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Page 73
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The rate fixers of Europe
by janus
FAMILIAR to many operators after so much discussion about it is the regulation adopted by the Common Market Council in favour of a compulsory rates system. This does not mean that the operators understand exactly what is proposed. The system is so encumbered with provisos and escape clauses that it hardly seems to differ from the present primitive arrangement under which rates find their own level.
Over the years the number 23 has acquired an almost mystic reputation. It is the percentage range of the bracket or fork within which the Common Market rates (often described as "fixed" all the same) will be allowed to fluctuate. Some incredibly complicated calculations may have been required before they came up with the number, or the intention may have been to give this impression. Nobody would suspect, it might be reasoned, that anybody would choose such a number deliberately.
0 PERATORS may not be reassured. Under the goading of the Prices and Incomes Board and the expert guidance that has become available in recent years, they have grown accustomed to assessing cost increases to two places of decimals, but they still prefer their rates increases in round numbers. They would feel a little more at home with a Common Market bracket of, say, 25 per cent. It would be clearly an estimate and not an attempt to persuade that rate-fixing is an exact science.
Even so. a statutory system of rates might prove useful at the present time in Britain. Whenever hauliers get together. they start to compare notes about the extent to which what they would call the "normal" rate is slipping. The explanation is ready to hand. The volume of traffic has been declining for six months or more and the customer is luxuriating in a buyer's market.
[HE precise effect depends upon the operators and the traffic. The haulier is at the greatest disadvantage when he is one of several largely dependent on a single customer. Such a customer is the British Steel Corporation, and operators working for this organization may have wondered whether there would be any advantage to them if the first effects of closer union with Europe are felt, as is likely, in the iron and steel industry.
However, it is not merely with the large and powerful customer that the 'problem of rates is arising. Hauliers find that in general there suddenly seem to be more competitors, some of them offering to carry at rates that would normally be considered uneconomic, if not ruinous. That this would happen was hinted at fairly broadly during discussions on the measure which in due course became the Transport Act, 1968.
Politicians and others who had no great liking for the haulier made clear their opinion that he was featherbedded by the privileges attached to his A or B licence. The zeal with which he opposed applications that might affect those privileges showed that he was not unaware of the situation. All the same, in the struggle for existence he had no clear impression of being favoured or featherbedded. The competition was as fierce as if not fiercer than that in any other industry.
WHAT he is now beginning to fear is that the introduction of operators' licensing has hotted up the competition still further. The customer is entitled to become his rival without so much as asking permission. Worse still, or so some hauliers allege, there is a growing number of operators who are not bothering even to obtain a licence. Corroboration of this has been given recently in Beccles magistrates' court, where a representative of the Department of the Environment said that thousands of goods vehicles were being used without operators' licences and that in many cases the offence was deliberate.
While strange things may be happening under the surface, the general appearance of the road haulage industry is not changing or no more than might have been expected in the ordinary course of events. A few operators are going out of business and some of them are being bought out, but there is no sign of a flood moving in the direction of the bankruptcy court.
ONthe other hand. there must be considerable anxiety in many quarters, especially among some of the smaller firms. They have little or no financial reserves and the dwindling of the cash flow must soon show its effect. Investigations by the Centre for Interfirm Comparison on behalf of the Road Haulage Association have revealed that in the majority of cases the rates do not provide what in most businesses would be regarded as a satisfactory return on capital, so that not even a temporary respite can be expected from a resort to rate-cutting.
The obvious conclusion is that many operators are economizing. This is borne out by reports from vehicle manufacturers of a decline in the home demand for their products. One advantage at least of the new licensing system is that the haulicr need have no fear of a reduction in his authorized fleet if he does not keep all his vehicles busy. He can lay some of them up or even dispose of them z nd keep his licence intact.
SOME hauliers are acting along these lines. They still have some reluctance in that the reduction in the working fleet means laying off drivers and other staff. Hardship may result at a time when employment is not easy to find, and the operator with an eye to the future when conditions begin to improve may wonder whether he will be able to find 0 ivers as easily as he can dispose of them.
What may not altogether have been expected is that the drivers and their trade union representatives are still pressing successfully for substantial pay increases. It has to be supposed that not all operatr.fs aequally affected by the traffic f:.ortage. Jr alternatively that those who insist on being paid an adequate rate are not invariably turn down.
IT may be that many traders, perhaps most of them, find it worthwhile continuing to employ the haulier who has given them a reliable service in the past rather than to take a chance elsewhere at an apparent saving in cost. One advantage to the 'haulier from the new restrictions and the higher standards required is that the operator on own-account has become more aware of his own true transport costs and is therefore more tolerant to the demands from the people who serve him.
It would not be to the ultimate advantage of the economy if too many professional hauliers went out of business. Nor did the sponsors and supporters of the Transport Act suppose that it would have this effect. It is an unfortunate combination of circumstances that, partly because of the legislation, road transport costs have risen during the past year or so at an unprecedented pace and that at the same time the opportunities open to hauliers have fallen away.
THERE is a limit beyond which costs cannot be reduced further without risk. Vehicle replacements can be postponed for a while and equipment can be kept in use a little longer than usual. But the inevitable time of reckoning may not be far away.
British hauliers may be inclined to look enviously at their fellow operators over the Channel protected by statutory rates which the authorities could hardly fix at a level below which it was not possible to survive. There is only one snag. The principle of rate fixing may have been approved by the Common Market Council but has not been adopted by any of the countries. The process of reaching agreement is extremely slow and looks like continuing indefinitely.