Road Haulage Association

Haulage Industry News

If it doesn’t pay, walk way!

In the November edition of ROADWAY I highlighted the dangers associated with the very low haulage rates currently, and regularly, being offered in the UK.

I recently attended the first Commercial Vehicle Forum. Organised by the CV Show Partnership, much of the debate focussed on unsustainable haulage rates and one statistic stuck in everyone’s minds. Motor Transport’s latest analysis (July 2012) showed that the average ratio of profit to turnover in the top 100 UK haulage companies is down to a frightening 1%. Two panel members – Wincanton and ABE Ledbury – confirmed that getting customers to pay sustainable haulage rates was a real problem for both large and small hauliers.

Long-term RHA member and author of the RHA Cost Tables, Brian Fish of DFF International, says that obtaining higher rates is, without doubt, the most critical issue facing the haulage industry today. One of his, and my, biggest concerns is a culture of ‘one-rate-fits-all’ that has become the accepted norm and is used widely by operators when quoting for work. Brian says: “There is no such thing as a ‘fits all’ rate per mile. Rates should be calculated by determining: the time required (wages and overheads) covered by a standard cost per hour; the distance covered at a standard cost per mile (fuel, tyres, R&M and lubricants); any job-specific costs, such as subsistence and tolls; plus a margin of profit.

“These costs mix together in infinitely varying proportions, leading to rates per mile which depend on miles covered in a given period of time.” (See table)

I am fully aware that the gulf between calculating sustainable rates and actually getting the customer to pay is often massive. In France, following tariff deregulation in 1987, the haulage industry went into meltdown as the drivers’ unions took action over working time and pay. The deregulation led to excessive internal competition, which squeezed haulage rates and pay. So is there a place for a national minimum haulage rate in the UK?

To get rates back up to sustainable levels – and we must do before more haulage businesses go to the wall – something has to change. I believe the industry must adopt a common approach when calculating and agreeing rates. At the Commercial Vehicle Forum, Andy Boyle (AEB Ledbury) said on the subject of rates: “Dare I say, maybe the time has come to adopt the mantra of if it doesn’t pay…walk away!” Now that is a challenge if ever I heard one. But if you all did it, the buyers of haulage would soon get the message.

The motorway and trunk road network provides the haulage industry’s delivery and collection routes and the efficient operation of that network is essential to the industry. However, it is plagued by delays and disruption, as every morning’s traffic news demonstrates. Each morning there is a list of traffic jams caused by accidents, roadworks, adverse weather or simply the number of vehicles that use the road. In fact, there are many locations where congestion is such a fact of life that it doesn’t even merit a mention on the bulletins.

We all know there isn’t enough cash available to build roads which can cope with the peaks we see across the country but there are dozens, probably hundreds, of places where relatively modest investment could bring dividends in the shape of reduced jams and delays. To name a few: the M6/M1/A14 junction has caused massive delays for years and only recently has the government re-issued proposals to improve this junction; the A43/M40 junction is laid out in such a way that delays are inevitable, forcing the northbound and southbound A43 flows generated by the M40 to cross. This is madness, but there are no plans to improve it.

I am sure members have their own ‘hit list’ of locations which are crying out for improvement, so the government’s apparent intention to publish a consultation document soon on what the network should look like and how it will be funded is welcome. But I’m not holding my breath.

Geoff  Dunning
Chief Executive

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2 responses to “If it doesn’t pay, walk way!

  1. Peter Matthews January 10, 2013 at 11:46 am

    I have been in the industry for 37 years and the hauliers themselves have been guilty for a large proportion of that time in driving rates down, by not rate work correctly but just by seeing what others are asking and slicing a bit off. Commercial suicide, so the phrase “if it doesn’t pay walk away” is spot on.

  2. Peter Cook March 8, 2013 at 9:36 am

    Since this is the Road Haulage industry website shouldn’t it be “if it doesn’t pay, DRIVE away!!” – Sorry. Couldn’t resist but commercially the comment is spot on.

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