Glowing Transport Prospects in Common Market
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Forecasted by the Economist Intelligence Unit
EVERYONE knows that the six countries of the Common Market together now constitute the fastestgrowing economy in the free world. The vital factor is trade: commerce among the six member states in 1960 was 28 per cent. greater than in 1959—and this was certainly not achieved at the expense of trade outside the Market, which also increased by a not much smaller amount. And where there is trade, there is an opportunity for road transport_ . It has been estimated that if Britain joined the Common Market her total trade with the othe-r six countries would more than double by 1980, so there must be a large potential of increased transport. How much can road get? Undoubtedly a fair amount.
If Britain joins the Cornmon Market she can expect an enormous expansion in trade with the other partners. Since trade grows most rapidly where demand grows most rapidly, trade is likely to increase, fastest in durable consumer goods, then in goods sold by manufacturing industries tO each other, and slowest in non-durable consumer goods and foodstuffs. Highly specialized manufacturers of products such as scientific instruments have a greater growth potential than standardized items produced in every country.
The road ferry between Tilbury and Antwerp or Rotterdam would naturally reflect this increase in road activity. Commercial gross tonnage carried by the road ferry has already increased from 12,225 tons in 1957 to 62,439 tons in 1960: this means that, as a percentage of total road and rail ferry traffic, road's share increased from 2.6 per cent. in 1957 to 10 per cent. in 1960. The principal countries suitable for road freight traffic from or to Britain are Belgium, the Netherlands,. Germany; France and Switzerland. Very long-distance road haulage, though sometimes undertaken, is apt to be somewhat more expensive than by freight train, unless such factors as convenience and savings in time and packaging offset the higher charges.
Order of importance with Trading Countries
At present the countries with which the most trade via road transport is carried on are, in order of importance, Germany, Belgium, the Netherlands, France (less than half the amount with Germany), Switzerland and Italy. Other 'countries, such as Denmark, Austria and even Russia, occasionally figure. But the significance of this is that Germany is the particular country with whom trade offers the greatest opportunities to road hauliers.
Of the goods carried at present by road, machinery (especially machine tools) accounts for some 60 per cent. A very wide variety of other articles is carried, exports ranging from aero-engines to ice-cream cones, and imports from fork-lift trucks to goldfish. The most important, however, will be discussed later. The general advantages of transport by road ferry include, as the most important, the fact that much less handling is necessary. This not only saves costs in itself, but greatly reduces the need for expensive packaging.
Again, through less handling, there is reduced liability to damage, and this is very important for complicated machinery such as aero-engines which, if damaged, mw be returned to the manufacturer for repair before they ar of any use. Another advantage is the convenience, an even the speed, of a door-to-door service, especially if th destination is not actually rail-served.
The principal disadvantage is that charges are consider ably higher than those of transport by cargo ship. I remains to be seen how the future level of road and ra ferry costs will compare. These factors give a roug indication of the type of goods suitable for carriage b road ferry, although much will depend on the individua firm's desire for convenience and speed.
Machinery exports and imports are both likely to ris considerably if Britain joins the Common Marke Economic integration among the Six has already led t increasing specialization by producers in each country, an this means that total trade in machinery-will grow mor rapidly than trade as a whole. British exports of rriachiner by road consist almost entirely of machine tools, othe industrial capital goods and agricultural machinery, reflect ing the fact that such 'goods constitute almost all c Britain 1/4 machinery exports.
Principal British Competitors on Continent
The principal competitor on the Continent is German! which is by far the largest producer, and which• ha developed a very wide range of engineering product Switzerland is a specialist producer of certain very exper sive, high-precision machine tools. France and Italy bot have fairly generalized industries, but the weaker sectoi are likely to go down to German and, if Britain joins th Common Market, British competition.
British machine tools are of comparable high quality t German, but much of the industry is accused of technici conservatism and often suffers from long delivery date. Its prospects in the Common-Market are mixed. Th British industry should be able to increase its share c Common Market imports, but not very greatly. By relatin the faster growth of total demand to the growth c investment, one can conclude that British exports c machinery to the Common Market will have doubted i tonnage by 1980.
Moreover, their individual value will be higher, and thi should make them yet more suitable for road freight trafth since transport costs will form such a small proportion c total costs.
The position of imports of machinery is similar. Import will grow very fast—faster than total demand, due t increasing specialization. With Britain in the Commo Market, the other Six would increase their share of tots British imports (now 40 per cent.), but not by a larg amount. The reason for this is that specialized equipmer from the U.S.A. will continue to form a high proportio of imports: such imports, forming 43 per cent. of tots British machine-tool imports in 1960, had very nearl doubled in value compared with 1959. Germany would b the principal Continental exporter to Britain, and woui have a slightly larger share of a much larger import marke Another important part of road traffic comprises exports )f chassis and engines for commercial vehicles and cars, tarts, and aero, agricultural and marine engines. Connnercial vehicle chassis and engines go to Belgium and iolland where sales are likely to increase, especially if 3ritain joins the Common Market, not only because of ncreased trade and increased demand, but because of the :ompetitive strength of the British commercial vehicle nanufacturers. Exports of car engines and cars for tssembly, on the other hand, will probably decrease. In general, exports of spare parts for vehicles will grow in line with vehicle exports, but exports of assembly material will grow less rapidly. Exports of aero-engines are likely to nerease. Imports of motor scooters will very probably iecrease.
Aluminium and steel strip form part of exports carried 3n road vehicles, as do certain metal manufactures. Britain and Germany are the largest producers of such goods, and there is no reason to believe the pattern of trade in them would change if Britain joined the Common Market. However, there should be a big increase in trade both ways, and some of the imports could be attracted by the road ferry, especially since it has been found that steel sheet and lighter-gauge plate are very liable to be damaged when consigned by rail.
Effect of Tariff Barriers on Exports and Imports
A good deal of beer is exported in road tankers, principally to Belgium, and a smaller amount is imported in return. Imported beer is a luxury and demand is dependent on an increase in income per head. Thus, neither exports nor imports are likely to be affected solely by the removal of tariff barriers, but they should continue the slow, steady growth they have shown in past years. Meat and fish, often refrigerated, are sometimes exported by road. These exports fluctuate sharply from year to year in line with short-run changes in supply and demand, and also in relation to other special factors.
Bricks, especially firebricks and tiles, are sometimes exported by road, mainly because of their fragility. In specialized items of these groups, Britain is highly competitive and exports should increase rapidly if she joined the Common Market.
In the case of goods imported on road vehicles, the greatest opportunity for increase appears to be in paper and paperboard. British consumption of paper is likely to rise by some 50 per cent. by 1970. The Scandinavian countries are natural producers of paper and will expand their sales both in the Common Market and in Britain. This paper and paperboard will not .generally. move by road, for obvious. reasons of geography. Howev.er,.even.if Britain takes an increased proportion of total Scandinavian exports and even if the British paper industry, grows at the same rapid rate as it has recently done,-Britain will still require yet more paper; on the assumption of British membership, this is likely to be supplied mainly by the Common Market countries; in this case, imports from the " Six " could double by 1980.
Bulbs from Holland are imported by road. The future of such imports depends on what arrangements the Government would make with the Common Market countries on the thorny problem of horticulture. Given complete free trade, the Dutch would certainly increase their exports to Britain, not only of bulbs but of many other horticultural products. Other imports by road include furniture and cotton velvet. The first of these depends on its style and cheapness, and the second very much on its cheapness. Small increases can be expected in them on these grounds.
Can road hauliers take a larger percentage of the present trade between Britain and the Continent? The answer is, undoubtedly, yes. In terms of the overall balance of advantage relating to cost and quality of service, a large variety of traffics can unquestionably be diverted to international road haulage, though under present conditions other traffics are best sent by rail.
Business Increased with Continental Depots
One example of this is fresh fruit and vegetables, of which imports into Britain are, and will be, very substantial. These must be moved in relation to the requirements of a daily market, but at present the road ferry sails only three times a week and arrives at 8 a.m.—too late for that day's market. Moreover, the railways have already provided special facilities for speedy handling of these goods. Business could also be increased if overseas agents were to establish a network of depots on the Continent, so that full return loads could be more often obtained. This would reduce costs. In 1960 the tonnage carried outwards exceeded the tonnage carried inwards by some 25 per cent.
There will be abundant scope in future for traffic growth in goods not at present moving between Britain and the Continent. But they will be goods not yet made or not yet made on a sizeable scale. There are remarkably few goods now widely used which are not traded at all.
This trade that will develop is largely in new products. Such trade will take place whether or not Britain joins the Common Market, but is bound to be greater if she does join, as otherwise the U.S.A. would be the main supplier. Trade in certain chemicals will obviously develop, and bulk liquid chemicals of specialized types in relatively small quantities will be particularly suitable for road movement. In addition, road should now gain traffic in some chemicals which at present go by other routes.
Electronic Goods are Best
Perhaps the greatest expansion of trade in future will be in electronic goods. It is significant that these are delicate, expensive and often heavy goods; they require the most careful packing for train or cargo vessel and are therefore eminently suitable for road haulage.
To show what might be done if Britain joined the Common Market, it can be pointed out that in the first seven months of 1960 British exports of electronic components to the "Outer Seven" EFTA countries increased by 128 per cent. as against 1959. This compares with a 41 per cent, increase to the Six. But if Britain joined the Six, her exports to them might rise faster than they have. to EFTA. Imports, too, would rise just as fast.
. Another sector of trade that can be expected. to develop in future is atomic energy equipment. This, too, would be suitable for road haulage. British exports to the Common Market would be considerably larger if she joined than if not; their performance will depend on the skill of large firms in technical research and in mass-production techniques. Imports, especially from the giant German firms, would be likely to increase as much as exports.
In conclusion, the potentialities of road traffic are enormous. If Britain joined the Common Market, not only would trade in most commodities at present carried increase, but the growth in trade would be especially great in the case of precisely those which are suitable for transport by road. At the same time, it is possible for road haulage to take a greater share of some goods now carried by other means of transport. It should be possible for road traffic to double itself in a few years.