Northland Viewpoint On Vital Problem

Northern Advocate, 10 May 1939, Page 7

Northland Viewpoint On Vital Problem

General Manager of N.Z.R. Defends Rail Truck System

TN ANSWER TO ALLEGATIONS OF UNFAIR COMPETITION BY THE RAILWAYS, PARTICULARLY IN REGARD TO THE TRUCK SYSTEM IN NORTHLAND, MR. G. 11. MACKLEY, GENERAL MANAGER OF THE NEW ZEALAND RAILWAYS, WROTE AS FOLLOWS TO THE EDITOR OF THE “NORTHERN ADVOCATE”— My attention has been drawn to an editorial article in your issue of the 25th March, based on a statement made by the chairman of the Whangarei Harbour Board at a conference of Northland harbour authorities on that date, when the subject of transport competition in the Northland Peninsula between the Railway Department’s services and those of shipping companies was ‘ discussed. As the information upon which your article is based does not state the position with sufficient accuracy for a correct judgment to be made, I am giving the following particulars for the purpose of making the matter clear in the. public mind. In order that the position should be fully understood, it is necessary to refer to the‘conditions which obtained in the Northland area prior to the provision of through railway access. At that time, inland access from the ports was quite inadequate for the full development of the districts, the roads being few and of a poor standard. This condition accounted for the insistent demand by the settlers for through railway communication with Auckland, and it was in recognition of the benefits which would accrue to the Northland area from rail access that from 1889 onwards the construction of a through line was proceeded with. The total cost of railway construction from Helensville northwards was approximately £4,500,000. Railways Assist Development As indicative of the trend of development in the area prior and subsequent to the provision of railway access, the following particulars relating to population, dairy production and livestock holdings are of interest: Population (Ctamatea and all counties north thereof) in 1919-20: 35,640; in 1936-37: 62,725. Dairy produce (export figures—factories Wellsford and north thereof): 2043 tons in 1919-20; 19,004 tons in 1936-37. Livestock holdings (Otaniatea and all counties north thereof): Horses and cattle: 283,000 in 1919-20 and 428,000 in 1936-37. Sheep; 478,000 in 1919-20 and 653,000 in 1936-37. J Pigs: 14,000 in 1919-20 and 76,000 in 1936-37. It is generally recognised that rail communication to an area primarily engaged in dairying and pastoral pursuits affords numerous advantages over a coastal shipping service. In the case of the railway, the main line, with its well-spaced intermediate stations, traverses and serves the heart of the country, and the branch lines radiating from it further extend its sphere of usefulness. On the other hand, the service which can be rendered by sea transport is limited by the relatively long distance between ports, all of which are situated only on the outskirts of the territory to be served.

Greater Regularity

Again, the equipment and facilities of the railway are specially designed to cater for all the varying classes of goods and livestock, and the fast and regular services which are maintained at normal periods can be augmented as.-required to meet seasonal and other exceptional transport demands. But shipping services, which are normally less regular and less frequent than train services, are susceptible to dislocation by weather, tides and harbour conditions. It is beyond dispute that the railway has been the vital factor in the big developments that have taken place in the Northland area in recent years. Its service was essential in facilitating the widespread distribution of the commodities so essential to land production, e.g., manures, lime and coal, and also in the transport of the land products themselves. Must Pay For Facilities As I have shown, railway communication to the Northland area was established to meet a public demand for improved means of transport, and the provision of these railways involved the investment of a large sum of public moneys. The facilities having been provided, it became the responsibility of the railways to secure loading for the regular services which they were required to maintain. In this connection it is necessary to bear in mind that the cost of maintaining a railway in safe working condition is heavy, whatever the volume of traffic it carries. In New Zealand, at the present time, maintenance and interest charges absorb more than SO per cent, of the total gross railway revenue. Having oriefly stated the history of railway and production development in the Northland Peninsula and the reason why it is necessary for the department and the public also to see that the best use is made of the service provided, I now come to the question of railway rates. One general principle underlying the railway rating system in all countries is.that low grade traffic is transported at a low freight rate, whilst the higher grade commodities are required to bear a relatively higher rate This system aids the freest movement of all classes of goods, as the rates are fixed with due regard to the ability of the commodities to bear the transport ; costs imposed. It is obvious that the successful functioning this method is dependent on the ratio of high grade to low grade traffic being maintained at a level ■ which will ensure that the average return from both classes of traffic will be sufficient to meet all costs —i.e., fixed charges and operating costs. More Equitable Balance Needed In the Northland area the fact that three forms of transport—rail, sea and latterly road—now serve the territory, created the position that through the incidence of its general rating system the railway, although handling the bulk of the low-rated traffic, was securing only a negligible proportion of the higher grade traffic. In effect, although the railway was still conveying the bulk of the low rated traffic, competition deprived it of the higher-grade traffic which had developed largely as a result of the community service rendered by the railway. By 1933 the position thus created had developed to a stage where i corrective action was necessary to bring about a more equitable balance as • between the two classes of railborne goods, and thereby secure an increased revenue in order to spread the fixed costs as equitably as possible over each unit of traffic. The position was governed almost entirely by the cost factor, and the desired result could be achieved only by adjusting the system of rating in such a manner as to encourage the use of the railway for full truck loads of general goods from Auckland to Whangarei and northwards whilst, at the same time, retaining the standard rates for the low grade traffics and for general goods other than in truck lots. It was for this reason that the truck rate system was applied to general merchandise traffic from Auckland to the Northland area. Rates Not Uneconomic Figures relating to standard rail rates and the truck rates as given by the chairman of the Whangarei Harbour Board are quoted in your editorial. The truck rate figure from Auckland to Whangarei is stated to be 12/10 per ton. It is not known on what basis this figure is arrived at, but it is certainly incorrect. Actually, the revenue return to the Department is considerably higher than the figure mentioned. Unfortunately, misled by this erroneous information, you have expressed the view that the rail rates have been reduced to a presumably uneconomic level. As regards this aspect, I may say the revenue return per waggon mile for goods conveyed under the truck system exceeds the average return obtained over the whole field of railborne traffic. This position is due largely to the good waggon loading secured. The conditions of carriage under the truck rate system are such as to reduce the department’s labour and accounting costs below those incurred in dealing with similar traffic under standard conditions. When due regard Is given to this factor and the other aspects previously mentioned, the suggestion that the rates are uneconomic cannot be sustained.

The practice of fixing special rates to meet competitive conditions is recognised and applied by railways in all parts of the world and is thus not peculiar to New Zealand. Conflict Between Services With the extension of the railway system to areas formerly served exclusively by coastal shipping, it was inevitable that the two forms of transport would to an extent come into conflict, but, having regard to the developmental value of the railways to the territories served, it would be quite unfair to the general public for the department to restrict its transport operations nut of consideration for the financial welfare of competitive private commercial undertakings.

On the general question of the right of the railway to fix special rates for the purpose of securing such loading for its services as will minimise losses of public money invested in the system, the following extract from a recent article by an authortiy in harbour matters is of interest: “Of recent years, a further argument for the inclusion of harbours in an economic survey of the transport facilities of the Dominion has arisen in the competition of the Railway Department to secure as great a share as possible of the available goods traffic from one part of the country to another. “It has been ’claimed by those most vitally affected that the rates quoted under certain special conditions -to and from points within various harbour districts are unremunerative to the railways and at the same time are diver ling a considerable amount o." coastal traffic whose natural avenue should be through the ports, and upon the continuance of which the welfare of the ports and their ability to meet their loan commitments depend. Differential Freight Rating Has Stood Test “I do net propose to discuss the merits or otherwise of these claims. The railways must organise their business to give the greatest possible service to the public in order that the system as a whole may pay its way, or go as near to doing so as possible; and the principle of differential freight rating has been accepted and stood the tost of time in other countries as well as in New Zealand."

I feel sure that if the‘position is viewed impartially, and due weight is given to the, importance of the railway as a factor in the past and future development of the Northland Peninsula, producers, shippers and the general public will agree that the Railway Department is doing its best to maintain a full and efficient service, and that the course it is pursuing is in the general interest of the whole community.