SHOULD THE RAILWAYS HAVE EXTENDED ROAD POWERS?
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A Dispassionate Survey of the Whole Question and a Consideration of the Defects of the Present Road Transport Systems.
By a Weil-known Authority on Transport.
S0 far, the controversy upon the merits or demerits of the proposals to grant extended road transport powers to the railway companies has in the main consisted of a publication -13.f the views of more or less interested parties.
Whether or not legislation has to be adopted as a means of settling the respective claims of the railways and road transport concerns, it is not to he doubted that the interests of industry can only be served, first, by the lowering of all rates for general transport and, secondly, by a thorough speeding up of the whole traffic.
It appears to have been assumed that the railway companies as a group are suffering unduly from the effects of road competition, but with some measure of truth it has been pointed out that the recently published returns of railway traffic and profits earned do not quite support that general assumption.
-It is not fully realized, however, that the road transport companies, considered as a whole, are in a far worse condition, both financially and morally, than are the railway companies, and that the disorganized conditions are being rendered worse by the intensification of competition not with the railway companies but among the road transport companies themselves. Vehicles are sent away with insufficient loads, and the complaint is general that traffic per vehicle due to this cause is being gradually diminished, earning power, in many cases, having completely disappeared. Yet, in spite of this general decrease in turnover per vehicle, the total amount of traffic taken from the railways is greater than ever, because daily we are getting additions to the number of road transport vehicle owners and the profit-earning power of each vehicle is becoming rapidly less.
• In spite of the good profits shown by some transport companies, both for passengers and goods, it would be fair to assume that the average profits earned on the capital employed in road transport are, proportionately, considerably less than the returns on the capital employed in railways. The capital employed in road transport is, unlike that invested in railway undertakings, without a vestige of any further protection than the industry itself has been able to devise.
• The• Incursion of the Railways Must Increase Costs.
Should road facilities be granted to the railway companies and those facilities lead to the utilization of• further vehicles, it is difficult to see how the present average takings per vehicle are to be maintained. On the whole, road transport costs would increase with the diminishing loads and the increase of dead mileage, and in the end rates would rise.
It has frequently been pointed out with truth that the incidence of the cost of goods transport to all our industries and particularly to the basic industries is a very important factor not only in deciding the general cost of living but in its effect upon our ability toexport. Many industrial undertakings have grown up on the basis of certain railway rates. which, although variable according to the nature of the goods transported, possess the stability which is necessary to the successful continuance of each
industry. This system which exists in respect to railway rates forms very largely the foundation of our industrial life.
Road transport charges, on the other hand, having developed on a flat rate per mile tariff, could not continue at the present rates if every road transport organization were compelled to carry not only the high-rated goods but also the low-rated goods. The uniform rate charged by road transport companies is, therefore, at the root of all the present difficulties, and it is not easy to see how it is possible to ameliorate the present position when the underlying principles covering freight charges by these two systems are so diametrically opposed.
Low Railway Rates and Their Effects on Industries.
• In the case of railway-borne traffic, some indus tries are 'admittedly subsidized at the expense of others. The less favour&I industries, however, are able to obtain from the road companies a flat rate which, in the majority of eases, is considerably lower than that artificially imposed by the railway companies for their particular classes of traffic.
Under these conditions industry as a whole is benefiting, even if only temporarily. In the case of the low-rated goods borne by rail, subsidy is still, and must continue tb be, receivable, but for the highrated goods, as road transport is available, the industries producing them are now eeceiving an impetus which may or may not continue'.
• To grant road powers to railway companies will not, so far as can be seen, remove this anomaly and quell this conflict of policy. It is to be presumed that the railway companies, in applying the road powers if they get them, do not anticipate the enforcement of their present railway tariffs for their road-borne goods, as, if they do that, they cannot possibly compete with their own railway tariffs on the high-rated goods, and the transport by road of such goods as coal, stone, iron, etc., -is a manifest impossibility for either Party. It would appear, therefore, that Parliament, being a party to the present variable railway tariff, may have seriously to consider legislation to enforce some kind of compromise. Industrialists may have to prepare themselves for some changes in freight costa. Those who have been enjoying the low rates provided by the railway tariffs may have to submit to some increases, whilst those who have been temporarily availing themselves of the lower road rates may have to forgo this relief, unless a proper .amalgamation of interests and the generalrevision of the system of charging can accomplish such economies as to render no violent changes necessary— a state of affairs which, in any case, itis highly desirable to accomplish.
Attention has already been called to the improved, and still improving, results of the grouping of the railways. The benefits of this grouping are. just beginning to make themselves felt, and further improvement may be looked for with considerable justification. The case for the railway companies appears to depend principally, on the fear that further withdrawals of traffic in favour of road transport will take place, but there is abundant reason to believe that these fears are groundless.
Dealing first with goods traffic, it may be asserted that the organization. of transport by road is economically unsound. The bulk of road traffic to-day is still being carried on vehicles which were manufactured just before the war, during the war and just after it. Soon after the Armistice no fewer than 50,000 new vehicles of an average carrying capacity of 3 tons were available for civilian use. To these were added a formidable number of vehicles which were returned from the various fronts and disposed of piecemeal and at prices which had very little relationship to the cost of manufacture. Such an enormous number of vehicles were available that it will still be within the public's recollection that the commercial vehicle industry was seriously crippled, and not until the years of 1923 and 1924 did a limited demand arise for new vehicles.
. Because of the existence of these vehicles, materially assisted by the availability of drivers trained during the war, road transport received such an impetus that it is fair to state that at the present moment the condition of the whole road transport movement is extremely artificial. There are many who hold the opinion that road contractors cannot maintain their present rates when vehicles have to be renewed on a larger scale at economic manufacturing prices. To add to the confusion, large numbers of vehicles are becoming available for goodscarrying as a result of their displacement from peeSenger-carrying by the more luxurious vehicle which is now demanded by the public.
These artificial conditions will not last indefinitely, and it is fairly safe to conclude that the present competitive rates charged for haulage by road cannot be long maintained and that much traffic will revert to the railways, to which, in fairness, let it be stated, a considerable proportion properly belongs. •
On the other hand, the question of passenger traffic will not be so easily and so automatically solved. The railway returns indicate the loss of much short-distance traffic. Long-distance passenger traffic by road has not yet been seriously developed. There is, we know, a certain volume of .regular longdistance traffic, but the whole of one day's traffic between any one centre and another would not fill IMIT Of a train and this traffic is unlikely, at the moment, tot develop, except for sight-seeing trips. Those trips make an entirely different appeal, and it is difficult to see how the railway companies can deal with their tourist traffic in a very much better manner than is done at the present time.
Scope for Long-distance Passenger Road _ Traffic.
Should long-distance passenger traffic by road develop any further, it will not necessarily be at the expense of existing railway traffic, and it is a little difficult to see in what way railway capital can suffer from loss of business which it never had and for which it was never in a position to eater. There is little evidence to show that the loss of short-distance traffic is any direct result of unfair competition. This loss may be put down more to the development of the small private car, or to the choice of the public where both road and rail facilities are available.
A lot of these road facilities have been created independently of the railway companies and along routes which the railway companies have not developed and, possibly, could not develop. It would seem unreasonable for railway companies to ask for additional powers to join the already more than sufficient competition for these short. journeys.
On the whole, the necessity for granting further powers to railway companies does not seem to he easily apparent. On the other hand, it is impossible to view with equanimity the continuance of the
• existing unorganized state of road transport facilities. s98
Although in some quarters it is believed otherwise, there is no doubt of the brains, experience and organizing ability of the railway executives and staffs. That experience might be of considerable value to the road transport companies, but if, as is fearkl, the reserves of the railway companies, put by in the main for other purposes, are utilized to usurp those existing road organizations which have already shown signs of co-operation, the price the public would pay for that experience might be high.
There would appear, on tile whole, to be good reasons for doubting whether the grant of road Powers to the railway companies would be advisable. At the same time, it is not in dispute that the existence of controlled railway undertakings is necessary to the country, but that the railway undertakings could not continue to exist without road powers is a matter which has yet 10 be proved.
A Permanent Place for Each Form of Transport.
Ills equally clear, on the other hand, that each form of transport has its permanent place in the economic life of this country. Both forms must, therefore, continue to exist. It might appear to a disinterested onlooker that the danger of granting to the railway companies a charter to enable them to compete for road transport is much more of a menace to the competitive element in road transport than the menace to the railway companies arising from a problematical further loss of business. According to the railway companies' own statements, railway capital could not, in view of road transport competition, be usefully employed in extension of their systems, at least, not to any material extent. Should the railway companies' case resolve itself into a claim on the part of their shareholders for an outlet for additional capital and show that those shareholders think that road transport is worthy of their attention, the peculiar position of the companies themselves (regarding each as a corporate body and not in effect unlike an individual) need not be exploited for the purpose of carrying out projects which the shareholders, as individuals, do not care to undertake. It is necessary to distinguish very clearly between the railway group as a powerful entity and the individual stockholders in their respective capacities. If each corporate body is regarded in the proper light as having made a contract with the nation and is now seeking. to vary it, the matter will be put into its proper perspective.
Another serious point hi connection with the whole subject is usually missed, or referred to only casually. The place held by road transport in the present scheme of things arises not so much as a result of relative costs per ton-mile as on rapidity of delivery. Where traffic is lost by a railway company it is not always owing to the competition in rates hut chiefly to the time factor. The formula " ton-mile-hour " is seldom used, yet all freight .charges that are paid amount in the end to the resultant of these three elements, and of these three elements the time factor, is frequently the most valuable. Speed is obtained at an additional cost, and it Is frequently worth that extra cost, The extra cost of speed in goods transport is less in the case of road transport than transport by rail, and it is on this element that the choice is very frequently made. The ton-mile cost by rail, irrespective of time, is always cheaper than the road costs and, so far as can be seen, -it always will be. Certain suggestions arising from the foregoing may, perhaps, be put forward for the consideration of those who are to help in the final decision. It would seem obvious that road transport companies, whether employed in carrying goods or passengers, should comply with certain definite regulations.
They should submit vehicles for inspection to ensure safety to the public ; they should pay proper rates for labour and enter into undertakings to carry _ goods or passengers on certain definite scales subject to control, and give such a service as can be relied upon by the public and by industry. In re' turn for their submission to these regulations a charter or franchise would be granted.
Transport companies so licensed would receive a certain measure of protection from unlicensed competition, assuming that unlicensed competition would be permitted at all. Further licences would be granted or existing licences cancelled by the sanction of a linnsing authority who would act in accordance with the needs of the community.
The controlling body would agree on a scale of rates and such rates would not be raised without their consent. Any rates might be lowered but not again increased without sanction.
Profits for distribution should be limited, and surplus retained and applied in some measure to useful purposes, including the relief in respect to transport of certain goods similar to the low rated goods as carried by the railway companies. They should also be applied to the reduction of normal rates for carrying workmen.
Raitway companies could be granted powers to enter into working arrangements with licensed road transport companies, provided, however, that the capital interests were not involved in such arrangements.
Neither road transport companies nor railway companies should possess manufacturing powers; otherwise a common type of vehicle for a common purpose would not be evolved and the Commercial manufacturing industry would be under -a disability with regard to export business. On the other hand, no commercial vehicle manufacturer Should be allowed to possess any financial interest whatever in any transport company.
Finally, emphasis might be laid on the necessity for compiling a series of flat rates for goods transport expressed in ton-miles, with permitted premiums for early delivery, night, Sunday and holiday tariffs, leaving the transport companies themselves to select that which they do not now possess, viz., the most suitable size of vehicle for the particular traffic and loads carried, through sufficient, but not overwhelming or unfair, competition being forced at the earliest possible moment to discontinue the use of inefficient methods, overlapping, dead mileage, unsuitable vehicles and bad maintenance. Improvement of methods, avoidance of empty running and of the carrying of insufficient loads are permanent means by which general reductions in rates are possible. In the case of a working arrangement between a railway company and a licensed road transport company, the railways would L inevitably be utilized where the time element is not of first importance. The road transport company, in utilizing railway facilities, could afford to pay to the railway company a rate which -would be based primarily on its own road transport costs, and in the case of high-rated goods, which are the only goods which come into question, these rates would pay the railway company very handsomely, owing to their much lower ton-mile costs.