I am an owner-driver operating under Contract A licence to
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a firm in the Home Counties manufacturing roofing tiles. Up to now I have always had maximum capacity loads for my four-wheeler. I now have a chance to apply for a B licence to cover concrete products in addition to the tiles. However, my proposed concrete product customer cannot guarantee full loads all the time, and therefore I would appreciate your assistance in working out some fair rates to cover multiple delivery work. Are my full-load rates adequate on the basis of 12s 6d per ton for 15 miles, 15s per ton for 25 miles, 18s 9d per ton for 40 miles, and 25s 3d per ton for 60 miles?
AFirst of all we must assume that you are operating a 16-ton-gross vehicle. Average operating costs for such a vehicle, taken from CM Tables of Operating Costs, 1968 edition, are as follows (though you should naturally substitute your own figures where you know them):—
Standing Costs (per week) 14.50 If your mileage is below 800 miles per week, your maintenance costs per mile will be proportionately higher.
On 800 miles per week, operating costs would be 623s 3d plus 966s 8d making a total of 1,589s 1 1 d (£79 9s 1 1 d ). However, to total operating costs must be added a 20 per cent margin for establishment (including clerical wages, professional services) and a similar margin for profit. With this in mind a gross weekly revenue of at least f 112 should be looked for.
Regarding wages in the compilation of standing costs, a basic week has been assumed. No doubt a basic week is regularly exceeded, but while admittedly a higher amount is payable in respect of wages, and moreover at overtime rates, the whole of the remaining standing costs will have been met by revenue received in payment for a basic week of operation. Therefore both for convenience and simplicity it is arbitrarily assumed that when overtime is worked the increase in wages will be offset by the absence of other standing costs.
We cannot comment on your full rate list, but we have assumed that you can maintain at least two full-load 25 mile trips per day— you might even be able to set up an additional short-distance load on alternate days—giving a daily revenue of at least £16 10s Od. With an additional 60-mile trip on the Saturday morning (early start) netting £13 18s Od your weekly revenue of approximately £100 is not too far short of the mark, but remember that if your mileage is under 800, according to our tables, your maintenance will be increased to 3.82d per mile.
You ask for advice on multiple drop work. Certainly is will not be necessary to tell you that the more sites you deliver to, the more likely you are to experience delay. it must be assumed that over a 20-mile radius with, say, seven drops there will not be much time left even for a second short load. Tell your concrete products customer that you must be assured of a minimum gross daily revenue of 16 10s Od and ask whether he would prefer to hire the vehicle by the day. Always remember that on this revenue when covering over 600 miles per week you would have to apply an additional mileage charge based on your running costs suitably grossed up for establishment and profit.