Problems of
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Establishing a Rates Structure Some of the Factors Which Must be Taken Into Co ns ide-ration When Solving a Most
Difficult Problem
By H. SCOTT HALL, M.IA.E., M.I.T.A.
THE biggest stumbling block in the way of rapidly reaching a solution of the problem of stabilizing road-haulage rates, is the fact that the rates decided upon must be of country-wide application. I mention this first, amongst the many factors which have to be considered, because I believe it to be the one which is least appreciated.
Most hauliers appear to be under the impression that there must be schedules of rates for each traffic area.
They base their beliefs on the fact that conditions of haulage, wages paid, and, other essential economic matters, differ according to localities. Rates, they imagine, must vary accordingly, and what applies in Cornwall, for example. will not do for Essex, and vice versa.
That, however, is a narrow view, almost a parochial one. It can apply only to purely local traffic, as, for example, china clay in Cornwall and sugar beet in Essex.
Commodities to Which Stabilized • Rates Must Apply.
Trunk traffics--commodities which are carried all over the country, as, for example, bacon—must, generally speaking, be carried at the same rate per 100 miles, wherever they be picked up, wherever they• be dropped.
That basis may not be ideal from the point of view of the haulage industry, for reasons which will be discussed later, but it is almost essential from the point of view of industry as a whole.
Bacon curers want to know what it will cost them, per 100 miles, to forward their product by road. They will not accept a position which compels them, in arriving at cost of carriage, to inquire, first of all, how the rate per ton varies as the vehicle traverses various counties.
It is, nevertheless, inevitable that extremely adverse conditions must have due recognition, which compels the adoption of what may be called " plus " system. The schedule of rates must be country-wide, and regarded as a minimum.
Traffics originating or terminating in particular districts where especially difficult conditions (either of wages, hours, costs or terrain) prevail, shall be rated at the country-wide minimum scale, " plus " some agreed amount calculated to compensate the operator for his disabilities. '
Apart from purely local traffics— and it is surprising how few there are to which that term applies, in its strictest interpretation at least—the following broad classification prevails.
Road-haulage operations, for purposes of rates calculation, fall into two principal classes : those in which a single commodity is usually carried, presumably to the extent of the capacity of the vehicle, and those in which the vehicle is loaded (usually. but not always, to capacity) with a number of consignments, the commodities varying as well as the size of each consignment.
Defining Parcels Traffic.
In the latter class, parcels traffic is included, although there is far from being unanimity of opinion as to when this class of traffic ceases to be "parcels."
Economic rates for traffic which passes in full vehicle-loads can be calculated with comparative ease, or could be if only the economic factor, the direct one of profit, calculated on the basis of vehicle-operating cost and overheads, had to be considered. Indeed, were that all, no schedule of rates vvould be necessary. Mil that would be required would be the equipping of each vehicle with a machine, similar in principle to a taximeter, and which would register the amount due for each journey, taking a given basis of time and mileage charge, the basic rates for which would, of course, be constituted according to the type of vehicle.
Such a calculating machine -would automatically take care of all such conditions as loading and unloading times, delays at terminals, and so on.
Such simplicity is, unfortunately, unobtainable. There is a large number of complicating factors which no piece of machinery, and hardly any simple rates schedule, can hike into consideration.
Should the Probability of a Return Load be Considered ?
The most important of these is the return load. Should any rate for a full vehicle-load take into consideration the probability of a return load being obtainable? Theoretically, the answer is " No "; each individual consignment should bear the full cost, otherwise there is the risk of rates, in one direction or another, being too low to be economic.
That arises from the fact that some operators, unable, for some reason, to obtain return loads, will have to carry one-way traffic for a return calculated on the basis of a two-way loading.
In practice, however, it is impossible to leave the return load out of the calculations. In many cases it is only the availability of the return load which enables the haulier to carry traffic at a rate less than the cost to the merchant.
In other words, recognition of the return load, and the revenue therefrom, is forced upon the haulier by competition from the C licensee.
The influence of competition is the next factor to be considered. I mean competition from the C licensee, from waterways and from railways. True, the T.A.C., in its recommendations, advised road-haul age interests to build up a rates structure of their own, based upon economic conditions within the industry and without reference to other forms of haulage. but to do so is impracticable.
An economic rate, so calculated, would have the effect of diverting traffics in specific areas, from road to tail cr road to water. That would involve ruin to a considerable number of operators because— and this is a particularly important matter—a haulier in any specific area who loses traffic is not free to go elsewhere or to take alternative traffics.
Even if his vehicles were suited for other commodities, the conditions of his licence would prevent him.
Local Conditions a Problem. Local conditions, and, in particular, what I might term the prevailing direction of traffic, are a problem. In many provincial towns, and especi ally in seaport towns, the traffic outwards, or inwards, as the case may be, is very much greater than that in the contrary direction. Rates being calculated on the basis of return-load traffic, are not remunerative enough to enable that condition to be borne.
As a result, special cut-rates are quoted for traffic which, normally, would not go by road at all.
That is an existing condition, the disturbance of which, without ade quate compensation, would entail serious loss. The unfortunate fact is, that the cut-rates arising from that practice are expected to apply elsewhere.
The foregoing are only a few of the complications which make the scheduling of rates so difficult. It can, at least, quite easily be seen that the idea of using a "taximeter," however attractive it may be, is quite impracticable.
Time and mileage must, nevertheless, still serve as the basis of the economic rates structure, but this basis cannot be applied direct. It is impossible to avoid the conclusion that our rates structure must provide (a) for a classification of commodities and (b) for a rates book.
Selecting the Appropriate Rate.
The two must be married, and the link between them must be time and mileage, with rates based on the cost of that time and mileage, plus overheads, plus profit. The selection of a rate for a particular commodity must be made on that basis, with due allowance for the other conditions described.
Curiously enough, the other class of traffic, that which travels as part loads, the vehicle carrying a miscellaneous assortment of commodities, is much easier to rate. On the face of it, the complication of assessing the ' rateable value" of each consignment seems impossible, but it is not, for the simple reason that the traffic is regular.
'Me vehicles concerned make routine journeys, the cost of the work is easily ascertainable, and the problem of rating becomes one of simple proportion.
Fixing Conditions of Transport.
The difficulty which is going to arise, however, is that of fixing conditions of transport. Obviously, standard conditions will have to be laid down. Not so obvious is it, to many in the industry, that great care will have to be exercised in drawing up these conditions, lest many of the attractions of road transport, as compared With other forms, should be lost. There is a tendency, in many quarters, for railway conditions to be applied. That, however, will not do.
There are two kinds of conditions which jump to the mind in this connection, conditions which, whilst they are essential for rail-borne traffic, are not so in regard to goods travelling by road. Moreover, it is largely the fact that road operators have not, hitherto, imposed such conditions—a factor which has caused many to favour road transport.
Expensive Packing Avoided.
One of these conditions is that relating to packing. The absence of demand for expensive packing and the safety of goods travelling by road, even when lightly packed, in many cases is an immense advantage. To lose that advantage by applying railway regulations is to lose the traffic.
The other condition is that relating to "owner's risk" and "carrier's risk." Road-haulage operators who try to apply the hide-bound methods of the, railway companies in this matter, will shortly discover that their customers are going elsewhere.
The proper line for our industry to follow is to provide for insurance of goods in transit, paying the appropriate premiums and assessing the rates for the traffic on the basis of the increased cost. Castorners will be more likely to overlook a penny or so, on the tonnage rate, than to bear the risk themselves.
It has become almost a custom of the road-haulage industry to accept that risk and the practice is an asset.