Hauliers failing to cover costs TDG
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RAPIDLY escalating costs are frequently not being recovered by increased charges, one of Britain's biggest road haulage groups has claimed in its annual report.
The Transport Development Group say that "It is particularly apparent that operators, both large and small, are not taking into their reckoning the mounting cost of new vehicles and the difficulties which will shortly be encountered in financing replacements."
Although TDG profits before tax for the year ended December 31, 1975, totalled £4.7m in the haulage sector—"profits owing little to the illusory contribution of appreciating stock values"—they were hard won in a fight against difficult trading conditions. Profit was reduced, there was restricted investment, and fewer acquisitions than usual.
The report says that in a recession, a central core of specialist traffics, distribution and contract work and associated activities with the food industry, provides a stabilising factor, but the extent of the present recession made even such traffics less certain and predictable.
In view of the replacement cost of vehicles costing £4,000, now amounting to £10,000, depreciation based upon the original cost is quite inadequate to fund replacement and "prices based upon such depreciation serve to lead the unfortunate operator towards insolvency."
The Group says there is an urgent need for operators and users alike to come to terms with this problem. "If not, the consequence must be a contracting industry with only the financially strong surviving."
Modern transport developments, notes the TDG, with the use of containers and rollon/roll-off ferries give great flexibility to producers, and storage enterprises have to be alert to the needs of the market. TDG's cold storage operations produced excellent results in 1975 though it points out that many English companies did not benefit from EEC schemes involving intervention beef, etc.
Profits for all TDG British operations, including storage, exhibitions and road haulage, totalled £12.1m.