|
LadyEllen -> RE: More UK Corruption. (4/17/2008 3:39:00 AM)
|
I work in a different industry, international road transport - we could do with cartels, (just like the air and sea transport people have), and this is why.
Customers, quite understandably, are motivated to purchase the lowest price service they can find. Good for them, you might think - good for us on the supply side too, you might think; it will make us sharper and more competitive. But this "lowest price bidder" approach actually helps no one past a certain point - a point which was passed several years ago.
Because there are so many hauliers within the EU all competing for work, and because the vehicles they use and the permissible operation of those vehicles is controlled, their services become a commodity - and with commodities, there is a market price, which need not bear any relation to the costs of production. Factor in too, that trucks and trailers cost more or less the same everywhere, that the fuel costs, toll costs and night out pay for drivers costs everyone the same, and that even the mainstay of the modern market, the east European driver, is now costing more and you have a fairly level playing field in terms of production cost - at or just below €1-00 per km.
Customers, understandably, take advantage of the presence of so much competition to drive down prices - a good thing you might think. But when the prices paid in this commodity market are below the costs of production, it is far from a good thing. Hauliers go bust all over the place, and those who survive are doing so by unethical and sometimes illegal practices
- using untaxed diesel
- exceeding driving hours regulations by every trick in the book - a major safety concern
- employing illegal workers to drive (Ukrainians, Moldovans and so on) who work for half price compared even to the cheapest east European EU driver
- overloading trailers - a major safety concern
- not using regular maintenance - a major safety concern
In short, to survive the hauliers must cut corners, some of which represent serious safety concerns.
And this is also now a self-defeating approach for customers. They may have the lowest price bidder contracted, but the result of the approach is a haulier who often occasions enormous incidental costs to the customer, both financial and in terms of reputation.
There is a need in my opinion, in a market like ours, for some sort of conference (the name the sea and air transport people use for their cartels) to set minimum prices which will enable hauliers to survive and be able to invest in future service delivery and development. But the laws of the EU expressly forbid it - the sea and air people get away with it because they are not in the EU and therefore escape its reach. And our industry is highly fragmented - we were asked a while back to name our competitors for a survey; all we could answer was "tens of thousands". With such a supply side, it is impossible to unite.
16.3%. This is the decline in value of Sterling across a basket of EU currencies over the last twelve months. Hauliers incur their costs in Euro or one of the national currencies, so the Sterling prices paid by UK shippers and importers have declined in value by the same amount as far as the hauliers are concerned. Have prices risen? No. Is there any way for us on the supply side to impose a Currency Adjustment Factor (CAF) as the sea transport people do? No. And yet - the prices of the goods exported or imported and eventually sold into UK markets have been strongly affected by this.
UK consumers will be told that they must pay 16.3% more for their purchases because Sterling has gone down in value, plus a few more percent for fuel increases. Yet be assured - the importer hasnt paid a penny towards these increased costs - its all just extra profit for him.
E
|
|
|
|
