A Method of Rating to Cut Out "Cutting"
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The System Devised by the National Conference of Road Transport Clearing Houses Provides a Basis for Stabilizing Charges at a Time When Rate-cutting is Increasing
IMENTIONED some little time ago that rate-cutting was recommencing and that although -it had not become rife there was every probability that it would, if the decline in traffics continued.
I had better, perhaps, as a beginning, indicate what I mean by rate-cutting, as that is a subject on which there is still confusion. By rate-cutting, I mean quoting a rate below that which has been agreed generally amongst hauliers of a particular traffic—a rate which is in general um: relating to that traffic That explanation is necessary because without it there is the possibility that someone may say "You cannot have rate-cutting because there are no such things as stabilized rates."
There are agreed schedules of rates for most traffics and although possibly such agreement has been arrived at only by members of the Road Haulage Association, I still maintain that as those rates are agreed, any operator, whether a member of that Association or not, who departs from that agreed schedule and quotes a lower price for his services, is"rate-cutting.
Under-cutting Established Rates
Even where rates are not agreed but where there is a rate relating to a traffic which is generally applied by operators 'carrying' that traffic, I think it is reasonable to charge anyone quoting a lower rate, with rate-cutting.
Rate-cutting is unsound policy because it leads to recrimination and is bad salesmanship. Recriminatory tactics of this sort lead to a general lowering of haulage rates and they soon fall below the economic level.
When I referred to this matter of rate-cutting, a short time ago, I was considering mainly short-haul traffics involving the use of tipping vehicles, because at that time there was, and I think still is, a considerable slump in traffic of that kind, and in the article in which I mentioned the matter I put forward certain suggestions whereby the tendency might be stayed.
Recent information, however, indicates that this tendency. instead of being stifled, is spreading to other classes of haulage. What is more surprising, if my information be correct, is that the practice has been adopted by concerns now the property of the British Transport Commission. My informant quoted specific instances, but added that the matter had been brought to the notice of Major-General G. N. Russell, the chairman of the Road Transport Executive, and that he had immediately put a stop to it. According to my information the chairman expressed himself as being opposed to tactics of that kind.
1 was also informed, and this struck me as being particularly interesting, that his attention had been drawn to e14
the advisory rates-schedule prepared and adopted by the National Conference of Road Transport Clearing Houses (Haulier and Clearing House Section). That seemed to me to be particularly important and reminded me that I had not dealt with that schedule at any length in these articles.
This schedule which, incidentally, is not put forward as being obligatory ,but only advisory, is designed to advise the haulier and customer alike what charges should be and it consists of two essential parts. First, a basic rates-schedule which is based on mileage, and second, simple rules for classifying traffic according to the packing and having regard to the liability to damage and pilfering.
In this article I do not propose to concern myself with the rates. They are duly set out in the handbook which can be obtained from the Conference at the price of is. 3d. from 83, Pall Mall, London S.W.1. So far as the rates are concerned, it may suffice to state that they have been generally adopted by clearing houses and their haulier sub-contractors, and are accepted by many large buyers of transport. The attractive feature of this method of charging, to my mind, is the simplicity of its classification. This, as has already been stated, provides for a simple method of adjusting the rate according to the packing, value, liability to damage and so on. Its great advantage is that it does not call for an enormous and complicated schedule of goods, the classification of which is indicated. The operator wishing to use this method of calculating rates has the simplest of additions or subtractions to make from the standard, according to the above factors.
Seven Rates Classifications
In all there are seven rates, as follows: Class A, Basic plus 25 per cent.; Class B, Basic plus 15 per cent.; Class C. Basic plus five per cent.; Class D, Basic; Class E, Basic minus five per cent.; Class F, Basic minus 15 per cent.; Class G, Basic minus 25 per cent. The rates apply to one collection and one delivery.
As regards the method of packing, the following is the system employed.
Class D. that is to say the basic rate, applies to such things as bales which are press packed, barrels, casks, reels, and unpacked goods which are manufactured or processed: to cartons, kegs and tins, where the weight exceeds 28 lb. each; to hampers, cases and crates of uniform size and 1 or
not exceeding 2 cwt. each. • Into Class C, which involves the addition of five per cent. to the basic rate, come goods such as bales not press packed; cartons, kegs and tins where theWeighi g 28 lb. or less each, and hampers, cases and crates where the weight per package exceeds 2 cwt. and/or whcre a consignment consists of miscellaneous sizes.
The point there is one which should readily be appreciated because first of all when cartons, kegs and tins are less than 28 lb. or where the hampers, cases, etc., are in excess of 2 cwt. or miscellaneous sizes, the time involved in loading and unloading is more than that which would apply apart from such conditions.
Under Class E, which calls for five per cent. Jess than the basic rate, come bags, paper sacks, unpacked goods not processed and scrap, the inference here being that there is not a hat of care or trouble necessary in loading, which can therefore proceed with greater speed.
When the haulier has decided upon the rate as above according to the method of packing, he has still to consider questions of value, liability to damage and/or pilferage and that is effected in this way.
The rate is down-graded one class if the goods do not exceed £50 per ton in value, and again one class if the goods are not liable to damage and/or pilferage
Down-grading According to Value If, for example, the goods would, according to the method of packing, normally be placed in Class C but it is found that they do not exceed £50 per ton in value, then the ratecan be down-graded back again from C which is higher than the basic, back to D which is the basic again, and so on.
The rate is up-graded one class if the goods exceed £300 per tort in value; it is up-graded two classes if the goods exceed £600 per ton in value and is up-graded one class if the goods be exceptionally liable to damage and/or pilferage.
It should be appreciated that this down-grading and up-grading as described above is cumulative. What is meant by it may perhaps better be appreciated by following examples which I take from this explanatory booklet. First, the rate for 2+ tons of cigarettes in cases; these are case goods and under 2 cwt. each so that according to the description and method of packing they come under Class D and the normal basic rate would apply.
The value, however, is in excess of £600 per ton so that according to the above note the rate must be up-graded twice, which brings it into Class B involving an addition of 15 per cent, to the standard rate. As regards liability to damage they can be taken as normal so that there is no modification to the rate necessary on that account. There is, however, a considerable risk of pilferage and oh that account the rate must go up once more, bringing it into Class A and necessitating an addition of 25 per cent. to the basic rate.
Valuable Loads and Bad Risks
The point which I wish to make here is that the rate is first up-graded two stages on account of the high value and a further stage on account of the bad risk. This class of traffic, as every experienced operator will agree, is top grade as regards rate and as a matter of fact it may even be necessary to add a special charge for exceptional insurance.
The next example is a rate for the conveyance of sectional wooden huts. As regards packing, this comes under the heading of unpacked manufactured goods and so far as that is concerned then the rate would be normal, i.e., the basic rate under Class D.
Turning now to the consideration of damage, we are informed that the goods are to be conveyed at owner's risk and on that account the rate is down-graded one stage to E. There is not any particular risk of pilferage en route so no modification is needed on that account and the rate therefore stands at E, that is to say five per cent, less than the basic rate.
Another factor which is taken into consideration is that of assessing a rate when the goods are bulky, exceeding 80 cubic ft. per ton.
In cases where bulky commodities are carried "by the load," the rate per ton is assumed to-be Class D, but the rules for down-grading and up-grading must be considered. When the class is finally decided. the rate for the 6-tonner will be the 6/8-ton rate on that schedule, and so on.
In the case of part loads of bulky articles or commodities, one of the two following methods is recommended: (a) If the goods can be stored anywhere on the vehicle (e.g., case goods, etc.) measure the space occupied and calculate the cubic measurement. To facilitate this the use of a ready reckoner is recommended. The tonnage is then assessed at 80 cubic ft..per ton.
(b) If the goods require to be stowed on the floor of the vehicle and nothing can be stowed on top as, for example, in the case of machines, etc., assess the amount of floor space required. The tonnage is then calculated at 12 sq. ft. per ton.
Next take the case of the conveyance of a portable circular saw. This is unpacked and is manufactured so that according to the criterion of packing it comes under the normal basic rate D.
The actual weight is 17 cwt. but it measures 5 ft. 3 ins. by 3 ft. 10 ins by 3 ft. 1 in. (loaded across the vehicle it will take 3 ft. 10 ins, of platform), so that it is actually equivalent to 2 tons and must be charged at the basic rate for 2 tons.
As regards value we are informed that it is worth £650, that is to say it is in excess of £300 per ton and on that account the rate must be up-graded once, bringing it into 'Class C. The risk of damage or pilferage is normal so no modification is required on this account and it is chargeable thus at Rate C, which is five per cent. over the basic rate.
Here is another example in which cubic capacity is taken into account. The operator is asked to quote for 20 crates of paint sprayers. These are crates uniform in size, each weighing less than 2 cwt. so that so far as packing is concerned the basic rate D is chargeable.
As regards tonnage, the actual weight per crate is 187 lb. Each, however, measures 2 ft. 3 ins. by 1 ft. 9 ins. by 2 ft., which is equivalent to 15f cubic ft. each and a total of 315 cubic ft. At 80 cubic ft. per ton that is equivalent to 78f cwt. which is in excess of the net weight of 20 times 187 lb. so that the goods shall be charged at 4 tons.
Goods for Export
As regards value, the information is that each crate is worth £55 so that the total is £1,000 which is less than £300 per ton, so that the basic rate D still applies. The goods are packed for export, so that as regards damage they may be taken to be a good risk and there is equally very little liability to pilferage. Nothing, therefore, needs to -be added to or subtracted from the rate on those accounts and the basic rate chargeable is for 4 tons and not for 2 tons.
One more point arises and that is in respect of quotations for goods consigned to places off the main traffic routes.
It is suggested that the best way to deal with this problem is to add the probable dead mileage to the normal miles.
Take, for example, a journey from London to Barnstaple. The mileage might be computed by an Exeter haulier as, London to Barnstaple 1911 miles, plus dead miles, Barnstaple to Exeter 40, making a total of 2311 miles.
Again, take the case of a consignment from London to Barrow-in-Furness. A haulier might reckon on having traffic from Lancaster and he should therefore reckon his mileage London to Barrow-in-Furness 279 miles plus Barrow-in-Furness to Lancaster 46, making 325 miles.
The rate, in cases such as these, should be determined in the usual way, using the calculated mileage. S.T.R.