John Parkinson, chairman of the TR Group of companies, says
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profit margins In the transport industry can be squeezed no further.
• if you want to sound off about a road transport issue write to features editor
Patric Gillman@ or fax your views (up to 600 words) to Micky Clarke on 0181 652 8012
ddTax increases on fuel and the rise in vehicle excise duty announced in the Budget earlier in the year have led us, a large company with several subsidiaries, to the brink of total frustration with government policy an road transport. But I realise that the Government is not going to change, so what is to be done? Everyone seems to agree that government policies don't work.
Not only are these policies alienating industry, they are potentially breaking the industry up. It has become obvious to the public—but not to the Government—through the rounds of demonstrations by transport companies in major cities that we can be a united force. However, there are many companies not joining in these demonstrations, which is not levelling the playing field.
Margins in the transport industry are some of the lowest in business today. Why should we work on a 2% margin? Every increase in fuel duty and every VED increase means we have to pass our rising costs on to customers—who just won't wear it.
There are unscrupulous operators out there who take work on any margin just to keep their businesses running. This is the road to ruin, and they should not be forced to take it.
We believe one step forward would be to name and shame them—not only the contractor, but also the customer who refuses to pay higher rates in line with the Government Increases.
The industry needs not only the support of the Government but also the backing of our bank managers, fuel suppliers and financiers.
Why is it that our accountants and advisers say we are a crazy industry, producing millions of pounds of turnover on margins as low as 2%?
Back to basics. A quarter of our costs go on running our trucks, a quarter on fuel, a quarter on drivers' wages, and the last quarter should go on running the business properly—that's why most of us entered the industry!
I believe we should be a united industry with a level playing field. We do not want to let our service levels deteriorate, Neither do we want to cut corners or reduce maintenance—which are two of the things that will inevitably happen if we continue to be hammered by taxes that we cannot recoup from our customers.
Some possible initiatives are:
• Increase all haulage rates unilaterally by 10%;
• Achieve a unanimous front by having total
industry support from all operators. Would the Government listen then?