The Bill's effect on
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haulage costing by Sam Buckley
• Because of the impact of the Transport Bill and the activities of the Prices and Incomes Board, radical changes in union bargaining can be expected. The resulting agreements will require detailed knowledge of costs and—more important—the ability to predict accurately the results of such bargaining.
These effects of the Transport Bill were forecast by Mr. P. W. Reed, lecturer in ecomanics, Reading University, in London on Wednesday when speaking at a conference organized by Davies and Robson, transport consultants.
The abolition of the existing carriers' licensing system would mean keener competition. It would therefore be necessary, Mr. Reed contended, for public hauliers to have a detailed knowledge of their costs. It would also be necessary for own-account operators in deciding whether to take the opportunity provided by the Bill to enter into the wider haulage market.
Other reasons why operators would have an even greater need in the future for detailed costing were set out by Mr. Reed. The criteria to be employed by Licensing Authorities would be economic and even own-account operators would probably be called upon to produce costings. Statutory reductions in maximum permitted drivers' hours will necessitate careful examination of scheduling and costing. There would be less "trusting to luck" as regulations became tighter.
Mr. Reed then described how operators could prepare themselves to meet this challenge. Unless the costs of specific traffics and routes were known unprofitable work might be taken on although hidden by a healthy position overall. But what would happen, he asked delegates, if through increased competition, the more profitable traffics were lost?
It was not enough to know the costs. Once known, they must be controlled: hence the need for a budgetary control system.
Significant changes from the budget could have several causes: too many activities being attempted; rates needing adjusting; services at fault; vehicles badly matched to traffics or the budget itself hopelessly astray in its predictions.
Budgets may be used as a basis for sophisticated charging systems, Mr. Reed explained. Thus, within the requirement to recoup all overheads from one activity or another, different charges might be set with varying contributions to overheads according to con
ditions of demand.
Own-account operators had not necessarily to minimize freight movement costs. Reliability, speed and timing might be more important. But this did not mean that non-operating cost factors must be left to the exercise of "judgment and experience", Mr. Reed concluded. A fair attempt should be made to quantify such factors.
In the example of a cost/revenue budget produced by Mr. Reed, return on capital was regarded as a cost with interest charged at 12 per cent. Scarce resources were being used in operating vehicles. If invested elsewhere they would yield a return: hence their inclusion here.
When a transport manager's licence scheme as proposed in the Transport Bill came into operation there would be a need for grades to provide a ladder of promotion. This was contended by Mr. G. F. A. Wilmot, organizing lecturer, University of London, in a paper setting out the effect of the Bill on the function and status of the transport manager. The grades he suggested were as follows:
Vehicles: up to 5; transport manager's licence grade: 4.
CI A simple verbal test. Legal requirements, engineering questions from Testers Manual, to include owner drivers.
Vehicles: 5 to 75; grade: 3.
71 Experience in the tower grades of man agement /supervision.
Engineering: Apprenticeship and City and Guilds course or lowest class of membership of an incorporated institution.
Administration/Operation: Level of Royal Society of Arts Diploma in Road Transport subjects. Vehicles: 75 to 150; grade: 2.
O Experience in high grades of management and supervision.
Engineering: Apprenticeship in Road Transport Engineering plus City and Guilds advanced course or middle class of corporate membership of an incorporated institute.
Administration /Operation: Minimum qualification standard of graduateship of institute.
Vehicles: over 150; grade: 1.
CI Considerable experience in higher grades of management and supervision.
Engineering: Technical education. Graduate or higher grade of corporate membership of an institute.
Administration /Operation: Minimum standard of associate membership of Institute of Transport: London University Certificate in Transport Studies, or university graduate from Salford or any CNAA degrees.