Stabilized toad Rates.— That's Nonsense
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HAULIERS are very hard to please. At least, I find
it next to impossible to please all of; them. The situation may be summed up roughly by saying that I can please some of them all the time and all of them some of the time, but not all of them all the time.
It is very disconcerting at times. The other day, for example, I met an old Yorkshire haulier friend of mine, one of the old school, good and hearty, who calls a spade a spade and all that! I didn't quite like his opening gambit. It wasn't exactly what be said, but the way he said it.
"You've been very busy lately, haven't you?"' he opened out. Just written down, in black and white, there's nothing wrong with that, is there? No, exactly, but you should. have heard him.
" Just so-so," I replied, not wishing to give him too much of an opening.
" I mean all this business of compiling rates scheduleS,". he said, " wasting your time."
" What do you mean?" I replied. " Wasting time, indeed. I consider I've done a good job of work for which
you onght to be truly thankful." ' "Not me," he said. "You'll get no thanks from me. I don't want any fancy rates schedules to help • me in my business. What's the use of a rates schedule anyway?"
" To fix prices for haulage and put a stop to that rate, cutting which was such a problem for you and your fellow hauliers before the war," I replied.
" Rubbish!" he rejoined. "There never was any rate. cutting before the war."
"What on earth . " I began, hut he interrupted.
" Listen to me a minute," he said. " What is ratecutting, anyway?"
Ding a job of haulage for less than the proper rate," I answered.
"Rate-cutting with a Vengeance" " Just so. If there isn't a proper rate there can't be any rate-cutting.. There wasn't any rate-cutting before the war, because there weien't any rates to cut. What you are doing is setting up a list of rates so that every Tom, Dick and Harry will know that if he quotes below your rate he is going to get the business every time. And, he will do it too. That is rate-cutting with a vengeance, and that is what you will start with your precious rates schedules.
"What is more," he went.on, "I say good luck to them. I'm going in on the same racket, too."
"Are those your business methods?" I asked, "Certainly," he replied, "And you know that I started in 1920 with an old Model-T Ford, carting -sand and cement for a local builder. Now I have two Fodor' eight-wheelers, a couple • of A.E.C, six-wheelers and three Albions of the same .type, as well as six Thornycroft 8-tonners. I got them, and built my business up by what you call ratecutting, but what I call-good, ,sound business.
"When I quote a rate, I quote one which will show me a, profit. If. I find some other haulier is underquoting me—
you call it rate-cutting---I set about finding how be is able to do it. I soon found the weak spot in this business.
" It isn't costs. Thanks to you I soon got to the bottom of that problem. It's running empty. If you run out a 100 miles with a load and come back light you are at a disadvantage compared with a fellow who gets a l'oad back. or even a part of a load, or a load back for part of the way.. It stands to reason."
" That's all very well," I " but you're not the only one who has had that bright idea—and it's not very bright at that. You can't get back loads every time." •„.
"That's just where you're wrong," he countered. " do, Or, if I can't see a chance of a return4load I don't make the trip. So soon as I realized that back loads were the key to the solution I set out to find where they were to be had. After that I took loads for those destinations only.
" I see," I said, "organization."
" Call it by that or any other term you like," he said. "I call it using you head. Reckon the job up, what it will cost, and add a profit, and there's your rate."
How Standard Rates are Assessed
" But that's exactly how these stanArd rates, have been assessed," I protested, "on cost Of operation plus establishment costs, plus a reasonable margin of profit."
" Yes, but what costs? What about some of those concerns with swagger offices, a general manager, an assistant general manager, a works foreman, a foremanmechanic and a charge-hand, intercommunicating telephones, teleprinters, and so on. They don't know what their costs are anyway."
" It's no use going off the handle like that," I protested. " The figures for cost I use are not collected from any one source, or even a hundred sources, Even if they be obtained from such concerns as those you describe they would not, of necessity, be any the worse for that. A large cOmpany may seem to have more staff than is necessary,. but actually it saves more than the cost in wages. In any case, a large operator can usually save in the lower prices paid for supplies, tyres, vehicles and so on.
"Now don't make me laugh," be replied. "None of your big operators buys his stuff at better prices than I do. If IT want tyres, or oil—I'm peaking of pre-war days, of course—I buy them at the right price. If I can't get there at my price from one source I go to another.
" As for vehicles, I had only to let it be known that I was in the market for a new machine and I had half a dozen salesmen in my office, one after the other, each of them offering me a further 21 per cent. List prices of commercial vehicles, well, they meant just as much as your rates schedule will mean after the war—a ceiling, something which the buyer knows he never need to pay. A sort of commencement of a Dutch auction, and the job will go to the haulier who makes the biggest cuts. That's what will happen to your schedule."
" But surely you are aware that so soon as the industry has prepared its rates schedules, it is the intention of the Government to make them statutory.. and enforce, them, so that any operator who departs from them runs the risk of losing his licence?" / questioned. " That," he replied, " is the' biggest farce of the whole scheme. You know as well as I do—as a matter of fact it was you who told me—that one of the many Ministers of Transport we have bad, said that it was the intention that these rates, when agreed, should be maximum prices and that there should be no penalty, or no interference with anyone whose rates were below those in the schedule. He said, moreover, that it could not be expected that any Government would fix haulage rates as minimum figures."
Yes. I remember the occasion. But I also-remember that the same Minister subsequently retracted and said that he had been misinterpreted."
Government. Attitude on Prices
" I know," he rejoined. " In other words, he didn't mean a thing he said. I've heard that sort of tale before, and I'm willing to bet that he.let slip exactly what was in., his mind. in any case, have you ever heard of a British . Government fixing minimum prices? It's always maximum prices."
" No, there at least you're wrong," I said, " and this time' I've got you stone cold. Not only is it a fact that the British Government fixed minimum prices, but it did so in haulage rates, even if it was .haulage by rail."
" What do you mean?" .
" Simply that the British Government, in 1928, laid upon the British railways the obligatioir to make standard charges without variation upwards and .downwards.
"Yes, go on. Finish it."
" What do you mean, 'finish it '?"
• " Except by way of exceptional rates—that's what I mean by 'finish it.' You know perfectly well that 80 per cent, of rail rates to-day are ',exceptional,' that is, below the standard and supposedly minimum rates. Furthermore, 90 per cent. of the exceptional rates now in force came into operation to meet competition by road transport, that is to' say, they are cut rates. Pit,cisely the same thing will happen to your road rates."
"It can't, and for a very good reason. . • " When the Order governing railway rates was passed, the principal object was to'prevent one railway from lowering its rates.in Competition with another railway. The idea that road operators would become serious competitors to the railways never eritered anyone's head at that time. In the same way, the Order controlling road rates will surely be framed to prevent competition within the industry." " We, I suppose, will be allowed to quote exceptional . rates to meet competition by the railways?"
" Competition with the railways, on a price basis, will be a thing of the past. Part of the scheme will be that both road and rail rates will he stabilized and neither side. will be able to •alter rates without consultation and agreement with the other. That is what the Road-Rail Central Conference is doing."
" Goodness, that's the biggest ramp of the lot," " What is?"
" This Road-Rail thingurnmy. Look, there's Bill — over there; he's on the area eommittee of the Conference and knows all there is to be known about it. What he thinks about it would till a book'. Here, Bill, come and tell S.T.R; something about the Road-Rail Conference."
" Now, wait a minute," I objected, "let's get this ratesschedule problem settled before we start another argument.
• You say you operate only over routes on which you are sure of return loads, and in that way are able to quote lower rates than the man who hasn't solved that problem."
" That's right."
".There are two things wrong about that. First, you are not going to tell me that you are the only man operating over those routes." .
No, I'm not."
" Very well, then, sooner or later a bigger operator, possibly one of the combines, or even a railway-controlled roadtransport Company, is going to start a rates war over your special route. • What is going to happen to you then?"
"I'll fight them. I can.tighten my belt a good deal without feeling the pinch."
"Maybe you could, but a properly enforced rates schedule would protect you." ' " It would if it was or could be enforced, but what's the second point?"
" Just this. You say that, mainly because of your competition, 'but probably also, I imagine, because of rulings of the Regional Transport Commissioners, many hauliers are operating' over non-remunerative routes, at rates comparable with yours and, therefore, not showing a profit. What is going to happen to them.?"
"They'll probably go out of business."
All Districts Must Be Served " It may not seem to be any concern of yours, but it is a matter for the Government to concern itself about, because the authorities cannot allow any particular part of the country to be starved of transport." " What, then, do you suggest that the Government will do to improve matters?"
" Enforce a. schedule of rates,"
" What ! Raise all rates to the level necessary to make poor rates pay? That would suit me all right, but I can't see it happening."
"No, The rates schedules ilI be assessed so as to show a fair average profit on all routes, and operators like you, who run over the best-paying routes, will have to subsidize the others."
I had to wait a few minutes while he got over the shock resulting from that suggestion. Then, he broke in " That's utterly impossible—why, its nationalization."
" No," I said, " it's not nationalization, it's actually the alternative which, in its application, will do away with the need for nationalization. But I'll talk to you about that when we've heard what Bill has to say about Road-Rail thingumrny, as you so disrespectfully call it."
What Bill had to say must be left for another article. S.T.R.