possible. This is, 1 suppose, also highly satisfactory to the con signees, many of whom are county councils.
The fact that this taper complicates my problem is of little importance. What does matter is that, for distances of more than 50 miles or so, the schedules in themselves appear to constitute an induce ment to "productivity" of an undesirable kind. I am told that the general policy of the quarry masters is to allocate the work in such a way that each haulier "takes the rough with the smooth", so that, on balance, he finishes up on the right side overall.
The objectors have conceded before me that a "package deal" of this sort may be the right approach for the purposes of deciding whether any given case would fall within S.178(1Xe). This is clearly a matter of importance, upon which I must express my view.
The conclusion which I have reached is that the matter is one of degree. If the proportion of traffic which travels at rates which are uneconomic were negligible, it would not be a proper exercise of my discretion to give a penal direction under S.178(1)(e). But any operator who persistently carried a substantial proportion of his total traffic at uneconomic rates would in my view be in jeopardy if other operators were thereby placed at an undue or unfair disadvantage.
On the evidence which I have heard, taking the Mendip area as a whole, it would be impossible to hold that the ratio between the volume of the total traffic and that of the traffic travelling distances of 50 miles or more is such that the latter constitutes no more than a negligible proportion of the whole. In these circumstances it seems to me that, on a strict view limited solely to covering the cost of operation, the longdistance traffic should be paid for at rates sufficient to cover the cost of carrying it.
If this were put into effect, two results would flow: none of the traffic would be carried at uneconomic rates, and a haulier would depend for his profit—with which I have no concern—on his share of the short
er runs. This strict view, however, leaves out of account one vital factor: No operator will be in peril under .S.178(1Xe) unless other operators are, by reason of his willingness to accept rates insufficient to cover his costs, placed at an undue or unfair disadvantage.
If, therefore, the generality of tipper operators are willing, as part of a package deal, to accept at one end of the scale a compromise figure which is on the low side for most of them, acceptance of that package deal could not properly constitute a ground for a direction under S.178(1Xe)."
Figures of costs Mr. Samuel-Gibbon then takes an example of costs from which he deduces that 16d p.v.m. is an absolute minimum cost figure—excluding overheads—for 45,000 miles running a year in this work. Examining the wage content of costs, he sums up:—
"All in all, my present view is that it would be reasonable to say that any lower figure than £20 per week would be unrealistic at the present time.
For present purposes, it would seem reasonable to require anyone who alleges that he can today operate an unplated four-wheel tipper on work of this sort for less than 17.5d p.v.m. to show clearly how this can lawfully be done.
I was told that the rates paid under any of these schedules work out at something between 15d and 16d p.v.m. for distances greater than 50 miles. On its face, the schedules assume a 9-ton load but as I have already indicated that assumption is, in the case of any unplated four-wheeler with an unladen weight of or exceeding 3tons lOcwt almost certainly an unreal assumption.
For present purposes, however, if one assumes an average return of 15.5d p.v.m. it is noteworthy that even if an increase of 5 per cent were to be applied, this would bring the return to no more than 16.25d p.v.m.
These calculations of average rate on the schedules as a whole, however, present only part of the picture. The schedule at present applicable in the case of New Frome Quarry shows, for instance, a rate of 15s 10d per ton for an outward journey of 50 miles. Assuming—as does the schedule —payment on the basis of a nine-ton load, this gives a return of 17.10d p.v.m. This is clearly uneconomical for Messrs. Uphill as it probably is also for Messrs. Parsons and others. But here again the actual total mileage covered per week or per month will affect the costs per mile.
Greater when plated
In an industry in which costs vary as between one operator and another, my conclusion can only be that, at some point in each of the present schedules round about the 50-mile mark the rate ceases to cover the cost of operation: the precise point in the scale of any given schedule at which this will happen will no doubt differ with different operators. But, as all parties appear to be agreed that all operators at any given quarry or group of quarries must be paid at the same rates, a balance would have to be struck by the parties to any negotiations for revised schedules.
In this connection it is perhaps significant that the schedule for which the RHA contend as a new package deal assumes payment on the basis of a 9-ton load and works out at 17.91d for 50 miles, 17.59d for 100 miles and 16.75d for distances greater than 140 miles.
That last figure may perhaps be undesirably low, even as part of a package deal. I should add that the figures for a plated vehicle would have to be greater than those acceptable for a non-plated vehicle.
At this point it seems desirable to refer briefly to the Prices and Incomes Act, 1966. The 1966 Act in no way affects my statutory duties under Part IV of the Road Traffic Act, 1960, and that even if it applied under Part IV in precisely the same way as it applies under Part III it would in no way preclude me from reaching the decisions to which I have come in these cases.
The considerations as to rates with which I have dealt above apply also, though within a different statutory context, to applications for or for variation of B licences."
And Mr. Samuel-Gibbon, as reported last week, ends with a warning that unless operators and quarry owners settle the rates issue, he'll call all the relevant tipper men under Section 178.