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The New Zealand Railways Magazine, Volume 5, Issue 6 (October 1, 1930)

Preventing Exploitation of the Railway Tariff

Preventing Exploitation of the Railway Tariff.

Owing to the serious inroads our competitors were making in the transport of the higher rated commodities, it was decided to introduce a system of uniform rating in those localities where it was found that traders were using rail transport for the low-freight goods, and road transport for the higher-rated traffic.

This is a matter of considerable importance and I wish therefore to take this opportunity of fully stating our position in regard thereto.

It is becoming increasingly evident that certain persons and companies are prepared to exploit the railway tariff in their own interests in the direction of sending all their low-rated goods by rail while sending their higher-rated goods by competitive services. Inasmuch as it is the high-rated goods that enables us to maintain the low rates on the lowr-rated goods, any defection of the high-rated traffic lessens our capacity to maintain the low rates. We have already arrived at the stage where it is necessary that we should increase the low rates in order to make up for our loss on account of the higher-rated traffic and, so to restore, in some measure at least, the financial status quo so far as revenue is concerned. Any general increase in the low rates founded on the fact that we are losing revenue through the higher class of traffic being taken away from us must involve a certain amount of inequity to the extent that those persons who remain loyal to the railway, giving us their high-rated traffic as well as their low-rated traffic, are involved in the increase on the low-rated traffic. We have therefore endeavoured, as far as possible, to devise means whereby we might protect these people, and prevent the exploitation of our tariff by those who wish to take away their high-rated goods and leave their low-rated goods with us. We had a rather outstanding case of a company which trades in general merchandise and farmers’ supplies of all kinds, including fertilisers. This company entered into an arrangement with a road-carrying organisation that is in very strong competition with us. Under this arrangement, in consideration of the carrying company agreeing to purchase goods for the purpose of the road-carrying business from the merchandising company referred to, the latter company agreed to give the carrying company its high-rated traffic. The merchandising company, however, left their low-rated traffic with us. We could not possibly see that such a position was in any way equitable. We did our best to persuade the company to see the unfairness of the position, but we were unsuccessful. The company took the stand that we had to meet competition.