FACTORS CONTROLLINI SCHEDULED RATES
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Some of the Problems Which Must Be Solved Before Stabilized Rotes for Traffics of Any Class Can: Be Assessed THE path along wch we haye to travel to arrive at a position where we can decide what should be appropriate rates for the road transport of any particular traffic is beset with difficulties. There are many who assert that the 'principal reason why road hauliers have not, ere this, been able to agree upon schedules of rates is that they are unoiganized and, consequently. cannot work together for the common good.
They point to the passenger side of the industry. especially that part of it engaged in public-service work, and suggest that-itsis because it is so well organized that it was able so quickly to come to a reasonable measure of agreement asto fares.
What is not appreciated by these critics is that in dealing with passengers there is only one class of traffic, wbilit in dealing with goods there are thousands of classes, nearly all of ,them different with regard to the conditions which affect rates.
The two outstanding-factors are, undoubtedly, terininal delays and the possibility of return-loads. In attempting to get down to a basis for a. standard of rates, the first thing that must be agreed is the period which can be allowed for loading and unloading, witliin the framework of the rates, schedule. .
Influence of Loading and Unloading on the Standard Rate
Now, whilst it may not be difficult to tome to an agreement as to what is a fair time to allow for loading and unloadingathat is not the whole of the problem. Having agreed upon that point, there is still the question as to what steps ate to be taken in the event of the 'actual period of loading and/or unloading tieing. longer or shorter than that which is provided for in the standard rate. It is in rbspect of this factor that there is a considerable difference of opinion amongst hauliers.
There are, on the one hand, those who suggest that the period for which allowance is made in the■standard schedule should be a minimum, that is to say, the lowest time in which it may reasonably be expected that loading or unloading can be effected. In any and every case wherein that time is exceeded an extra charge' for demurrage should be made.
Others, differing from this view, argue that -to fix a minimum period would involve almost continuous friction . because of the necessity, in 90 per cent, of the journeys,
of making an extra charge for demurrage. . Here, again, there is more than one consideration to
be. taken into account. First, these is the strong disinclination on the part of the majority of operators to be continually asking their customers for extras. In addition, there is the fact that it is extremely difficult to come to .agreement as to the time actually spent in loadin-g avid unloading and whether the extra time was due to conditions at the terminals, the fault either of consignee or consignor,
a30 or whether it was the fault of the driver of the vehicle. Customers, too, are inelired co dispute the driver's statements as to delays and the cause of them.
It may be easy for differences of opinion to arise, because a driver may arrive with his vehicle to collect goods and spend some time in findicg the responsible official who will attend to the business Of loading. At the other end of the journey the same conditions may arise.
If the contrary course be adopted, that of providing for ample time to loan and unload, then it may well be that the standard rate, which mu,st be high enough to cover the cost of such maximum periods for terminal operations, will appear unduly high in the case of those customers whose provision for loading and unloading vehicles is well organized so that the actual periods involved are much less than those provided for.
It has been suggested that, if the latter course be adopted, the claim of the customer who gets the vehicles off his premises promptly could be met by rebates on the standard rate.
There is another objection to this besides the one already mentioned, the difficulty of agreement as to actual times
involved. It is that there is a serious danger in introducing rebates into any stabilized system of rates, of its abuse and of its utilization as a means for cutting the rate. to a favourite customer. That is something which must be avoided.
That some decision mnst be reached on this qtestion is obvious. it is impossible to agree upon schedules of rates without full Consideration being gieon to the periods of loading and unloading. It seems, therefore, that .a mean between the above two extremes will have to be accepted, with perhaps, a leaning towards fixing minimum periods, so that the question of rebates shall not arise.
Bearing. of Terminal Delays
on the Short-distance Haul . This factor of terminal delay is, of course, of. much
greater importance in connection with short hauls _than it is over long 'distances, for the .obvious reason that in the case of short hauls the standing time is much greater in proportion than is the running time. The trouble there is that any charge for demurrage seems to the customer out of all proportion to the rate he would normally have to pay.
Take for example a 25-mile lead. Assume that the load he 5 tons, that the normal period' tillowed for loading and unloading is one how at each, end, also that the charge per hour for demurrage is 7s. 64. The normal rate for a pasticular class of traffic over that distance is 7s. per ton. It is quite possible for the periods for loading and unloading to be double that scheduled as standard. That means that two hours' demurrage must be charged for, amounting to 15s. for the 5-ton load. That increases the actual rate charged by 3s. per ton, so that the customer now pays
109. per ton instead of 7s., nearly 43 perscent. more. •
On the other hand, over a 250-mile haul, assuming that the conditions otherwise remain unaffected and that the rate fclr the same class of traffic is 45s. per ton, the demurrage charge still involves an addition of 3s. per ton for the rate, which thus becomes 48s. per ton, an increase of actually less than 7 per cent.
The problem of deciding how "far an allowance should be made, in setting up standard schedules of rates, for the possibility of return loads is even more difficult than that of providing for terminal delays. There are those Nyho suggest that as there is no provision whatever in the railway system of rating for ieturn loads, road rates should be similarly assessed.
Whence comes this idea that the railway schedule of rates does not take return loads into consideration I do not know, any more than I knoW upon what basis railway rates are actually assessed in so-far as the question of cost plus profit arises? What is certain is that any attempt to assess road rates on a basis which excludes any allowance for return loads is foredoomed to failure, Excessive Profits Are Possible But Not Practical
To proceed along those lines -Would be to place road rates at a level so high that it would be easily possible for any moderately efficient organization to earn excessive profits. Whitst the prospect of that may seem alluring to the individual, it is out of the question from the practical point of view.
The difficulty, as I see, it, in the way of solving this problem of provision for return loads in relation to a national schedule of rates, is that if cognizance be takin of the effect of the prevalence of return loads then it will be impossible to assess the stabilized rates schedules on a plain straightforward basis of mileage.
What I mean is this. Assume, for the sake of argu ment, that a rate of 22 Per ton is agreed as satisfactory over a 200-mile lead, that 22 per ton having been calculated on the assumption that there is, a reasonable chance for return loads. I interpret the term " reasonable chance '• as meaning that there is a prospect the .operator will, on his return journey, be loaded for 60 per cent. of the time.
That may be taken to mean that his total of return ■loads for a period is 60 per cent. in tonnage of his outward loads. That condition may apply between two points. A and B. 200 miles apart. It is, certain that over another route from A to C, also 200 miles apart, the prospect of return loads will be nil or nearly so.
Now, if 22 per ton be reasonably profitable, having in mind all the conditions, from A to B it will be quite insufficient in respect of traffic from A to C. Moreover, as the industry is at present constituted, apart from war conditions, it is unlikely that the one operator will be conveying traffics from A to B as well as from A to C. Except in the case of large concerns, the operation of the Road and Rail Traffic Act prevents that. It cannot, therefore, be suggested that the standard rate for this 200-mile lead cap be assessed so that what' is lost over the A to C route—whera there are no return loads— will 'be made up by the profit on the A to B route, where return loads are aasonably plentiful. .
As an example of the diffe.renceS which prevail in respect of particular routes, the following is of interest :.From a given provincial city, A, conditions in so far as the prospect of return loads are concerned are thus:—
To B; good. principally because the operator concerned has a depot at B. To C; prospect of return loads SO per cent, of the
journeys made , To D.; no direct return loads, must travel a
matter of six or seven miles through a tickly populated and congested area to a neighbouring city if return loads are to be had.
To B; prospects good.
To F; 75 per cent, of return loads but, the majority of ',these is not direct but must be conveyed to a city some 20 or 30 miles off the direct return route, with only moderate prospect of a third load from that city back to A.
• To G; prospects vary considerably from day to day. Perhaps 60 per cent, would be a fair expectation. . To H; very few retuin loads.
The above journeys are all of what are called the longdistance type, most of them over trunk routes.
Rates Assessment is Only
• One Sicte of the Problem It. is quite clear that something other than the mere
assessment of rates is necessary before this problem can be solved. Experience shows that it is the highly organized concern which has the lowest percentage of empty running. Large companies, with many vehicles and contacts in all the principal towns to which these vehicles run, are at a considerable advantage over smaller concerns with, perhaps., only five or six machines, and—without the capital or scope needed to justify establisment of such depots.
There, is no doubt that this problem will have to be tackled simultaneously with the stabilization of rates, otherwise equality as between large and small operators will be unattainable. One solution will undoubtedly be the grouping of several small operators into one large organization. This grouping need not necessarily involve the pooling of all finances; its obj3ctive should be the pooling of traffics, of information regarding return loads, and of depots. The foregoing are just a fe* of the outstanding difficulties in the way of assessing rates fop road-borne traffic. How practical results may be achieved will be described in subsequent articles. S.T.R.
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