Tough talk

As 2004 gathers pace the haulage industry is tightening its belt for yet another tough year. Irish Road Haulage Association president Eamonn Morrissey teased out the issues with John Loughran.

IRHA President Eamonn Morrissey

2003 was a tough year for the haulage industry. Many haulage companies went out of business as a result of external and internal factors. An unwillingness on behalf of consignors to negotiate realistic rate increases, increased competition within the haulage industry; high insurance premiums and spiralling fuel rates were just a few of the reasons why many hauliers chose to throw in the towel in 2003.

IRHA president Eamonn Morrissey believes that profitability is now the single biggest issue facing the average haulage company this year. "Profitability is without doubt the biggest issue facing hauliers all over the country. Our accountants tell us that many of the hauliers on their books would be better off getting out of the business."

He continued: "If these companies looked at haulage as a business and thought like business people, they would get out of haulage altogether, because they aren't making a profit."

In that vein Morrissey believes small operators are the worst affected. "While the bigger operators continue to show a certain level of profit, the small guy is working harder and harder just to stand still,” he affirmed.
So-called "phoenix companies" are also having a negative impact on the sector, according to Morrissey. "There are operators going to the wall and continuing in business. We are talking about guys running a number of companies at the same time. Invariably they allow one or two companies to close owing massive amounts of money, while continuing to trade with their other companies."

Profitability is now the biggest concern of the average haulier

He continued: "This practice is being facilitated by the Department of Transport, who are issuing licences to these companies and allowing trucks to be transferred from one licence to the next."

Increased foreign competition also had a serious negative impact on the haulage industry last year, according to Morrissey. "A lot of foreign operators coming into the market are now cutting the rates. These guys are coming into Ireland with a good rate and cutting rates to get a back load home. Irish hauliers are now finding it extremely hard to get a load out."

While the back loading concept is legal under Irish and EU law, the IRHA president feels foreign operators are not working within the spirit of the law. He elaborated: "They are destroying the market. These operators are willing to accept £1, 000 for a back load to the continent, while they are receiving between £2,500 and £3,000 for the load into Ireland. This issue needs to be addressed."

Distribution costs must be borne by industry

To that end the haulage associations of the existing 15 EU member states met in London at the end of January to discuss the impact of EU enlargement. Back loading was one of the issues on the agenda. "We met to discuss the enlargement of the EU, the forthcoming Working Time Directive, and the plethora of legislation coming out of Brussels. Back loading was also on the agenda," he commented.

In the December Budget Finance Minister Charlie McCreevy added five cent per litre in excise duty to the cost of diesel, much to the annoyance of the road transport sector. The IRHA contends this increase represents a further tax on distribution. Eamonn explained: "That equates to a 2.5 cent per mile increase for the average articulated lorry on the road. If hauliers started expressing the increase in those terms, some people might sit up and take notice."

He added: "Hauliers need to realise their costs, and go back to their customers. Increases need to be passed on to the customer. The days of absorbing increases are a thing of the past."

The appreciation of the euro against sterling and the US dollar is also an area of concern for the haulage industry. While the euro has risen sharply against the dollar in the last 12 to 18 months, there hasn't be a corresponding decrease in the cost of diesel at the pumps.

Morrissey fumed: "We have seen no benefit whatsoever as a result of the strength of the euro against the dollar. We were expecting great things with the advent of the euro, but it has brought very few benefits. Someone is creaming off excessive profits somewhere along the line in the case of fuel prices."

The National Roads Authority (NRA) recently suggested that an increase in fuel prices or the introduction of tolls on the existing roads network could be used to fund the roads programme going forward.

"We are pricing ourselves out of the work market. Look at all the jobs that have been moved to Eastern Europe, where costs are cheaper. We are on the periphery of Europe. If we continue along the path we are going, industry will re-locate to Eastern Europe and there will be no need for an Irish haulage industry."

He concluded: "The more tolls we have to pay the more it will cost to get the goods to market. Distribution costs have to be borne by industry so the more expensive it is to move goods from here to Europe the more jobs that will be lost."