Danger Signs
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GOVERNMENT restrictions on credit do not appear so far to have reacted harshly on the road transport industry. Some coach operators have been embarrassed by the onerous terms of hire purchase, but generally the economic situation has not touched road transport operators more severely than other members of the business community.
There is, however, little comfort in that knowledge. Most hauliers work on a narrower margin of profit than other traders and their protection against the cold winds is slender. As recent reviews by The Commercial Motor in four areas have shown, rates have a strong tendency to drop, despite increasing costs of operation, and offer little resistance to the effects of an industrial decline or a tighter grasp on credit.
Nobody can yet assess the ultimate results of the seizure of the Suez Canal by the Egyptian Government. It may have serious repercussions on the whole of British industry and on the standard of living. In that event, the amount of goods traffic to be moved, particularly to the docks, will be reduced, and if the present downward trend in rates continues, some hauliers will find it impossible to earn a living. They do so at the moment only by working at maximum capacity.. The liquidation of one of the largest road haulage companies in the kingdom is a straw in the wind not to be ignored. The fact that the petitioner was a bank might give the impression that the action was enforced by the credit squeeze, but this is unlikely to have been the case. Admittedly, bankers have asked borrowers, including hauliers, to reduce the limits of their loans. They were requested to do so a year ago by the Government and they have since been reminded several times of that responsibility. There is no sign that the pressure will be released.
Banks do not, of course, normally lend money for capital projects. They were, however, encouraged to provide finance for the purchase of vehicles from British Road Services and the Government gave them special dispensation from restrictions on credit. That benevolence does not extend to the present situation and hauliers, like others, are being pressed to accelerate their repayments.
A bank would be unlikely to liquidate a haulage eompany because it could not increase its repayments, but unless haulage rates are stabilized, some hauliers who have bought vehicles with borrowed money may find themselves in serious difficulties in meeting their contractual commitments, apart from increasing their repayments.