• Lean Times Ahead for Many Rural Hauliers
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Solving the Problems of the Carrier
The Position of Many Hauliers, Especially Those in Rural Areas, is Rapidly Deteriorating and considerable Increase in Haulage Rates for Local Traffic Will Be Necessary in the Wear Future
ASERIOUS situation is arising from the rapidly growing tendency to curtail the radius of action of those .hauliers who have been accustomed to carrying produce—fruit, vegetables and the like—from rural areas to the central markets. Every month, or so it seems, new regulations are made by the Ministry of War Transport forbidding the transit of such commodities by road. Wherever it is at all possible. they must be sent by rail.
The difficulty which many hauliers, subject to these conditions, must face, is that they have, in the course of establishing their businesses, involved themselves in commitments by way of current expenditure and establishment costs which cannot easily be diminished, certninly not in proportion to the cut in their traffic.
How serious the situation is was brought hone to me recently in considering the figures of a haulier of this class. Until recently he had full employment for his six 5-ton vehicles in conveying produce and other commodities such as those named above, over a route approximately 60 miles long, to a large central market. His economic position is indicated with sufficient accuracy by the following details of expenditure.
Each of his six vehicles made six journeys per week to the market carrying a full 5-ton load on each journey. Each vehicle, therefore, ran 720 miles per week and the total fleet mileage was 4,320 during that period.
The average petrol consumption was equivalent to 12 m.p.g., and as he was paying 2s. per gallon his fuel cost per mile was 2d. His lubricating oil averaged 0.1d. per mile; and his tyres averaged 24,000 miles to the set, which cost 260; his tyre cost was, therefore, 0.6d. per mile. His aVerage figures for the repairs side of maintenance, over a number of years and relating to good as well as to bad vehicles, worked out at something under Id. per mile but, with reCent increases in the cost of spares and rubber, cannot now be less than 1.1d. per mile.
The routine maintenance, greasing, washing, cleaning and so on, does not appear as a separate item of cost since this work is carried out by the drivers. Depreciation be has always reckoned on a time basis, so that it does not appear in the schedule of running costs: reference will be made later to this item. His running costs per mile on the foregoing basis are thus 3.8d. and the total, for the mileage dif 4,320 per week, is 268 8s.
His six drivers averaged 56 hours per working week, and as they invariably worked into a Grade I area when making deliveries they were paid on the basis of the Grade I schedule under the Road Haulage Wages Act. To-day the total, including provision for the usual insurances, etc.; is approximately 231 per week. Other items of the standing charges as appliedto these six vehicles are, per week, licences, 24; rent and rates (in a country village), 11; insurance, 24; interest on capital outlay. on the vehicles, 22 10s.; depreciation, 212.
There are still establishment charges to be considered and these I went into in some detail wilth this result:— These establishment expenses are equivalent, in round figures, to l4 per week and the total expenditure, including running costs, standing charges and establishment. expenses, artiounts to 2136 18s. per week. Now, the average rate for his outward traffic to the mullets was 12s. per ton and as he carried 180 tons per
week his revenue therefroin totalled £108. His vehicles sometimes obtained return loads, but not every time because the loading capacity was sometimes occupied by return empties. However, his average return-load traffic was rather more than 50 per cent, at a rate which varied considerably but which worked .out, an an all-the-yearround basis, at 10s. per ton. His revenue from that side of his activities totalled £50 per week. His weekly revenue, therefore, was £158, showing a net profit of £21 2s. per week, which is approximately 16 per cent, on his expenditure. That is low, but not unreasonable in all the circumstances.
It is of interest to note that his costs per mile, all in, total 7.6d. and his revenue is approximately 8.8d. per mile. The figures from "The Commercial Motor" Tables of Operating Costs, relating to a 5-tonner covering 800 miles per week are 7.62d. per mile running costs and 10d. per mile standing charges. On the basis of operating costs, therefore, this haulier's figures approximate closely to what can reasonably be expected.
On the other hand, his rates are low; that, however,•is to some degree accounted for by the fact that he is operating from a country district and his establishment costs are low. They total £14 per week for a pay-load tonnage of 30, that is only 9s. 4d. per ton of pay-load, whereas the normal expectation is from 12a. 6d. to 15s. per ton and even more in the case of certain traffics which are expensive with regard to the costs involved.
As the result of one of those Ministry of War Transport orders mentioned above, the whole of the operator's traffic to the central market has ceased. A regulation forbids the .conveyance by road of any of his customary traffics to that market, or to any other at approximately the same distande. Actually, the market gardeners and farmers in the area prefer to continue to send their goods to that same market; they would also much prefer to send them by road, but are not permitted to do so.
Unsuitability of Vehicles for Unfamiliar Traffics
All that my haulier friend can do for them is to take the stuff to the nearest railway station, a matter of three to Jive miles, depending on the location of the farm or market garden. Occasionally, he is able to bring a load back to the farm from the station, but such return loads are corn. • paratively infrequent. He has been endeavouring to make good the shortage of traffic by carting sand and gravel, coal, coke and similar commodities, for none of which his vehicles are particularly-suitable and he has, in fact, bad to improvise to make the vehicles capable of dealing, although comparatively uneconomically, with these new and, to him, strange traffics.
It should be noted that all of this is short-distance work. Moreovei, this immediate difficulty arose. Others besides himself have met with thesame fate, so that there is fairly keen competition in the area for the -alternative traffic which is available.
The upshot is that, for t'he present, he is endeavouring to keep his six vehicles in use, partly no doubt with the idea that he may, within a reasonable space of time, be able to find additional traffic which will make it possible' for him to keep the machines reasOnably fully employed. Then, again, he is reluctant to dispense with the services of any of his six drivers. .
His weekly mileage per vehicle. ia now but one-third of what it was and the total, in fact, for the aix machines, is only 1,440 per week, as against 4,320. His running costs have increased. His average petrol consumption is now nearly 10 m.p.g. instead of the previous 12 m.p.g., that being *cause so much of the work comprises short hauls. His tyres are costing him more, because he is in and out. of gravel pits and coal yards. For the same reason his rnaintenince costs show signs of increasing. In 'fact, at a Moderate estimate,-bis running costs per mile for the above items and including expenditure on lubricants, are now 4.4d., instead of 3.8d. His total expenditure per week on that account for 1.440 miles is £26 8s.
His big difficulty, of Course, arises in connection with standing charges and establishment expenses. Of these, none has diminished except the item wages. His six men
s 'are now doing only 48 hours per week, instead of 56, so that his wages bill is down.
It is true that, amongst the establishment charges, -there is now nothing to be debited for weighbridges and parking. On the -Other hand, he. has had to spend s little more in travelling expenses and in advertising in his search for new traffics, so, in effect, the total stands as before, at £14 per week, His total weekly expenditure is thus £90 10s.
Ills revenue is obtained from approximately 720 Miles in the conveyance of the traffics mentioned aboveat a rate of 5s: per ton, which is Is. per mile run and brings a revenue of £36 per week. For about half the balance of the 1,440 miles 116is carrying return loads at the same rate, namely 5s. per ton and his revenue from that is a further 218 per week. As things stand at present, therefore, he has a revenue of £54 per week to set against a total expenditure of £90 10s. per week, which looks anything but good to me.
How is this operator to meet the position? Must he make energetic efforts to find new traffic in which, of course, he is handicapped by the fact that there are nearly a dozen other operators in. the district in a similar condition? Secondly, it must not be forgotten that.his vehicles, plant and drivers are all adapted to or experienced in this produce traffic only. Thirdly, he must remember that restrictions on road transport are increasing and not Should he go fnr new traffic or endeavour to cut expenses to meet prevailing conditions? •
Returning to Conditions that Existed Some Years Ago
How difficult the latter conrse_will be may be appreciated if, for the sake of argument, it be assumed that he takes the drastic step of returning to those conditions under which he was accustomed to work some years ago, before his business was established on a sound economic basis. If he does that he will have to dispense with the services of three ofhis drivers, put two of his vehicles on the stocks, sack his clerk, and do without the payment to himself of either salary as director or wages as a driver, although he must drive the fourth vehicle himself! He must persuade his wife to return to her old job of looking after his books and telephone and must effect such other economies as are possible.
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Presumably, he will still continue to run the 1,440 miles per week at a running cost of 4.4d. per mile,The first item of his expenditure will thus remain unaffected at £26 8s. The amount spent on Road Fund licences will diminish from £4 to £2 10s.. His garage rent cannot be altered, because he must still have room for six vehicles, although he is using only four of them; thin it stays at, £1 per week. His insurance will presumably drop to £3 per week. . The interest on capital outlay will remain unaffected at £2 10s., as will depreciation at £12.
Turning to establishmeht costs, his office rent and rates will remain at £26. He may be able to effect some slight economy in lighting and heating, bringing it down from £10 to £7, and to reduce telephone costs from £12.10s. to £6 10s. -His audit fee may come down to £22s.
Let us assume that he escapes law costs, that he spends nothing on travelling expenses, nothing on clerical wages, and pays himself no salary as director. The item depreciation of garage equipment and plant remains at £2. He reduces his subscriptions to associations to £10. His bank charges, at £2 10s., are less by 10s. He has no weighbridge and parking fees to pay, but his printing and stationery remain as before, as does the item general insurance of buildings, etc.
His building repairs are at minimum at £10 and there is no way in which he can diminish the item of £200 for interest on the capital invested in the business. His postages will rethain at £10. His A and H licence fees are reduced from £9 to £6 and we can assume that he decides to cut out all advertising. In this way, his total annual expenditure on establishments is reduced to £292; approximately' £6 per week as against £14.
If these items be totalled, it will • be found that the weekly expenditure is £69 8s., as against a -revenue of £54, so that he is still losing £15 8s. per week. • Clearly, if this state of affairs becomes general there will have to be a considerable alteration, in an upward direction, of the rates for short to medium-distance haulage. From the look of thefigures just set out it is obvious that
the increase must be near 100 per cent. S.T.R.