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THERE Is A ROYAL ROAD FO FAIR RATES

7th April 1939, Page 30
7th April 1939
Page 30
Page 31
Page 30, 7th April 1939 — THERE Is A ROYAL ROAD FO FAIR RATES
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Which of the following most accurately describes the problem?

There is no Reason Why Hauliers Should Not Obtain Fair Rates for Their Work Although Most of Them Suffer From Imaginary Obstacles to Profit

THERE are certain questions which are almost invariably asked at the meetings' I address. They are of general interest and extensive reference to them here is justified. Pressure of other and more current matters has, hitherto, prevented me from dealing with them, but an opportunity arises now to do so, by quoting an actual conversation with a haulier who, quite recently, put forward these so frequently recurring inquiries.

"You know, S.T.R." he began, "if we were to get the rates you recommend in The Commercial Motor Tables of Operating Costs we should soon, every one of

us, be millionaires." .

"The answer to that," I said, "is that the rates are being obtained, and those who obtain them are still a long way from being millionaires. I know a good many hauliers who get better rates than those recommended and are still a long way from reaching opulence."

" You must, nevertheless, admit," he said, "that there are a good many who do not get those rates."

"I do admit it, but I insist that there is no reason why the majority should not get these rates, and for most traffics."

"I wish you would tell me how," he said.

"By getting together, agreeing upon rates—for preference rates based on the figures in the Tables—and, having got as far as that, to abide by the agreement when you have made it."

"That's a pretty tall order, but, even supposing we achieved that, there would still be outsiders, not parties to the agreement, who would cut these rates and, in that way, upset the whole scheme."

"That is just where I disagree and where I am of opinion that you people go wrong. You are too much afraid of one or two outsiders cutting these agreed rates. You hear that someone is doing so and immediately some of those within the agreement are frightened and take that as justification for breaking the agreement. That is actually what happened in connection with some agreements for municipal haulage rates. I referred to that, if you remember, a week or two ago in The Commercial Motor."

"But, if these outsiders do start to cut our rates, where are we?"

"If you like to think about it and not get panicky you will realize that you know exactly where you are, that there is no need to be afraid.

"You know, to-day, what is the tonnage of every operator. You know, therefore, the full extent of the harm that can be done by those who do not come into your agreement. You know they can carry a certain bulk of traffic and that when they have taken that traffic the rest will have to be carried by you, if it be carried by haulage contractors at all, and, therefore, if you abide by your agreement, the rest of the -traffic will come to you at the proper rate.

• When a Rates Discussion .Arises. • "Mind you, I do not suggest that you should take advantage of that favourable circumstance to the extent of forgetting that you must be reasonable with your customers. When, as is inevitable, a discussion of the difference in ratesarises you must be in a position to prove your case and justify your rate."

"That is not so easy."

"You have always the detail figures in the Tables to use as a basis for argument and if, in any particular case, they do not suffice, I am always willing and anxious to assist hauliers in such circumstances.

"Part of the trouble, you see, is that you are inclined to be greedy and you have not yet grasped the essential fact that a limited quantity of traffic, at fair rates, is much more use to you than more work at rates which do not show a fair profit. For example : if you can get traffic to keep you running for 16,000 miles a year and no more, and you make 2d. per mile profit, that is a long way better than 32,000 miles in a year and only a halfpenny a mile profit. In other words, you can afford to stand out for a better rate and let those who will cut, get on with it."

"But aren't you overlooking the possibility of the C licensee buying his own vehicles?" " I am not overlooking it, and I agree that where there is that risk you will have to be very careful. It may, in some cases, pay you to do work at a rate less than would be necessary in order to earn the minimum revenues stipulated in the Tables. At the same time, you can look out for other work at a better rate and, when you have found that, let someone else (of the rate-cutting fraternity) carry the traffic for this particular C licensee, giving you the opportunity to go for the more profitable traffic."

• Hauliers Whose Revenues Are Low. • ". Now tell me," he said, "you say it is important that we should get the revenues you specify in these Tables, yet at the same time we know that there are many hauliers who do not get that revenue and never will. We all know, however, that these chaps have been in business for years and look like going on for many years more. How do they do it?"

"There are many reasons. The principal and most important is the one which is easiest to explain. I can give it to you by reference, not to the Tables, but to the figures we have had on the board to-night with regard to a vehicle carrying a 4/5-ton load and running 800 miles per week. You may remember I described that the average all-in cost per mile of such a vehicle would approximate to 51d., and I said that in order to cover your business costs and to make a reasonable minimum net profit, you should earn 7d. per mile.

Now, obviously, if my figure for vehicle-operating

cost be correct, and no one has yet challenged it, then it reasonable to state that that is a rock-bottorn. figure, it is indeed. below rock bottom, because an opera-tor working for Rd per mile is covering only his vehicle costs and is not earning sufficient to pay his business cost. Now, in my 7d. there is, perhaps, three farthinx. per mile for business costs and id. net profit. On that basis; 6d: is really the roek-bottom figure and a man Operating at 6d. and a small fraction of a penny per mile-caii obviously go on indefinitely

" Heis not making a real profit : on the other hand, he is not losing and if, as is most likely, he drives one of his two. or three vehicles himself and is content with the equivalent, of a driver's wage for the work he does, then he cannot be persuaded that there is any reaSon why he should charge more. Sixpence farthing per mile, you see, would bring him a profit of 16s. 8d. per Week. That is the principal reason.

"But there may be other conditions favourable to operating at a rate below" what I recommend—not that I think there is justification for cutting a rate, but merely that it is possible so to do. When two or.tbree vehicles ar.,e worked by, say, a father and two sons Or by three brothers, they are often willing to work Saturday afternoons and Sundays maintaining their vehicles.

"In that way, they can probably make a cut of a farthing or so per mile in the vehicle-operating cost. Perhaps, too, one of them has a leaning towards hook-keeping and is willing to devote part of his leisure time to that work, thus enabling some sort of a cut to be made in business costs. Nevertheless, overworking in order to cut rates is all wrong.

S.T.R.

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