Warp and Woof
Page 62
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CHARGES for the carriage of goods and passengers have been the subject of many books and of innumerable articles. In respect of very few other commodities and services has there been such a prolonged haggling between provider and customer—and even the providers seem to find it difficult to agree among themselves.
Passenger-vehicle operators have the ultimate decision made for them. This is in some ways an advantage: The operators, particularly those running bus services and not in competition with each other, can concentrate on answering questions, that fall fairly thickly, from Traffic Commissioners and from some members of the public.
. Discussions on fares have a tendency to run always on the same lines.' The bus companies can plead higher 'costs as part of the general inflation, and can prove a fall in the number of passengers, for which they blame the private car and television, sometimes reversing the order for the sake of variety. They can assess their :costs fairly* accurately, and they know exactly the number of passenger miles. With the help of those two figures, they can work out the correct fare per mile ',to any required number of decimal places.
Goods-vehicle operators are less unanimous in their discussions on rates. One job is seldom exactly like another. Infinite pains would have to be taken to-work out a fair and economic rate on each otcasion, and there is always the -possibility that somebody else will charge a little less. Hauliers reap little benefit from their rates freedom, and must often wish that, like passenger operators, they had their prices fixed by an outside agency.
Until recently, the railways had the worst of both worlds. Their rates were imposed by an independent tribunal, and they were exposed to competition from road operators. Now that the merchandise charges scheme has given the railways almost complete freedom, it will be interesting to compare their approach to rates and costs with that of the haulier.
Intellectual Pretensions
The pattern of rates that the haulier puts together on the warp and woof of standing charges and running costs must be clear enough to satisfy the customer, who from time to time may ask for justification. If the haulier has no intellectual pretensions, he may be forced to keep his rates structure simple so that he can understand it himself. He also requires something suitable for easy comparison with the scales of charges used by other operators. For a number of reasons, therefore, when the haulier talks about rates, he keeps the theory down to a minimum. He wants to cut the cackle and come to the horses_ Perhaps the freedom provided by their new charges scheme is helping railwaymen to adopt the same direct and practical attitude. This at least is the opinion of Mr. A_ A. Harrison, chief charges officer, British Railways central staff. He has said recently that the task of getting business at a remunerative price must be tackled "in harmony with the revised concept of traffic management." This leaves no room, he adds, for " ivory towers," or detached " mystiques."
The haulier would agree with Mr. Harrison, but 28, would probably use different words. A colleague of Mr. Harrison's, using much the same words, expresses what appears to -be an opposite opinion. Mr. A. E. T. Griffiths, traffic costing officer, London, Tilbury and Southend Line, writing, like Mr. Harrison, in British Transport Review, a B.T.C. publication, describes the assessment of transport cost as "a complicated and somewhat esoteric matter." "The practitioner of the black art," Mr. Griffiths says, " can rarely give a figure of cost without an explanation of its limitations, and a demand to know what is going to be done with it."
Theoretical End
From the other side of the fence, this may sound very much like the backroom boy blinding them with science. The haulier would think twice about telling his customers who ask about costs to keep away from things they do not understand. However, Mr. Griffiths, approaching his subject from the theoretical end, has a number of points that the haulier may find somewhat interesting.
Transport is different from almost every other industry, Mr. Griffiths points out, and illustrates the statement by a series of paradoxes. Transport equipment has a long life, and equipment and staff are specialized to an extent that makes them relatively unsuitablefor any other purpose. Yet the product is transitory, more perishable even than agricultural
produce. A seat-mile or capacity ton-mile not sold today has no value tomorrow. As a result, "there is every temptation to take thought only for the day and to consider only marginal cost." Here is at least a new explanation for the prevalence of rate-cutting.
The article produced, as an example of which Mr. G'riffiths gives the vehicle-mile, is not the article sold, which is the capacity ton-mile. In transport, there is not a great range of types of output, but there is a great multiplicity of markets for transport services. Each market demands a separate costing. Although Mr. Griffiths is aiming at a comparison of road and rail, his main concern is with his own side of the industry. He has a special comment on what he calls "the variation of cost through time." He gives the period of 100 years as "the maximum useful life we can ascribe to any asset," and it is the railway engineering and building works that he has chiefly in mind. "It is now a cause of some embarrassment to us that there was so much railway activity in the 1850s." Not many hauliers, one imagines, are embarrassed in this particular way.
"Renewal of Capital"
Depreciation, a favourite word among hauliers when they are discussing costs, appears to have no place in
Mr. Griffiths' vocabulary. He refers instead to the renewal of capital, which he says must come from the customer in proportion to his use of the assets. Hauliers have been saying as much for a long time, but Mr. Griffiths carries the argument just a little farther. The user who does not pay his proper share towards replacements, he suggests, is "both frittering away the savings of his predecessors and undermining the welfare of future users."
Hauliers may like to try this line of reasoning over on their customers.