ROAD AND RAIL TRANSPORT.

Press, Volume LXIX, Issue 20753, 13 January 1933, Page 5

ROAD AND RAIL TRANSPORT.

SURVEY OF PROBLEM IN NEW ZEALAND. CHAMBER OF COMMERCE BULLETIN. A detailed survey of the problems involved in the growing competition between road and rail transport in New Zealand is given in the latest bulletin prepared by tho Department of Economics of Canterbury College and published by the Canterbury Chamber of Commerce. The bulletin reads as follows: The vital importance of transport in any community may be illustrated from the history of the nineteenth century. That century was marked by an enormous growth in world population, production, trade, and wealth, and a remarkable improvement in standards of life and comfort. This expansion was due largely to the opening up of new sources of supply and now markets by new transport systems based upon the application of steam power. The development of New Zealand has also been closely dependent upon transport improvements. The opening up of tho country, increases in population, production, trade, wealth, and standards of living have always been intimately associated with cheaper and easier communication between productive areas and markets. During the post-war decade, farm production in New Zealand increased greatly. In dairy production alono, the increase exceeded 50 per cent. Such increases created an additional demand for the products of town industries, and so stimulated a general expansio i of industry and trade throughout the Dominion. But again this expansion was dependent largely upon the improvement in transport facilities provided by tho motor vehicle, which made it profitable to increase production in some areas and to develop other areas where production had hithorto been unprofitable. The importance of transport in our national economy may be illustrated from the following tables extractod from the Reports of the Transport. Department: — Estimated Capital Cost of Transport B«rvices. £ Millions. "TOM. 1929. 1931. Railway* •- 35 57 J c^ Tramways . ■ 2 ft 5 Roads •• - s -WJ fiS Motor vehicles, garages, etc. .. 5 48* .)3 Ilorses and horse vehicles .. •■> i Totals .. 75 171 IS-i Estimated Annual Cost of Transport. £ Thousands. Annual cost. Kind of Transport. - Railway • • - • •'•]^ Tramways .. ' rJ<52 Road transport- - i J) Motor vehicles: (a) Motor-cars .. 1-3.997 (b) Omnibuses .. 1.fi20 (e) Motor-cycles 913 id) Trucks . • 9,880 C2 > Other road vehicles 1.054 (3) Road costs not included elsewhere 4.120 Total . . .. £44,2a15 The figures given are departmental estimates, and require cautious interpretation. In the case of railwaya, for instance, a substantial part both of the capital cost and the annual cost or* the railways might be better describod as the cost of political mistakes in the past than as the cost of transport. In the case of roads, much of both the capital aud the annual cost is eertainly not proporly chargeable against road transport, as ordinarily interpreted. In the easo of motor vehicles tho cost, and not the present value, appears to be given. The cost is averaged at £2OO a vehicle and the annual cost is estimated on an average at «000 miles a motor-car per annum at <sd a mile, while trucks arc averaged at 10,000 miles per annum at. lOd a mile. It is possible, too, that the annual road costs duplicate motor taxation included in motor costs. Comparisons have been mado between theso estimates of transport costs and the total value of national production, estimated at £97 m. for 1930-31. Such comparisons are of doubtful value. The value of production excludes dis tributivo services. Much transport is employed in providing those distributive services, and should be related to them. Moreover, transport enters so largely into all production and trade that it is difficult to say what proportion of the vnluo of production is a proper reward for transport services. In New Zealand the cost of transport has increased greatly since 1914, but the value of production has also increased greatly, though the increase in production has been relatively less than the estimated increase in "transport costs. During the past three years, however. Ihe costs of transport, in common with costs of other sheltered services', have probably decreased loss than the value of total production. These figures give some picture of the placo of transport in the national economy and of the relative importance of different forms of transport. Further dotail is given in the estimates of distribution of transport and goods transport published in the Department's report. Estimated Distribution of Transport.

The figures relating lu motor port in theae tables must necessarily be only approximations. The passenger niiles for ' motor vehicles appear to include all private motor-cars and to be based on the estimate that the average car carries about 24 passengers. The importance of the private car may be judged from the estimate that private cars pay 62 per cent, of the total petrol

tax collected. The estimate for freight ton miles of motor trucks may also include all trucks, private as well as commercial, and these are estimated to pay SI per cent, of the total petrol tax. A very large part of the motor vehicle cervices is therefore privately operated and should be considered separately from commercial operators providing public service?. Jt is obvious, too, that a large share of the total motor operations is practically confined to the cities and suburbs. The figures given, however, serve to illustrate the great importance of the motor vehicle in pre-sent-day transport. Road and Rail Transport. Much atteution has been directed to the competition between road and rail truffle by the losses on railway operations during recent years, and there lias been a tendency to impute these losses solely to tho competition of road vehicles. This tendency overlooks the fact that the competitive position of the railways has been greatly weakened in the cast by over-capitalisation, ill-advised construction and political administration, and it overlooks the loss that the railway? have suffered from the depression. "Railway goods traffic declined between 1929-30 and 1931-32 fvom 7.2 m. tons to 5.3 m. tons, a decline of nearly 2 m. tons, or 2G per cent. Over the same period, organised freight services paralleling the railways also declined by about 20,000 tons, or perhaps 10 per cent, of tho decline in railway freights. It is very improb able that private freight services account, for the rest of tho railway decline, and very probable that the recent contraction in railway goods traffic is duo mainly to tho depression. A substantial part of the contraction in railway passenger traffic may also bo attributed to the depression. Here, however, the competition of road transport has probably been greater, but. the great majority of road passengers are carried in private vehicles and there is now much travelling by people which would not be undertaken without the motor vehicle. The major part of railway losses may bo due, therefore, to causes other than road competition. Road competition has, however, seriously affected railway finances. The railways have to meet capital and maintenance costs which are largely independent of the volume of traffic carried. The railways can carry larger loads over longer routes at less than proportionate increase in cost. If they carry smaller loads the decrease in revenue is more than proportionate to the decrease in cost. To meot the conditions of railway organisation, schedules for railway freights make different charges for different classes of goods. Cheap, bulky goods must be carried cheaply, whereas lighter and more expensivo goods can afford to pay more per ton mile. The railway practice is therefore to charge what the traffic will bear —cheap rates for cheap, bulky traffic and highor rates for more expensive goods. When the railways complain that the roads arc taking* away the cream of their traffic, thev mean 'that competition is keenest in the higher priced traffic, which, while providing a small part of the railways' total tonnage, provides a larger part of the railway revenue. The roads tend to take this lighter and more profitable traffic and to Vave to the railways the bulkier sir' I'-ss profitable goods. Railways and Roads. II is generally admitted that rail traffic has an advantage over road traffic in the transport of bulky goods for long distances, while the road has a distinct advantage over shorter distances and in the carriage of smaller goods. The road vehicle has the great advantage of low capital cost, small operating units, flexibility of service. variety of routes, low terminal charges, and its capacity to carry goods from door to door, in some respects it can therefore give much better service than tho railway, and in some cases the buyer of transport can afford to pay a higher price to tho road vehicle because of its more convenient and better service. Some idea of the extent of competition between commercial road and rail traffic may be obtained from the following table, extracted from the Transport and Railway Departments' reports:Road and Rail Traffic. 1931 32. Figures in Thousands. Passenger services. Passengers. Revenue. Railways .. Road services .. 13,117 834 'Freight services. Tons of goods. Revenue. Railways • • 0272 4020 Roads * paralleling railways - • 3()S -^ Roads not paralleling railways ■ • ■*"*- o '-' t It is obvious that tho figures, in this table are not wholly comparable. Road freight services arc divided between those paralleling the railways and those not paralleling tho railways, but passenger services are not similarly divided. Passenger services probably include citv and suburban bus services and also services between points and over routes where the railways provide no competing service. In the case of goods services, it may be presumed that road son ices not paralleling the railways do not compete with the railways, while some at least will assist the railwaya bv acting as feeders. Even whore road services parallel tho railways, they are not necessarily wholly competitive. Some mav act' as railway feeders and some ' may operate between points where the railway service is unsuitable. It is a striking fact, however, that of the total goods carried both on the railways and on roads paralleling railways, onlv 6-J per cent, is carried on the roads, -wjiile 93 per cent, is transported by rail. Regulation of Transport. New Zealand has already taken definite steps in regulating internal transport. A Ministry of Transport has been created and a department built up. Fairly drastic regulation has been imposed by a licensing system on public passenger vehicles, and a system of licensing for freight vehicles is proposed. There is a strong case for regulating passenger traffic in the interests of public safety. Licenses, too. may bo necessary as part of a taxation svstem to collect road costs. But the methods followod in New Zealand lend support to the widely held view that the main object of regulation is to protect publicly owned transport services against the competition of road services operated by private enterprise. The Transport Report estimates that the regulation of passenger has resulted in a having of nearly 0 m. out of a total of 21J m. vehicle miles. Thev estimate that this saving amounts to' £150,000 in vehicle operation costs and £24,000 in reduced road damage. No estimate has been made of the cost to vehicle operators of applying for and observing the conditions of Iheir licenses, nor of the cost to the public of maintaining the machinery for regulation, inspection, and administration. Nor is it possible to make any estimate of any loss the publie may have suffered in the reduced competition in services and the substitution of some measure of monopoly. Moreover, since total taxation. State and local, in New Zealand probably exceeds 2,1 per cent, of the value of total production, tho loss in total taxation on £150,000 of vehicle operation costs is probably from £30,000 to £-40,000, against which must be set the saving in road damage of £24,000. The Department's evidence of economy effected is not convincing, nor is it

generally agreed that it is a proper function of Government to effect economy of private enterprise by restrictions which limit competition and promote monopoly. Road Freight Regulations. The draft of the regulations pro posed for road freight services in New Zealand cover more than three Gazette pages closely printed. They proiidc for the establishment of licensing authorities and the issue of route, area, and seasonal licenses. Section 26 (abridged) contains the following:— 1. —In considering applications the licensing authority shall have regard j to: (a) The extent to which the proposed service is necessary or dcsirablo in the public interest, and (b) The needs of the district or districts as a whole in relation to goods transport. If, having considered these points, the licensing authority is of opinion that the proposed service is unnecessary or undesirable, it shall refuso to grant a license. 2.—lf the licensing Mithority still wishes to consider tho application, it shall take into account: (<:) The financial and other ability of the applicant to carry on the proposed service satisfactorily. (d) Time-tables or frequency of tho proposed service if regular. (e) The changes proposed to be made for the carriage of goods. (f) Other goods services already provided for the localities. (g) The requirements of such localities in respect of goods services. (h) The vehicles proposed" to be used for tho service. (i) The conditions of roads and streets traversed, speed, road restrictions, etc. (j) The evidence of foe railways, public bodies, competitors, and others. It is worth noting that no evidence and no licensing authority can supply a complete answer to the first two major provisions in this section. The question as to what services are desirable and necessary and what the district needs in relation to goods transport can be answered only by the process of experiment. It is the function of the pioneer in goods transport, who is often regarded as a pirate, to discover what the needs of the district are, and how far services can be organised to satisfy them. Under present conditions, when low prices and depression demand reduced costs and when transport is in u process of transition, it would be extremely dangerous to interfere with this freedom to explore and develop any latent possibilities. Position in Britain. It is interesting to compare with these New Zealand proposals the findings and recommendations of authoritative enquiries in Great Britain. The final report of the British Royal Commission on Transport in 1930 stated, inter alia: — "Tie haulier's lorry is analagous to tho tramp steamer, since it is at the service of anyone who wishes to lure it for any journey of any distance. As a rule, the haulier has no fixed routes and no time-tables—nor can he have them save in exceptional circumstances, since the essence of his trade is to carry anything from anywhere to anywhere, " The conference of representatives of rail and road transport, known as the Salter Committee, which was trenchantlv criticised in the British motor trade papers, recommended the licensing of freight services in the following terms: — "The licensing authority shall grant the licenses requested by a haulier es-i-ept where the grant would bo in whole or in part against the public mtorest on consideration of the following factors: — "1. Any excess in the existing transport facilities suitable to meet the public requirements to be served bv the applicant. '"2. Any aetual or prospective congestion or "overloading of tho roads. "In tho introduction of the above svstem wo presume that care would be taken to give such notice, to frame the regulations in such a way, and to make audi arrangements as will prevent unnecessary disturbance and hardship. We consider, for example, that all hauliers already in business . . - should, without question, receive ther first year's license for tho number or equivalent tonnage of vehicles employed by them at the time of the license application." At the present time tho following extracts from a memorandum submitted by tho Commercial Motor Users' Association to the British Royal Commission on Transport in 1930 deserve the fullest consideration in New Zealand. "The road motor transport industry is a young and growing one. It has not yet passed through the development stage, and in so far as it is possible it should be left free and untrammelled to act as an independent transport agency or as a means of supplementing existing transport facilities. The convenience and demands of the general public cannot bo met unless freedom of development and expansion is allowed to road motor, transport. Cheap road transport is essential to the nation, and is only oossible by the full and unhampered" development of motor traction. It affects costs through innumerable phases of industry as well as throughout tho whole process of distribution of foodstuffs and material?." Mobility on Roads. "One of tho salient benefits of road motor transport is its mobility, and any attempt to interfere with it by rigid methods of standardisation would deprive the road transportation of goods of one of its most powerful advantages, The Association accordingly strongly urges the Royal Commission not to recommend any further regulations or restrictions which might have tho effect of reducing the mobility of this modern means of transportation." "The Association submits that the special regulation of the road motor transport industry for the carriage of gouds, either according to the distance run or tho particular class of user employing this form of transport, is nopracticable. Tho choice in these matters should still rest with and be exercised by the producing and trading communities of the country. A motor vehicle licensed to use the- roads under the special regulations already provided by law should be capable of serving the public in any capacity within these limits. Any further restriction applied by regulation is a restriction of trade and an added cost to the commercial activities of tho community. "The Royal Commission has no doubt been improsscd by the evidence respecting the surplus of transport facilities available in the country at the present time, which has led to intensive competition between various systems of transport as well as internal competition within individual systems. This state of affairs is common to commerce generally, owing to the prolonged depression in trade throughout the world, the result of which has been to search lor a new level of prices. Transport cannot expect to escape taking its share in this struggle, aud the Association submits that this is. not a time for imposing regulations on the road transport industry with a view to limiting its competitive powers and thereby handicapping the industry in adjusting itself to the need of trad© *"* »nmmoroa at this critical period

'"Any proposal to institute a special avstcmof licensing haulage contractors is not favoured. The business of haulage contractor is a trade and an absolutely necessary one, just as much us the making anil selling of any commodity. A haulage contractor sells his goods,* i.e., transport, in competition with other haulage contractors, and the one who gives the best service at the cheapest price obtains the business. The conditions governing goods transport are essentially different from those obtaining in road motor passenger transport, and any special system of heening upon the former would bo in the nalurc of a restriction on trade to the disadvantages of productive industry and trade generally." Competition and Co-ordination. There are broadly two possible methods of dealing with the transport situation in New Zealand. The first is to let competition have free sway and to permit economic forces to determine the appropriate fieldfor each form of transport. The second is to attempt to guide the various forms of transport into their most appropriate fields by a process of co-ordination and rationalisation. Much has recently been heard from the Railway and Transport Departments of the necessity for coordinating and rationalising transport. Little, however, has. boen done or even suggested beyoud the regulation and restriction oi road services, and the restrictions imposed have usually given a greater measure of monopoly to the publiclv owned transport services. The regulation and restriction of privately owned transport competing with publicly owned services constitutes neither co-ordination nor rationalisation. It mi"ht even be directly, opposed to the best interests of the country as a whole, and might entail losses from the restnc : tion of competition and private enterprise in road services much greater than the gain achieved by tho. additional protection given to publicly owned services. There can be no doubt, however, that New Zealand needs a policy to safe, guard the great public interest in transport. The policy at present being pursued tends towards limiting competition and increased monopoly in road services, but it exercises no such control over publiclv owned services. If a policy of competition is to be pursued, then the regulation of transport should bo confined to the protection of public safety and the prevention of undue traffic congestion- If a policy of co-ordination and rationalisation of transport is to bo adopted, then it must consider all lorms of transport. Such a policy should take account of the present position and of possible future developments in transport, and should aim to employ and permit the combination of all forms of transport in such manner as might provide the most efficient services at the lowest cost, It must include rail traffic and coastal shipping as well as road traffic; capital expenditure on public works as well as current operations; and it requires a genoral plan for linking up internal transport services with overseas shipping. There is some part of the transport field where each type of transport service is supreme. Between these parts of the field there are zones within which supremacy is undecided and. where competition is desirable. Co-ordination Problems. A policy of co-ordination, rationalisation, and planned development over the whole field of transport would involve, before it is entered upon, a wider and deeper study of the whole transport field than has yet been made in New Zealand. Its application might involve regulation, but such regulation should not bo confined to road services; rather it should aim to harmonise all services. In the railways, for instance, it might prove necessary to abolish short htuls,

where the motor vehicle is superior, to modify and adapt the arrangements at railway termini in order to lessen delays, and co-ordinate railway sarvteaa with road services collecting -and distributing gox>ds, to close , brawfejh lines and small intermediate stations and encourage road vehicles to feed the railways at the larger central. , la short, the" railwavg might ba mast *fo*onu<ally run if they concentrated on balk traffic and long" hauls, on that pnrt t>t the transport field where the railway is definitely superior. ' The question of harbours and shipping, particularly at minor ports, would also have to be considered, and consio- . ered in relation to overseas as well as to internal transport. It is stated that at the present time the coat ©f oveiseas shipping is increased greatly by the practice of shipa IdMing »»* discharging at many minor ports IB New Zealand. If these ships were concentrated on main ports the increased cost of transporting local good* ta ! those main ports might be mow thft* offset by the savjmg in overseas freights. This question at least needs ex«mia«» tion. Further XteYelopmenti. When these matters have bee* decided it would be possible to consider capital expenditure on the railway*, on ports and harbour facilities, aad o» highways, and a broad general plan of development might bs' laid down; It would be necessary, however, to define within limits the appropriate field of each form of transport, and to eneoufugc the rational development of eaeis form within its own particular field. If regulations proved necessary they should bo broadj. simple, and ; clear. They should provide scope for qnd encourage experiment and progress, and should avoid monopoly and the stagnation thai is usually associated with monopoly. On the subject of co-ordination, the British Eoyal Commission on Transport reached the following conclusions: "We have given the most serious and anxious thought to the whole question, • taking into account not merely the roads but all the other means of transport. We confess that for the present wa can sec no positive solution. "Under existing circumstances, auy attempt at compulsion or coercion would, we believe, be a great mistake, and would be strongly objected to, not only by the transport agencies, but also by the traders, and any such attempt would probably prove to be quite ineffective in practice. ' ■ •'For these reasons, therefore, Jfe lind it impossible as a Commission |« make any definite recommendation «° the subject." In Britain, a Eoyal Commission, after full enquiry, rejected the policy ef teerdianting transport by State coercion. In New Zealand, further coercion or restriction of road transport should be withheld until full and impartial enquiry has been made into the whole transport problem

Passen jiers. Passenger Per cout miles. of total (millions) Motor vehicles .. 1750 71 Tramways .. 203 11 Railways . . 4 23 17 Inter-Islnnd shipping "7 1 Total? . . . -:t,51 100 Go oris. Freight Per cent ton-miles. of total (millions.) Motor ti-ucU.- . . 1S-1 20 TiJiihvays ., 4 05 45 Coastal shipping .. 321 35 Totals .. 010 100