Normal controls were not effective

Press, Volume CXIV, Issue 33655, 3 October 1974, Page 16

Normal controls were not effective

(New Zealand Press Association) WELLINGTON. Freightways Express, Ltd, was unable to increase its profits in the last year because of cost increases in a period when normal controls could not be effective, the managing director (Mr R. H. Pettigrew) says in the annual report.

As announced, the group net profit rose only $29,672 to $1,329,110 in the year to June 30.

The group increased turnover, and had a 21 per cent rise in operating revenue in The last year, but the Government’s price control mechanisms prohibited the company recovering in full its costs, he said. “In the last year the road transport industry was granted rate increases of 8.9 per cent, but these covered specific rises in fuel and wage costs. Increases in the costs of tyres, parts, repairs and depreciation were mainly not recoverable. | “Freightways Express also I has contractual arrangements with clients, who were also under price control. [There had been delays in re--1 negotiating these contracts,

while the customers in turn sought increased prices for their own products.” The forwarding section felt the price control regulations badly. In February, the Minister of Trade and

Industry (Mr Freer) had directed the Price Tribunal to hold an inquiry into maximum charges for freight forwarding. This has still not eventuated, although the tribunal had considered an interim industry application, Mr Pettigrew said. “Unfortunately for the company, the tribunal permitted three large opposition companies to increase their charges on a limited basis, but no increases in our charges were allowed, which naturally puts us at some disadvantage,” he said. Since 1972, costs in the forwarding sector had risen substantially, and were now in excess of $1,000,000 on an annual basis. “While we have been forced to carry this burden to date, the extent to which we can continue to absorb increasing costs is a matter of continuing concern to directors and management,” Mr Pettigrew said.