Conditions of Coal Transport
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Our Costs Expert Explains How Charges Should be Calculated, so that Slack Periods may be Tided Over, and Examines the Different Circumstances of Town, Suburban and Rural Delivery
IN an article which appeared in •" The Commercial Motor" dated July, 21, .1950, I dealt with the problem of the small haulier•who charged too little for delivering industrial coal from 'station yard to local factories. In a particular case iti which I assumed a• one-mile lead, I suggested that li hrs. ought to be sufficient for one load. I was taken to task in a friendly way On this point by Mr. H. L. Warren, Of Coote and Warren, Ltd., St Ives, Hants, one of 'several leading 'coal merchants who have branches all over the country. The following is an extract from his letter: "1 should not dream of questioning your figures for standing.and running charges, although I think that the figures for establishment costs (3) and profit an are higher than are normally _ obtainable or justifiable. Where I disagree with your figures is in the number of loads per da3> wfiich 'the driver has to shovel out of railway
wagons into his lorry.
" In yotir article', you have assumed that 29 loads would be carried each week (44 hrs. divided tly lit hr. per load), which is 2.6 tons per day (51-day week), and I am sure that no driver will do this unless there is an incentive by way of a •bonus. If the driver falls short. of 26 tons per day by 3 tons, all the profit is gone and I doubt whether 23 tons per day can be averaged.
" It is a common practice to give drivers, say, Is. per ton over, again say, 18 tons per day. I do not think that the tonnage can be Obtained Without this, and immediately the weekly tonnage costs will go up. Indeed, I am not sure that a bonus of 2s. per ton over 18 tons per day would not be necessary, and if it were,.the charge per customer would be more like 3s. 6d. per ton.
"The calculation assumes that wagonssof coal will always be available every day and that demurrage does not fall, upon the haulier. It is usual for hauliers to have to carry demurrage in order to get them to clear wagons rapidly, and at 3s. per wagon per day (after one free day) the cost can be quite considerable, although impossible to work out,"
Work Not Cone
1 r. Warren and had n in ormative chat with him. In the course of the talk, he stressed some of the points already made in his letter. He was particularly anxious that I should appreciate that coal wagons are not always available for emptying, so that work is not continuous.
The allocation of coal to any particular factory may be 50 tons per week and wagons may come in five at a time and have to be cleared at once. The person responsible for clearing the. wagons must pay demurrage, as stated in the law, and provision should be made for it in the cost.
He agreed that it was possible for one lorry to move 20 tons per day, but it was not likely that a man would • shift that amount. There must be some inducement for him to do so. One way was to give a bonus on the quantity shifted, as mentioned. If it happened that there was a week without any coal at all in the station yard, this also made a big difference in assessing the cost of collection. Another factor to be considered is the variation in demand. Actually, 13 per cent. of the total annual delivery is made in each month December, January and February. That is to say, practically 40 per cent. of the coal must be delivered in 25 per cent. of the year. In London a scheme is in operation whereby the men who collect the coal are paid on a piece-work basis. It was a curious thing, said Mr. Warren, that a man will fill two 5-ton lorries, that is to say will load 10 tons, in a day but will not sometimes find himself able to fill three 3-tonners, that is to say 9 tons per day. A lot can turn on the type of vehicle used and it may be useful to include some pointers on this.
A36 St. Ives is the central depot for the transport needs of the several companies which make. up this large organization, , and spacious and well-appointed premises are available. . Bodies are built there for the vehicles and it is interesting to note that several special features have been embodied.
The floor of the lorry is sloped upwards from the middle towards each side so that it comes to the top of the side rails; this facilitates the handling of the sacks of coal. In the case of vehicles for country use, sides are fitted, but in town use only stanchions and chains are incorporated. The reason for the differentiation is that in the country coal is delivered both loose and in sacks. In town, sack deliveries are universal. Incidentally, where stanchions and chains are fitted, the stanchions are made comparatively weak so that they will not. harm the chassis if struck heavily.
The Owner-driver's Case There is just one point I would like to make in answer to Mr., Warren's criticisms before proceeding to deal with the costs of delivering household coal in detail. In the particular article which he so kindly criticized, I had • in mind the Case Of 'an Owner-driver who would find his incentive in 'the profit he would earn and might therefore he inclined' to. work harder than a driver employee. I do admit that in the case of the owner-driver the figure for establishment costs is somewhat high, but it is not so in the case of the. ordinary haulier having several vehicles and managing the. business., himself. A little consideration will suffice to proye that, point, If the owner of the business wishes _to .. Pay .himself a-reasonable salary as manager he will not he likely to regard £9 per week as excessive. If he has only three vehicles, that is £3., per week per vehicle for establishment charges—without any' of the other items that constitute that part of an operator's expenses.
As regards the disputed figure of £3 per week profit, that was calculated on the basis of 20 per cent, on costs. This has not 'befi itgas-e4ed as an excessive profit ratio.
In cleali‘tvisft, tht delivery of bagged coal to householders, the story oT'Osts is different indeed. In what follows, I am concerned with the general cost of transport of household Coal in the provinces. Deliveries can be divided into three classes: town, suburban and country. Throughout the country generally (as distinct from the Metrbpolitan area) these deliveries are effected within zones of 5, 12 and up to 30 miles radius. The average length of a lead in each case. is. 3, 9 and 23 miles. For town and suburban deliveries, vehicles. of 2-3 tons capacity are used, carrying as a rule 2 tons' in the town and 3 tons in the suburbs. For country -.deliveries, 5-tonnersare more frequently employed-and are usually loaded up to 6 tons. The 'average "drop" has been found to be about 4 cwt. In some parts of the country, where flats and dwellings are smaller, and where. the accommodation for the storage of coal is lower, 2-3 cwt. per drop is more likely to be•the figure.
In the calculations which follow, the vehicle" is assumed to travel at an average speed of 12 m.p.h. exclusive of stops and inclusive of Short runs between one delivery and the next. The time taken to load bags of coal into lorries is 15 mins. per.ton.
. Let me take first the deliveries within a 5-mile radius, that is to say the town deliveries. The fixed charges in connection with the operation of a 2-3-tonner with two men and reckoning wages for a -grade 1 area, will approximate to the
• following per annum:—tax, £30; wages, £600; garage rent, £20; insurance, £25; interest on capital outlay, £18; overheads,' £50; total, £743.
Spreading that total over 2,200 working hours per annum gives 6s, 9d. per hour. The time needed to complete a round journey of average length, that is a 3-mile lead, 6 miles in all, is 120 mins., made up of 30 mins. loading, 60 mint delivering and 30 mins. travelling.. The cost for that time is I3s. 6d., which is equivalent to 6s. 9d. per ton.
Provision miist be made in assessing these costs for the slack period of the year. Mr. Warren Says that 40 per tent. of the deliveries are made in three months, so that leaves 60 per cent. to be delivered during nine Months. A rough calculation shows that to compensatefor the slack time.
approximately two-thirds must be added the foregoing cost per ton, bearing in mind that the standing charges will remain throughout the summer. The men are not discharged and all other expenses continue to be incurred. Adding 661 per cent. to the figure of 6s, 9d. per, ton, 1 get us. 3d.
There still remain the running costs of the vehicle to he considered. Assuming that petrol is bought at an average price of 3s. per gallon and that the vehicle does 9 m.p.g., the petrol cost is 4d. per Mile. whilst oil is 0.1d.; tyres, 1.08c1:; maintenance, 1.02d.; and depreciation, 1.3d. The total is 70. per mile, which is 3s. 901. per 3-mile lead (6-mile run) and that is equivalent to Is. 101d. per ton, so that the total cost of transport for town deliveries is 13s. lid. per ton, which is nearly 8d. per bag.
Suburban Deliveries
To arrive at the cost of suburban deliveries I take the same figures for vehicle cost. 6s. 9d, per hour and 71d. per mile. The time for a round journey over a 9-mile lead (18 miles run), dimprises 45 mins. to load bags into the vehicle, 90 mins. to deliver, and 90 mins. for travelling. The total is 225 mins.-3:1 hrs. That is 25s. 4d.. for a 3-ton load, or 8s. 6d. to the nearest penny per ton. To this must be added 66g per cent. on account Of the slack period, giving 14s. 2d. per ton. Adding for running costs. 18 miles at 70., which is Its. 3d. or 3s. 9d. per ton; I get
a total of 17s. lid, per ton or approximately 102d. per bag.
Now for the country deliveries using 5-ton lorries carrying 6-ton loads. The fixed charges are: tax, E30; wages, £600; garage rent, £25; insurance, £30; interest, £24; overheads, £.71. Total, 080, Which is equivalent to 7s. Id. per hour. The time for one journey is 500 mins., comprising 90 mins for loading. 230 mins. for running. and 180 mins. for delivering 6 tons to householders. The time cost for the journey is thus 59s., approximately 10s. per ton. Adding 66g as before. we get a basic figure of 16s. 8d, per ton for time. • • • • • Running costs of the 5-tonner on this class of work will approximate to 10d. per mile, that being made up of petrol, 5d.; oil, 0.2d.; tyres, I.9d.; maintenance, I.4d.. and depreciation, I.5d. For the round journey of 46 macs that is 38s., or 6s. 5d. per ton, so that the total cost per ton is 23s. Id..
or approximately Is per bag.
Further Points
There are two' further pointswhich I must make before concluding. In the first case, the above figures do not include the cost of putting coal into the bags. That, under presentday conditions, is likely to approximate to 2s. 6d. per ton.
These figures are really devised to be of practical use to coal merthants or to 'those who have business with coal merchants and hauliers. The haulier doing work of this kind may add a reasonable amount for profit to arrive at his charges.
It is perhaps advisable to point oufthat the cost of transport as described and assessed above is not all the expenditure in which a coal merchant is involved. His expenses are of a threefold character. They comprise the cost of maintaining his depot and his services, the cost of loading into the vehicle and transporting and delivering the coal to the consumer and the cost of maintaining his sales organization and general office, In this article 1 have concerned myself with only . the second of these three factors. It is important that the reader should appreciate the existence of the other two lest he he misled into thinking that there are immense profits to be made from the sale of coal. If he were to imagine that the only expense over, and above the price at which he could buy the coal at the pithead was the cost of transport, as set out in this article, there would appear to be a wide .margin of profit. Any apparent margin should be discounted by provision for the 'other two important series
of expenses just mentioned. S.T.R.