TNL less profitable

Press, 26 November 1982, Page 10

TNL less profitable

Nelson reporter It was naive to believe that over-all transport costs would be reduced in the long term by adopting a policy of allowing more vehicles to carry the same workload, Mr Garth Butler, managing director of the TNL Group, Ltd, told the annual meeting of shareholders last evening. “The road transport industry has been under investigation for many years now and several papers and the Wilbur Smith report have all indicated that some changes to the present system should be made. Throughout this period through to the present white paper under discussion a most remarkable fact is that at no time has the Government declared an

internal transport policy,” he said. ;‘Another extraordinary aspect of the situation is that some members of Parliament, farmers and manufacturers believe that by allowing more vehicles to carry out the same work load transport costs would be reduced because of increased competition,” said Mr Butler. “Obviously the impact of the introduction of this sort of philosophy will force many operators out of business, but it is naive to think that over-all transport costs would be reduced in the long term. The lowest road transport costs occur when maximum two-way loading is achieved and this, in its simplest form, is brought about by having the fewest number of vehicles doing the

available work,” said Mr Butler. If the politicians were sincere in their desire to reduce road transport costs then they should set about removing Government-imposed-taxes in the industry — road user charges fuel tax and duties on vehicles and parts, he said. “The combined effect of these taxes represent 29 .per cent of the operating costs of the average vehicle. Clearly a reduction in the tax take would be to the immediate benefit of the user,” said Mr Butler. Since the directors’ report was written there had been a marked slowing of the economy which inevitably was having an adverse effect on both the freighting and coachlines divisions. “In this

first quarter, our assets in both divisions have been underutilised and this, with the effect Of the price freeze, has reduced profitability,” he said. However, November was showing a higher level of activity which was probably sustainable for the next six months. It was not possible to predict accurately the extent to which the company would be affected by the recession but considerable effort was being made to hold costs and to increase market share, said Mr Butler. The TNL directors announced an unaudited net trading profit after tax of $636,090 for the three months ended September 30. This compares with $652,000 for the same period last year.