Memorandum by Scrutton Bland Chartered
Accountants (RH 32)
As a Chartered Accountant specialising in the
haulage sector, and as a founder member of the East Anglian Hauliers
Group, I have a firm understanding of what the hauliers are going
through at the present time.
I have seen the price of Derv rise from 25 per
cent of the weekly earnings of a vehicle to over 30 per cent of
the vehicles weekly earnings in the past five years alone. When
preparing costings for clients I now propose including the derv
ratio at 33 per cent for the current year. This means that if
a vehicle earns £1,750 per week, the cost of derv (net of
VAT) will be now costed at £577, but will this be a valid
figure after the budget?
This situation cannot continue because of the
nature of haulage pricing. Most hauliers negotiate with their
customers on an annual basis, mostly commencing in January of
each year. With the fluctuating cost of derv the production of
meaningful budgetary figures becomes impossible, and the haulier
is unable to pass on the price rises to his customer, and all
the costing and budgeting is useless as the haulier is locked
into an annual contract without a price increase.
As a firm we have seen hauliers margins eroding
and profitability slipping year after year. With the ever increasing
cost of capital equipment (a Unit costs £60,000 and a trailer
£16,000) and a reducing profit margin of approximately 1
per cent of revenues, the ability to reinvest and update equipment
is becoming increasingly difficult. This inability to reinvest
is creating a pool of ever ageing vehicles that over the years
become less environmentally friendly and less fuel economic, the
exact opposite of the Government's stated desires and wishes.
Whist we have not seen a large amount of loss
of business to foreign hauliers, we are dealing with the knock
on effect of that loss of UK haulage to foreign operators. This
is evidenced by the fact that the rates for jobs are being depressed
by the ability of foreign operator to ply his trade at a competitive
advantage and the customer using the rate quoted as leverage to
reduce the rates to UK hauliers.
The haulier is squeezed by both increasing costs
and reducing rates, and the less scrupulous are forced to bend
the rules in order to continue to exist in business.
The haulage and shipping industries are large
employers in this region, but a large proportion of the owners
are merely existing, hoping that the Government will see their
way to accepting that there is a problem and do something about
it.
The East Anglian Hauliers hope that we, through
peaceful lobbying are getting through, and that there may be a
small light at the end of the tunnel. Let's hope that light is
not the headlight of a foreign haulier coming to take another
slice of UK business.
James McElhinney
February 2000
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