, Britain
A haulage firm in Kendal would have set its rates for the year some time in the spring of 1973. Cost per mile, cost per day, a figure for the regular customers and a figure for everybody else, all of it built on what it cost to put a lorry on the road that March.
By the middle of November the largest variable in that calculation had gone up by more than three times, and the rates had another season to run.
Nothing about the work had changed. The loads were there, the customers wanted them moved, and the lorries were sound. Every mile of it was now being run at a price agreed when the world was different.
The cost did not drift, it stepped
The oil embargo that followed the outbreak of war in the Middle East in October 1973 did not raise the oil price the way prices normally move. It stepped it, several times, over a matter of weeks. Crude roughly quadrupled over the crisis, and what reached a haulier's fuel bill more than trebled.
A cost that drifts can be managed. You watch it, you build a little headroom into the next quotation, and by the time it has moved ten per cent you have already moved with it. A cost that steps gives you none of that. The step lands in the middle of a contract year, and everything already committed is now committed at the old number.
The second half of the shock was physical rather than financial. Fuel was not just dear, it was uncertain. A state of emergency was declared in November. For a transport manager the question in December was not only what diesel cost but whether there would be any next week, and the answer to that governs whether you accept the load at all.
A lorry earns by the mile, and the miles got slower
On 8 December 1973 a national speed limit of fifty miles an hour came in, applying everywhere including motorways, to save fuel.
For most people that meant a longer journey. For a haulier it changed the arithmetic of the business, because a lorry does not earn by the hour. It earns by what it delivers, and how much it delivers in a day is set by how far it can get within a driver's legal working day. Take the top off the speed and you take miles off the day. Take miles off the day and the same wage, the same road tax, the same insurance and the same finance payment are spread over less revenue.
So the two things arrived together and pulled the same way. The cost of covering a mile went up sharply, and the number of miles a vehicle could cover went down. A firm running trunk work overnight, where the whole point was distance covered while the roads were empty, felt it worst.
Then the demand side moved as well. The industrial customers who generated the freight were heading into an electricity restriction of their own in January, and a factory working three days a week does not produce five days of goods to be shifted.
The rates were the problem, not the fuel
Here is the part that decides whether a haulage firm comes through a fuel shock, and it is not about fuel at all.
Suppose fuel is a quarter of what it costs to put a lorry and a driver on the road for a day. Treble that quarter and your cost for the day has gone up by half, without a single other thing changing. If your rate was built on a margin of a few per cent, which is normal in haulage, you are now losing money on every load you carry at the agreed price, and carrying more of them makes it worse rather than better.
There are only four things a haulier can do about that, and all of them cost something.
- Renegotiate the rate, which means opening a contract that the customer is perfectly happy with, and giving them a reason to test the market.
- Add a separate fuel surcharge, which is easier to justify because it is visibly tied to a published cost, and easier to remove later.
- Cut the miles that do not earn. Empty running was always waste; when fuel trebles, it is three times the waste it was, and the value of finding a backload goes up in exactly the same proportion.
- Park the vehicle. This is the one people forget is an option, and the one the numbers sometimes demand, because a lorry standing still costs you its fixed costs and nothing else, while a lorry running at a loss costs you those plus the loss.
Which of those you can reach for depends almost entirely on the shape of your customer list. A firm spread across thirty accounts can raise rates on the weakest ones and accept losing a couple. A firm where one customer is most of the revenue has no such room. Renegotiating with them is not a negotiation, it is a referendum on the business.
The shock did not reverse
The 1973 price never came back. That is the point most easily missed from a distance, because the queues and the coupons and the fifty limit were temporary and the cost base was not.
The speed limit was relaxed later. The emergency ended. The oil price stayed where it had gone, and everything downstream of it moved to match: tyres, lubricants, plastics, the vehicles themselves, and the insurance on all of it. A haulier who bridged the winter by absorbing the cost and waiting for normal was waiting for something that was not coming. The firms that came out the other side were the ones that repriced their whole book, accepted they would lose some of it, and were running on the new numbers by the spring.
Where this shows up in the game
Coupons for the Tank is a historical start at hard difficulty. You take over Lune Valley Transport, a haulage firm in Kendal, in November 1973, and run it for a year as a limited company. The objective is to trade profitably for six of those twelve months. Every month counts the same, so a strong December does not buy back a weak February, and there is no way to average your way out of a bad start.
The situation you are handed does most of the work. Fuel rises by a step in month one and does not come back down. Rates already agreed with customers are fixed for six months unless you renegotiate, and renegotiating puts the customer at risk. Miles per vehicle-day fall while the fifty limit is in force. On top of that, one customer is most of the revenue and has given notice, so the account you would most want to lean on is the one already walking out of the door. Fall short of six profitable months, or stop trading, and that is the run.
The seed is fixed at 600002, so every attempt meets the same winter, the same customers and the same fuel prices, which is what makes the scores worth comparing. It runs under ironman rules: one save, and what happens happens. You can read the start position, the objective and the rules on the Coupons for the Tank page.