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Efficiency in Transport
By S. Buckley
Assoc Inst T
FVERY transport operator is daily concerned with 4 efficiency. Whether he does so objectively, or in default, the subject is so inherent in the running of a successful haulage business or transport department that to stress the need for greater efficiency borders on the facetious. In contradiction of this, however, the constant need for effort to be so applied can have the effect of diminishing enthusiasm and drive in this direction through
sheer repetitiveness. .
Therefore it is an opportune moment for all operators to take a further look at their own efficiency on the occasion of pertinent comment on this subject by two top-level and impartial committees which have both reported within the space of a week. They are, of course, the Geddes Committee, on sections of which report comment has already been made in this series, and the report of the Prices and Incomes Board which was announced in The Commercial Motor last week.
Although the Geddes Committee was primarily concerned with the effectiveness of the licensing system it dealt at length with the extent to which the present system had
promoted efficiency in the carriage of goods by road. At the Outset this ..report defined "efficiency" by _saying that it would be at its maximum when the road transport of goods was being carried out effectively to meet the diverse and varying needs of its customers with the minimum demand on national sources, while -Maintaining stringent standards of safety and appropriate working conditions for those employed.
Useful to Define Objectives
Whilst this undoubtedly smacks of being all things to all people it is useful on occasion to define objectives, even though the results of such an exercise may be dismissed as a foregone conclusion. Even if this were the case with this particular definition it would still be worthwhile in emphasizing the inter-relationship between the joint objectives. Even with the best intentions it is only too easy to apply so much enthusiasm to achieving the ultimate in one direction that the adverse effects On associated objec.tives are forgotten, or at best underrated.
The Geddes Committee maintains that it is easier to say' what is meant by efficiency than to measure efficiency itself. Incidentally, a week later at a Press conference when introducing the Prices and Incomes Board Report on road haulage rates, the chairman, Mr. Aubrey Jones, said that whilst aware of this comment in the Geddes Report, he nevertheless intended to try and formulate an efficiency yardstick for the road haulage industry during the further studies his committee was making to supplement its first interim report.
In support of its contention regarding the difficulty in measuring efficiency the Geddes Report considers that comparing some aspects of efficiency of two firms in the same line of business would not help them, nor would there be much scope for comparison between road transport in different countries as basic circumstances vary so widely. Because there was no significant element of customer dissatisfaction in evidence submitted to them, to the casual observer this might present an encouraging impression of efficiency—although this might owe something to the freedom of the user to run his own vehicles if that were the only way he could get the service he wanted. However, the Geddes Report continues that it would wrong to judge the industry solely on this basis. Measurement of efficiency, it states, is hardly practicable.
Refreshing Admission
After so many academic .pronouncements by politicians and economists on the obvious benefits of full loading on both outward and return journeys it is refreshing to have the admission in the Geddes Report that for many Clicensed operators greater use of vehicle capacity could he achieved only by reducing the standard of service more than was acceptable. Nevertheless, the report does state that it would be surprising if there were found in practice to be no useful economies over the country as a whole from C-licensed operators looking around to find others whose road transport requirements could be fitted in well with their Own.
• The imposition of more or less stringent restrictions on the use to which a lorry can be put .must also frequently
• reduce the efficiency of its operation. However, the proportion of full-load running of a lorry is not necessarily an appropriate measure. of. efficiency. But obviously the aim of minimum use of transport resources is more nearly achieved the more only one vehicle is used.
Controls and Stability
The Geddes Committee states that it does not accept the analysis that without controls on entry 'and capacity the industry would be intolerably unstable and unable to render the public service expected of it. In its opinion the pessimistic view of the working of uncontrolled competition does not take adequate account of major elements of stability in several of the Main markets for transport services. It was impressed, for example, by evidence that many users put a high valite on continuity of service and business , connections and on dependability of service. Moreover, the small-scale new entrant is unable to enter markets where large-scale operations are essential or offer real eeonomy.
Accordingly, the report continues, uneconomic rate cutting, even if it were to occur in fringe markets, would be unlikely to undermine, efficientoperations in the major sectors of the industry where customers' 'preferences for quality and stability were ithpOrtant.
Here again an admission' is made as to the importance of quality and continuity relative to a transport service. This is weleorne and needs regular reiteration if a proper balance is to be maintained between those aspects nf a transport service which are readily qualifiable—such as miles, tons and charges—and those' standards of service which do not fall into this .category but are of vital importance to the high-geared tempo of trade and industry today.
Licensing System Wasteful _
In summarizing its comments on efficiency the Geddes Report considers that the present licensing system inevitably causes waste and hence higher costs and prices through limitation of vehicle use, whilst the system also reduces flexibility of operation and restricts competition.
By its terms of reference the National Board for Prices and Incomes has been called into being to help deal with the problem of rising prices and rising costs, bearing in mind that costs per unit of output have risen more sharply in the UK than in other countries. A cause for this with which this Board is concerned is that old habits, inherited attitudes and institutional arrangements may all combine to exert an upward pressure on prices. Accordingly the members have asked themselves whether the pricing practices in road haulage have been conducive to the fastest possible rate of increase in productivity not only in road haulage but also throughout the economy generally. Moreover, the Board considers that it has a responsibility to inquire into any method that can promote a faster rate of increase in productivity in the industry under examination.
Dealing with ptocluctivity as affected by factors within the industry the Prices' Board's Report was critical of the present wage negotiation machinery because the recommendations it made., like the hauliers' rate recommendation, were unrelated to productivity. Indeed, this report continues, at no point within the Wages Council or outside it has the possibility of increasing the productivity of the road haulage industry been explored either as a desirable objective in itself or as a condition of wages settlement.
Drivers' Hours This Board's comments on drivers' hours are only too familiar as part and parcel of a haulier's daily problem, but they have significance in that they have now been so publicly and plainly stated. Unfortunately, up to now the democratic procedure of election and adherence to previously agreed lines of action has virtually compelled representatives of both management and men alike repeatedly to go through an exercise in which the basic rates on which so much time and discussion were spent had tittle or no meaning relative to the actual pay packets of drivers. Such rates had purpose only in providing a starting point from which to compute overtime.
With admirable forthrightness the Board states that the average lorry driver works longer hours than most other industrial employees because his rates of pay are below the average and he aims to make up in overtime what he fails to get out of his basic wage. Accordingly there is an
I I-hour complex in the industry based on the statutory limit of 11. hours which a driver may work each day.
But no one pretends that such drivers are at the wheel for 11 hours a day, and everyone is aware that .there is considerable disparity between real working time and apparent working time. The Board regards this situation as having serious economic and social implications. It leads to under-utilization of capital equipment, so bringing down the rate of profit expressed as a return on the capital employed. The Board is struck with the absurdity of a situation whereby a vehicle is built and equipped to operate at the ,higher limit of 40 m.p.h. which haulage vehicles are now legally permissible to run, but that operators of such vehicles are prevented, from using them effectively because of opposition from union leadership on grounds of safety:
As an aid to efficiency this Board considers that the RHA, rather than issue blanket recommendations on rate
increases, could dp more to promote greater accounting responsibility in the industry in general, and amongst the small hauliers in particular. This could be done if it gave its members comparative information on the relationships between costs, turnover, capital, profit margins and So on in comparable parts of the industry so that -each operator could judge his performance by the achievement of others.
As stated in this series of articles on several occasions it is a recognized fact that many owner-drivers and smallfleet operators have either an engineering background or are attracted to road transport operation because of the opportunities which it gives for the exercise of individual initiative. Unfortunately, excellent though the qualities may be in isolation they are often in direct contrast with the more studied approach necessary in the keeping of accurate records and accounts. .Nevertheless, it is a problem which every small operator must recognize and solve to his own satisfaction prior to that stage in development when he is able to employ staff specifically for that purpose.