Examination of Witnesses (Questions 200
- 219)
WEDNESDAY 15 MARCH 2000
MR RICHARD
TURNER, MR
JAMES HOOKHAM,
MR DAVID
BROWN AND
MR ANDREW
PARKHOUSE
200. Exel, are you training drivers?
(Mr Brown) Yes, we are.
201. How many compared to the number of drivers
you have?
(Mr Brown) It very much depends on the area of skills
we are recruiting for and it very much depends on the area of
the country we are recruiting in. Our experience in the United
Kingdom is that shortage of driver skills tends to be a regional
issue, rather than a national issue.
Chairman
202. That is interesting. Where do you mean?
(Mr Brown) Particularly in the south-east.
203. They are all so rich in the south-east
they do not want to drive lorries?
(Mr Brown) We do our bit for local richness, I am
sure. The issue we have as an industry is that I believe we got
fairly complacent about this and we now have to look to that as
an industry.
Mr Bennett
204. If the industry contracted a bit, there
would be a few more drivers to go round, would there not?
(Mr Brown) There would indeed.
205. Is that not a good idea?
(Mr Brown) I do not want to be in a contracting industry.
206. Would it not be far better if we reduced
the amount of goods that moved around and encouraged people to
buy local produce?
(Mr Brown) I suppose the simplistic answer is yes,
but I am sure the FTA would have a much more reasoned view on
that.
Chairman: Can we do without you, Mr Turner,
you are being asked.
Mr Bennett: Without a bit of you.
Chairman
207. We will not specify which bit.
(Mr Turner) Demand for freight is derived from customer
demand, what customers want, where they want their goods and the
condition they want their goods in, whether they want them from
abroad. If the economy can sustain your sort of solution, I would
be very surprised. I agree with what David said. We are in an
economy in which we need to grow consistently. With that growth
will come increased demand to move goods to the customer, and
we respond to that.
Mr Bennett
208. Just in time delivery. Is that not getting
rid of warehouses and turning the motorways into the warehouses
in which you have your trailers?
(Mr Turner) I am sure David has a much more elegant
answer to this but, as far as I am concerned, just in time delivery
is about taking stock out of the supply chain, improving customer
service, giving the customer what he wants when he wants it, in
the right condition.
Chairman: We have heard an interesting argument
that there is only 30 days' worth of supply of food in the country
and, if anything went wrong, we would all starve. It is an interesting
thought but not for this afternoon.
Mr Forsythe
209. What is your reaction to the research that
shows the road haulage industry pays only about 70 per cent of
the total costs, once the environmental and social factors are
taken into account?
(Mr Turner) I do not believe it. I could give you
a politer answer.
210. Let us suppose it is true. Given the fact
that rail covers more than its costs and is therefore a little
more expensive, would it not be in order that the road haulage
industry does accept a little more expense, a little more tax,
to make it a level playing field with the railways?
(Mr Turner) Let us accept all sorts of conditions,
but in response to that I would put another question to you.
Chairman
211. That is cheating. Round here, Mr Turner,
we ask the questions.
(Mr Turner) Okay. I will turn it round the other way.
I accept your rebuke. You speak about a level playing field between
road and rail and we could argue all day about that.
212. Not today we cannot.
(Mr Turner) We have spent some time this afternoon
talking about a level playing field between United Kingdom haulage
and European haulage. As United Kingdom haulage carries the vast
majority of freight in the United Kingdom—rail carries something
like seven per cent—I think that is a very pressing problem,
that we make sure we have a level playing field there, even if
we accept your argument that there is a disparity in the other
areas.
(Mr Brown) We are not here as a rail lobby or a road
lobby. As far as we are concerned, this is about the quality of
the solution. In many cases, it is not about economics; it is
about the ability of rail to be a responsive part of a solution
for a client.
213. Do you see any change in that situation
in the last couple of years?
(Mr Brown) I think it is slow, and too slow.
Mr Bennett
214. But it is not getting worse?
(Mr Brown) Certainly not.
Mr Forsythe
215. What proportion of the agreements between
hauliers and the industry includes provision for the increases
on fuel and so forth being passed on to the customer rather than
the haulier?
(Mr Brown) Virtually all our commercial agreements
have rights of negotiation with our clients. The fundamental problem
we have is that a lot of our clients are in a position of finding
difficulty in paying. That is our problem, rather than the commercial
positioning that allows us to negotiate. Substantial parts of
United Kingdom manufacturing are very, very cost conscious to
survive and that is a bigger problem for Exel in terms of recovery
than our commercial right.
(Mr Parkhouse) When Mr Brown says "paying",
he means the increased cost of tax, not just paying per se.
Chairman
216. It is not necessarily cannot pay; it is
will not pay.
(Mr Brown) Yes, there is a genuine position of difficulty
in a lot of our manufacturing areas. An inflation in cost is a
very difficult thing to negotiate with clients, irrespective of
your commercial positioning.
Mr Forsythe
217. When you take into account the percentage
of the total cost of any freight, surely it is a very small percentage
that ends up with the customer? Would the customer not willingly
pay it to get the service?
(Mr Brown) Across the board in Exel, fuel accounts
for over 20 per cent of our operating cost. When you are taking
a 40 per cent hike in prices, that is a considerable increase
to pass into the market place.
(Mr Hookham) If a company the size of Exel is having
that difficulty, I would ask the Committee to consider the difficulties
being encountered by much smaller businesses. As Mr Turner identified
earlier on, we need to bear in mind the difference in size across
the industry when considering this issue.
Chairman
218. Have you any evidence of anybody who has
gone out of business because of the changes in the Fuel Escalator?
(Mr Hookham) We certainly do. Unfortunately, there
is a long list of such businesses that are known to us.
219. You can quantify that?
(Mr Hookham) I can send you a list of the ones we
know about.
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