Smalls Traffic Calls for 20 Per Cent. Profit
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"The Commercial Motor" Costs Expert Shows How Parcels Carriers Must Approach Their Charging Problems. Dealing With a Second Question.. He Discusses the Way in Which Hauls Over Varying Leads Can Be Fitted Into a Weekly Operational Programme
P -1 HE only way to deal with questions concerning smalls
it
'-traffic is to take a schedule of rates which are already current in a certain district. I treat such problems in a manner exactly opposite to that which I customarily employ Usually, I calculate cost and deduce from that what the charge should be. With smalls traffic, I state what the current charge is, tell the operator what his cost comes to and advise him that his business will succeed only if his revenue exceeds cost by a certain minimum. His earnings from the traffic must be at least equal to cost plus 20 per cent. If it does not, then he has either to give tip or go out for more custom.
There is another kind of problem almost as difficult, of which I have had an example recently. It relates to a contract for haulage which involves journeys of varied lengths starting from a central base and making deliveries to several points.
In this case, my inquirer tells me that he has been invited to quote for the conveyance of goods from a given centre to 20 different destinations. The distances from the base to the points of delivery vary from 11-40 miles.
The loads to each destination are sufficent to fill the 5-ton lorries which it is proposed to use, so that we are spared, the complication of having to calculate the effect of dropping portions here and there. Each journey is complete in itself --out with the load and back again for another. I am not told what the traffic is, but it must be something rather unusual for it is stated in the letter that it takes 21 hours to load and li hours to unload. The terminal time for every journey is thus 4 hours.
In many. cases, the distances to the various points of delivery are the same, so that the 20 may for our purpose be reduced to 14, as we are concerned only with distance and not actual destinations. In the accompanying table I have set down the total distances for each trip, the travelling time out and home and the total time necessary for each journey. Before going any farther, let •us study the figures in the table, chiefly concerning ourselves with the fourth column and considering this point: how many journeys per day can ' be run for each distanee?
04 It appears that journeys 1, 2, 3 and 4 arc to be completed twice in one day of IIhours. As regards the others there is obviously going to be some difficulty. Clearly, the practice of mixing long and short journeys to fill each day is not going to be easy. The time for the shortest journey is 41 hours, which leaves only 6:f hours, which means that we can manage to fit in only two journeys per day among the first eight examples.
We can make a day's work consist of one journey with No. 1 and another of any of Nos. 1 to 8, but once we get beyond No. 8, take ,No. 9 for example which takes 6!, hours, then it is not going to be possible to run more than one complete journey per day.
To show what I mean I am going to suppose that we start on the Monday morning with a series of journeys over routes 13 and 14, which take 7/ hours each. • 'Assume that on Monday morning the vehicle loads oP for its first journey over rouse 14. A time of 7; hours is involved in the first out-and-home trip. There 1S time to load up for the second journey, for that takes 2* bouts, so that in the first day the vehicle will have completed one journey on route 14, taking 71 hour:, and has reloaded for the second journey, taking 2* I oess, a total of 91 heiurs. for the Monday of that week.
Assume that on Tuesday We set out to complete the second journey, the Vehicle being...dready loaded. It takes 31hours to travel 80 miles out and home and 1i hours to unload, so that the total time involved to complete The second journey is 4/ hours, leaving .01 hours to complete the II hours of that day.
Now if it so happens that it is convenient to do one of the shorter journeys as well,that day can be filled and anything from 9*-11 hours will. be run, but if there be only the No. 14 load available. then 411 the haulier can do is to load up again on Tuesday bringing the total time up to 71 hours and wait for the next day before he sets out on journey No. 3. He is already loaded, as he was on the Tuesday morning, so that 41 hours is all that is necessary to complete the third journey,
Number
1 2 3 4 5 6 7 8 9 10 11 12
1.3
14
Wage Rates To complete 'hose sk journeys, the vehicle has worked .91 hours on Monday, 7/ each on Tuesday, Wednesday and Thursday and 41 hours on Friday, that is 36/ hours of actual work. the driver, however, will have to be paid for the / hour of overtime on Monday and for his full 44-hour
week in addition. , The operator's charges would comprise one week of 44 hours at 8s, 2d. per hour, pp.ii six tithes 80 miles, that is 480 miles at lOds • The total is £38. For that 138 he has conveyed 30 tons, so that his Charge must be approximately £1 5s. 6d per ton over the longest route.
So far as the shortest route is concerned, two journeys are completed per day, the time taken being 9* hours and for that the charge is 9* hours at 8s. 2d., which is 13 17s. 7d., plus 44 miles at I0d., which is £1 •16s. 8d. The total is £5 14s. 3d., and as 10. tons have beep carried for that the rate per ton is its. 6d.
. Similar Assessment 1 have pointed out that it is practicable to make up a full day's work out of any two, routes from 1-8 inclusive. There is no loss of time and the operator's charges can be calculated for every one of those eight routes in.the same way BS I have assessed the charge for No. 1 journey..
For the others, however, that is to say for journeys over routes 9-14, it is not practicable to work in any of the shorter journeys and complete two in one day. They will all have to be worked out on the same basis as No. 14, that is to say, it will be practicable to work in one extra load per week, thus running six journeys per five days.
The vehicle itself w'll not be at work more than 30-36 hours in any one week confined to those journeys. The operator, however, must nevertheless charge for the full 44-hour week.
To assess the rates for the destinations involved in route Nos. 9-14 we can take the figure for the time charge from that already calculated in respect of No 14, that is £18 per week for time. To the time charge of £3 must be added the charge for distance of 10d. per mile in each case, so that for No. 9 we shall charge 56 times 10d., which is £2 6s. 8d., making the charge for the journey over route 9 £5 6s. 8t1.. which is £1 Is. 4d. per ton • Over route 10, the charge for time is still £3: the charge for mileage is 58 miles at 10d., which is 12 8s. 4d., making
a total of £5 8s. 4d., or £1 Is. 10d. per ton, and so on. 1 have worked out the figures for all 14 routes and they appear, in the fifth column of Table I.
Another way to compile the rates of this contract is to proceed as follows. The lowest rate quoted is that for No. 1 journey covering 22 miles, Its, 6d. The highest rate, of course, is that for route 14, where 80 miles are covered for a charge of £1-4s. 8d. Deducting its. 6d. from £1 4s. 8d. leaves 13s. 2d. Deducting 22 miles from 80 miles leaves 58, and 58 divided into 13s,-2d. gives me 2.8d. By increasing the charge over the lowest. one of its. 6d. for 22 miles by 3d. per mile we get an evenly spaced schedule of charges as shown in the second table.
This method of evening out the increase in charges has advantages. First, it is likely to appeal to the customer as a logical method of charging at the rate of Its. 6d. for 22 miles and '3d. increase per mile thereafter. It is of value to the operator as it gives him a little more for the longer journeys, £1 6s. 6d. for No. 14 instead of £1 4s. 8d. Finally, it makes it easy in the case of an additional route being arranged, to assess the rate at once' without making complicated calculations.
I opened this 'article with a reference to parcels carrying because I had a special inquiry with which I, now propose to deal. This inquiry came from a man who proposes to put a 30-cwt. van into commission in his town to act as a delivery vehicle for a number of local traders. He 'writes saying that he has been asked to run a daily service from Tuesday to Saturday (the traders say there is not enough work to justify a run on the Monday), and naturally wants to know what he should charge.
I ,gather that the radius of operation will be about 7-8 miles. The service is admittedly an irregular one, in at least it is likely to be so at first, probably settling down to a regular routine as experience is gathered. The weekly mileage is not staled, but in view of the radius of 7-8 mites. it is likely to be from 300 to 350 per week (five days at 60-70 miles per day).
19 0 1 0 0 1 1 0 1 4 0 1 4 6 1 6 0 1 6 6
Depreciation Basis
The first thing to do is to look into the question of cost. A 30-ewt, van at to-day's prices vill cost about £800. ii will have 32 by 6 tyres costing £60, and if I deduct that 160, and £80 for residual value, from the original £800, I get £660 as the amount on which I must calculate depreciation.
Taking half of depreciation on a tirne.basis and allowing five years, 1 get £66 per annum, or 11: 6.s: 10d per week. On the mileage basis I have 1330 divided:by 96,000, which gives me 0.82d. per mile.
The running costs per mile will'approximate to the following: petrol, 2.25d.; lubricants, 0.11d.; tyres. 090d.; maintenance (e), 0.60d.; depreciation (half), 0.82d. Total, 4.68d. For, 300 milesper week that is £5 17s.• and for 350 miles per week £6 16s. 4d.
Standing Charges
The standing charges per week will be: licence, 10s.;
wages, including provision for insurance and holidays with pay, £6 6s.: garage rent, is. 6d.; insurance, I5s.; depreciation (half), £1 6s. 10d.; maintenance (d), 10s.; interest, 10s.: overheads, £1 10s, Total £11. 15s. 4d. Add for 300 miles £5 17s. and the total cost is seen to be 117 12s. 4d, If 1 take the figure of 350 miles and add £6 16s. 4d., 1 get a total of £18 1 Is. 4d.
The cost to the operator, therefore, will probably vary between those two and the average is approximately 118 per week. This job will not be worth doing unless it shows at least £5 per week net profit, so he must obtain from the several traders to whom this service is to be rendered not less than €23 per week.
I have advised him that he should charge each trader the same amount and if there are six Of them he might well make the charge £4 per week. I will go farther into this question in a subsequent article.