Solving the Problems the Carrier
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Quoting Charges for Councils
Further Advice for Hauliers Seeking Work from Municipalities is Given in this Article, which also Illustrates Difficulties in Applying an Agreed ,Rates Schedule Because of the Failure • of Some Persons to Adhere to it ,
AREADER, the owner of two vehicles. a 5-tonner and a 2-tanner, has quoted to me some experiences of his which confirm the story I included in my article which appeared in the February 13 issue of The Commercial Motor. In that story I described what might go on after an agreement among local hauliers has been reached upon fair rates for municipal haulage.
My correspondent is located in a rural area where tenders have been put in recently for work for a rural district council and a county council. During the previous year, operators have been hiring their 2-tonners for 7s. 6d. per hour. Being quite ssre in his own mind that the rate was not good enough and not likely to return any profit, he persuaded a friend to act with him in calling a meeting of local operators with a view to coming to agreement on rates. He hoped in this way to get agreement on a rate of at least 9s. 6d. per hour. To his delight, agreement was reached: all of the operators present were of the opinion that they would quote that amount-9s. 6d. per hour for mileages up to 5 per hour, and SA. per mile for excess mileage. "Now," continued his letter, "see what happened. Two of us, both Road Haulage Association members, had our quotation of 9s. 6d. per hour turned down. Another haulier, a new member, had his quotation of 9s. 6d. turned down. Another operator quoted 7s. 6a-obviously a ridiculous charge at today's figures for costs. Another quoted 8s. and was accepted. A member who was accepted at 9s. 6d., 'now finds that he will he expected to stand down when, at some not far-distant date, the man who quoted 8s. per hour obtains another vehicle which is on order."
After that experience, my friend is determined not to enter into agreement with anyone again, but to make sure that his rates are at least remunerative and to refuse to cut them.
Time and Mileage Rates
gathered that he used the 5-tonner for general haulage -mostly agricultural-and the 2-tonner for daily hire to local councils, although there was no strict limitation in respect of either machine. He asked me to assist him in the calculation of the cost of operating both vehicles, and said that he would like the information to include data for time and mileage charges as well as tonnage rates.
In his letter he related an experience in connection with a job which demonstrated to him that in quoting it is just as well to try both methods of calculating, the time and mileage method and the tonnage method. The quotation was in respect of a 20-mile haul. He started work on the job at the rate of 2s. 3d. per mile run, so that his rate for the round journey was 40 times 2s. 3d. which is £4 10s., equivalent to 18s. per ton.
On another occasion, he tried to work out a time and mileage rate, culling the essential data from the article to which I have already referred. The figures in that article were 9s. 8d. per hour, that rate including provision for 5 miles of running. Excess mileage was to be paid for at the rate of 8-id. per mile. The journey takes 4 hr. so that the charge should be for 4 hr at 9s. 8d. per hour, which is £1 18s. 8d. There is an excess of 5 m.p.h. to be included and that adds 20 times 80. which is 14s. 2d.
The total charge, according to this method of reckoning, is £2 12s. 10d. or 10s. 6d. per ton, approximately. Needless to say, he dropped the idea of applying the time and mile RIO age method to this job. How he arrived at the convenient and profitable rate of 2s, 3d. per mile run he does not say, and I can find nothing to justify it, which is not to say that I am not in agreement with him in taking the money. 1 do gather, however, that the work he does with his two vehicles is not all paid for on the same lavish scale, as he asked me to give him figures which he can apply when he has a tequest for a quotation before him.
The first thing to do is to agree upon figures for the operating costs of the two vehicles. j will take the 2-tonner first. The standing charges are substantially the same as those given in "The Commercial Motor Tables of Operating Costs." They are as follows: licence, 12s. per week; wages, with allowances for insurances and holidays with pay, £6 12s.; rent, 8s.; insurance, 12s.; interest, 10s.; total, £8 14s. per week, which is equivalent' to 4s. per hour of a 44-hr. week. The calculations are to the nearest penny.
Readers who are reading this article in conjunction with the figures in the Tables will note that I have increased the amount appearing under the heading of " insurance " which in those Tables is quoted at 6s. 6d. per week. That figure applies only to C-licensed vehicles and is approximately half of what a haulier must pay.
Provision for Heavy Costs
Now to deal with the running costs, but before treating with them let me make a special point which arises only when dealing with vehicles which are running small weekly mileages which are too low to allow average figures being applied. I make provision for the extra heavy costs which are involved by treating the vehicles as if they run only 100 miles per week.
The fuel cost per mile in the Tables assumes that petrol is 4s. 2d. per gallon, and that the mileage per gallon is
approximately 11. That makes the cost per mile for fuel to be 4:53d. For lubricants allow 0.14d. per mile, and 0.96d. for tyres.
Depreciation and maintenance I treat apart from the other items, because I am going to depart from the method of calculation used in connection with the figures for those two items as they appear in the Tables. Maintenance (dl 1 am putting among the standing charges, leaving mainte nance (e) as a running cost. Depreciation I split, putting one half among the standing charges and the other half among the running costs.
The amounts for these items have to be calculated anew. The initial cost of the 2-tonner is assumed to be £750. From that total is subtracted the cost of a set of tyres, £76, leaving £674. From that deduct £74, the assumed residual value of the vehicle. The residue, £600, is the figure to be used when calculating the amount to be set apart for depreciation.
Half that sum is to be treated as the proportion of depreciation to be placed among the standing charges; the other half to be similarly dealt with but placed among the running costs. Thus. £300 spread over five years, the assumed life of the vehicle, gives £60 per annum, or £1 4s. per week. taking the year as 50-weeks The other half of the £600, treated as a running cost and assuming a life of 120,000 miles, provides the figure to go in the running costs, namely, 0.60d. per mile. Maintenance (d), which, in the Tables, is treated as a running cost, is calculated this way. At 100 miles per week the amount quoted under that heading is 1.45d. per mile, which is equivalent to 12s. Id. per week. Note that I
should have reached the same result if I had taken some other weekly mileage as a basis for the calculation. Take 400 miles per week, for example_ According to the Tables. maintenance (d) is 0.36d, per mile. For such a week, then. the important figure to put among the standing charges is 400 times 0.36d., which is 12s.
It is now necessary to add these amounts for maintenance and depreciation to those we have already. That means that the total of fixed charges is now £12 per week. The running costs come to 736d. per mile.
Profit at the rate of 20% on cost must be £2 8s. on the standing charges, making the total £14 8s, per week or Gs. 6d. per hour of a 44-hour week, The same proportion of profit must also be added to the running costs, that is 1.47d. per mile, making the mileage figure 8.83d. per mile.
Turning now to the 5-tonner, the operating costs can be shown to be: standing charges, tax, 14s.; wages, etc., £6 12s.; tent and rates, 9s. 6d.; insurance, 16s.; interest, 18s.; depreciation (half) it 15s.; maintenance (d), 14s.: overheads, £2 15s. The total is £14 13s. 6d. Running costs: fuel, 5.15d.; lubricants. 0.20d.: tyres, 1.33d.: maintenance. 1.75d.; depreciation {half), 0.87d. The total is 9.30d. per mile.
Now add the profit of 20%. The amount, in the case of the standing charges, is £2 185. 6d. and that, added to the standing charge total of £14 13s. 6d., makes the weekly charge £17 12s. For the running cost the profit margin must be 20% of 9.30d„ which is 1.86d.. and the mileage charge is seen to be 11.16d. per mile. The time and mileage figures for these two vehicles are: 2-tonner, 6s. 6d. per hour and 8.83d. per mile; the 5-tonner, 8s. per hour and 11.16d. per mile.
Importance of Radius Now, to give my inquirer all that he asks I must suggest charges per hour for daily hire. An important factor in that is the radius within which the operator works. In towns that radius rarely exceeds 5 miles, but in county council work it may be as much as 8 miles.
It should be dear that the greater the radius, the bigger the mileage per hour which the vehicle will have to work. My experience is that the average miles per hour on this class of work approximates closely to the radius. That is to say, if the radius is 5 miles, the vehicle will probably run 5 m.p.h., if 6 miles 6 m.p.h. and so on.
Basing the charge on the above data, the charge per hour must be. in the case of the 2-tonner, 6s. 6d. per hour plus the charge for 5 miles at 8.83d, per mile, which is 3s. 8d. The total charge is thus 10s. 2d. In the case of the 5-tonner, the charge must be made up of the 8s. per hour plus that for 5 miles at 11.16d. per mile, 4s. 8d.-total 12s. 8d. If the radius is 6 miles. the hourly charge for the 2-tonner must be 6s. 6d. plus six times 8.83d., which is 4s. 5i1, total 10s. lid. For use of the 5-tonner the charge per hour is 8s plus six times the mileage charge, that is 5s. 7d., making 13s. 7d, per hour in all.
If the radius within which the vehicle is used is 8 miles, the hourly rate for the 2-tormer must be 6s. 6d. per hour, plus eight times 8.83d. which is 5s. lid., and the all-in charge per hour including 8 miles of running becomes 12s. 5d. For the 5-tonner, take the hourly rate of Ss. and .add to it eight times 11.16d. which is 7s. 6d,, and the total charge is 155. 6d. per hour.
Excess Mileage Charge
On all the above rates there must be provision for a charge on account of excess mileage and the amount should be 9d. in the ease of the 2-tonner and is. for the 5-tortncr.
Now comes the final query: what should the tonnage rate be for the 5-tonner? An important factor in connection with the calculation of tonnage rates is the loading and unloading time. No information about these is given in the letter and this is not a complaint because, presumably, the variety of the traffic is considerable and the times needed for loading and unloading vary. I have, therefore, taken my own average figures for loading which are, 10 min. per ton of payload plus hr. for signing documents, turning round and so on. I take the same figures to apply when unloading. This means that the terminal time at each end of the journey is 65 min. or 2 hr. 10 min. per journey.
The first thing to do is to assess the charges to make for these terminal delays. The charge for 2 hr. 10 min. at 8s. per hour is 16s. 10d. That is equivalent to 3s. 41d. per ton and as I do not propose to include halfpennies in this schedule of rates per ton I shall make it 3s. 4d.
I am taking an average speed of 15 m.p.h. and will make allowances subsequently for differences in that average speed, differences which must inevitably arise in accordance with differences of length of lead, the average speed being lower for particularly short journeys than it is for a journey nearing the maximum of 25 miles.
For a 1-mile lead, the vehicle must travel 2 miles at 15 m.p.h.; that will take 8 min. The cost of that on a time basis is a fraction of a penny less than Is. Id. The mileage charge for those 2 miles, run to complete the journey on a 1-mile radius, at 11.16d. per mile is ls. 10d., so that the total charge per mile run, additional to the terminal charge
is 2s. Ild. or 7d. per ton. S.T.R. (To be continued)