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Fluctuating Traffics

16th February 1951
Page 54
Page 57
Page 54, 16th February 1951 — Fluctuating Traffics
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Which of the following most accurately describes the problem?

IN my previous article, I dealt with the minimum-daily charge method of rates assessment with particular reference to allowing for fluctuations in traffic.The subject of variations in the volume of traffic cropped up again when l attended a recent sub-area committee meeting of the Road Haulage Association.

I always find These meetings most interesting and never come away without having learned something of value. Indeed, if I were directly engaged in the haulage industry. I should do my best to be elected to the local committee and should attend them regularly for the sake of the information I should gather. Actually, at an annual general meeting of one sub-area, one member pointedly asked to be elected to the committee and it was revealing to note that he had no difficulty in being appointed.

These meetings would be useful if they did no more than promote a spirit of fellowship, encourage operators to discuss their problems openly, find out each others' points of view and achieve agreement on controversial matters. At one meeting the chief item brought forward for discussion was the revocation of permits. • Whilst some talk ,proceeded upon whether operators should sell out to the Road Haulage Executive or keep going, the main discussion took place upon the policy to be followed when competition within the 25-mile radius became more intense. •

Naturally, the question of rates and schedules of charges followed, and in respect of policy about increasing charges to customers a most sound suggestion was made. It was put forward that notice of any increase should take the form of an official letter to the R.H.A., so worded that each member could circulate copies to his customers. making it clear that the intention to raise rates was not personal but some thing Which all hauliers had agreed to do.

It was also pointed out that in such traffics as sand and ballast haulage and agricultural transport, fluctuations were seasonal, whereas in other instances the ebb and flow of activity followed that of the industries served. In the last-named, variations were neither seasonal nor regular and were therefore much more _difficult to guard against.

Haulage rates. are usually assessed on a scale which provides for a minimum profit from the conveyance of goods, On the assumption that the vehicle is regularly engaged throughout the year. The profit margin is small and leaves nothing for emergencies: the haulier is unable to build up 'reserves to tide him over slack periods. In consequence, when he meets idle times he is prepared to accept work at Whatever rate be offered, inevitably an uneconomic rate which also spoils things for fellow hauliers and immediately :becomes the standard charge for the transport of that particular commodity.

In all Instances in which traffic is liable to fluctuate, the stabilized rates should be sufficient to yield a net profit at the end of the year If such rates be charged while traffic is flowing, enough money will be earned to carry a haulier through slack periods and enable him to decline traffic at rates known to be less than what is correct.

I will illustrate this principle with an example, but before doing so I should remind readers that rates quoted in "The Commercial Motor" Tables of Operating Costs are given on the assumption that vehicles are fully employed through out the year Taking a 6-ton oiler fully engaged for 40 weeks in a year and running 600 miles per week, we will say that it earns Is. 3d. per mile, so that the weekly revenue is £37 10s. The operating cost is 11d, per mile, equivalent to £27 10s. a week; overheads total £3 10s. a week, so that the net profit is £6 10s. a week. During the 40 weeks, the profit is £260. This is not exorbitant and part of it in many instances will be paid off in hire-purchase instalments.

At the end of the 40 weeks comes a lull. The instalments and other overheads still have to be paid, but assuming that a little traffic involving 200 miles a week is obtained at a cut rate of Is. a mile, about 7d, would be lost for every mile run. This equals a loss of £5 16s. 8d., which, plus overhead charges, comes to a total weekly An Interesting non-standard Commer In use in New Zealand as a refrigerated meat deficit of £9 6s. 8d. During that carrier. The chassis was lengthened and a trailing axle with brakes fitted. Each 10-week slack period, therefore, day, the van runs 130 miles, starting from sea level and crossing a 2,000-ft. mountain in the busy period, the net annual profit equals £166 I3s. 4d. —a meagre return for the operation of a 6-tonner over 26,000 miles.

The proper way to calculate the :ates is to take the mileage covered in the busy period and call it the annual total, disregarding mileage run in the slack period. Six hundred miles per week for 40 weeks is 24,000, and we take this figure as an annual total, which gives an average of 480 miles per week—the mileage upon which rates should be calculated. This means that earnings should be Is. 4id. per mile. The extra profit, compared with the rate previously charged, would thus be 24,000 times lid., or £150, and this sum would tide the haulier over the 10-week slack period.

Another subject mentioned at the meeting was sugar-beet haulage. It was said that, in general, rates schedules were adhered to in this work. During the discussion, one haulier said that when he carried for a farmer who built up a big heap of sugar-beet, which would provide the opportunity to use a maximum-capacity vehicle, he customarily gave the farmer a nominal rebate off the standard rates.

It is of interest to check the potential profit of a vehicle of this kind on sugar-beet haulage. The standard rate for a 15-mile lead is 10s. 3d. Assume that the haulier cut his rate by 3d. In a week he would probably take 140 tons over the lead and his revenue would be £70 for a mileage of about 360. The operating cost would be approximately 2s. 6d. per mile, a total of £45. Adding £8 for the wages of a .mate and £8 for overheads, we get a figure of 1..61 for the haulier's outgoings.

The net profit is £9 a week, and although that is not a great deal it is reasonable, but only if there be sufficient work in slack periac's to keep that vehicle engaged regularly. Off-season work for lorries usually engaged on sugar-beet haulage is mostly the carriage of bricks and road-making materials. At the present time there is a demand in these traffics and it seems reasonable that the cut rate described would be sufficient. S.T.R.

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Organisations: Road Haulage Association

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