• Rates for Small Mileages
Page 54
Page 57
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BEFORE showing a method of assessing rates for small mileages, I want to deal briefly with a cost-recording book recently brought to my notice. At the outset, I would say that any method of recording the costs of operating motor vehicles must, in the first place, provide that records are complete. Measured by that standard, the Cable Universal Motor-Vehicle Log Book is good and will meet the needs of many.
The bulk 'of its pages is set out to provide for the daily entries of those running costs which are effected by the miles run or hours worked. The headings provide for the entry of expenditure each day on fuel, engine oil, maintenance and tyres, and on sundries, garaging away from base and driver's expenses.
The provision for tyre costs is a• separate one. This gets over the difficulty which always arises in connection with tyre costs when a direct entry of expenditure on that item may bump up the figures so much as to give the idea that the cost of operation during a given week is excessive. There is a separate provision for the re-entry of the tyre-cost figures and means provided for summarizing the weekly expenditure and ascertaining what the cost is for each vehicle. Expenditure on tubes is dealt with in the same way.
Book for Each Vehicle
As there is a book for each vehicle there is no possibility of the tyre costs for one vehicle being recorded against another as may happen with the usual method of cost recording.
Separate provision is made for the assessment and entry of depreciation. This is on a page which serves for the entry of what is referred to as "Capital Investment Account." There the information essential to the assessment of depreciation is provided, giving the value of the vehicle at the beginning of the log year and at the end. There is also a log of service attentions needed and another of major repairs and renovations. .
My criticism is that the log book calls for daily entries. In the majority of cases, I do not think that such daily records are necessary. One week is the usual standard and I believe that to be sufficient. I feel that there arc few A36 operators who would wish to have their records assessed daily.
The book is published in two forms, the Standard and the Popular, and the publishers are The Cable Printing and Publishing Co., Ltd., 62 Doughty Street, London, W.C.1.
A troublesome problem for newcomers, and for old hands too, is when the day of reckoning arrives and they find that they can no longer carry on with rates they are getting.
They have, for example, to assess rates per ton for the haulage of materials over a lead which; starting at 10 miles, is to be reduced mile-by-mile as time goes on and stretches of road are re-made. This was a problem I was recently asked to solve.
Duration of Contract?
For how long the contract is to last I do not know. imagine that there is a time limit on each one-mile stretch of road. It will take just as long to lay one mile at the 10-mile lead as it does when the one-mile lead is being run by the vehicle.
As a preliminary, we need some figures for the cost of operation of the 6-ton oiler which, my correspondent informs me, he proposes to use for the job. First, the standing charges are: tax, 14s. per week; levy, approximately, 3s.; wages, including provision for the employer's contribution to the National Health scheme, premiums for the W.C.A., and holidays with pay, £7 per week; garage rent, 10s, 6d.; vehicle insurance, 18s. 6d.; interest on capital outlay, £1, Total £10 6s. per week.
Establishment costs will be about £2 14s. per week, so the total of fixed charges becomes £13 per week. Add about 25 per cent, for profit and we get a weekly time charge of £16 5s. Spread that over 44 hours per Week so as to get a charge per hour and the result is 7s. 4c1.
The running costs per mile are: fuel, 2.51d.; engine oil, 0.18d.; tyres, 1.50d,; maintenance, 1.81d.; depreciation, 3.00d. The total is 9d. per mile, to which we add 2d, profit, the cost per mile becomes 11d.
Starting, as agreed, with the longest run, a lead of 10 miles, I am told that half-an-hour is needed for loading and the same for unloading. The time needed for travelling out and home is one hour, so that the total time for the longest lead is thus two hours. On that basis, four complete runs will be made in the course of an eight-hour day, and two on Saturdays, making 22 loads pet week. The distance travelled will be 80 miles per day and 40 on Saturday, the total, for the week thus being 440.
The charge per week for that mileage is, first. for 44 hours at 7s. per hour £16 5s. (round figure), and secondly, 440 miles at lid.-20 -3s. 4d. Altogether, then, the charge must be £36 Ss. 4d.
During the week the tonnage carried will be 132 (22 loads )f six tons each), and the rate per ton-£36 8s. 4d. divided ay I32-which is 5s. 6d.
That is thc easiest part of the job. The best way to quote s to put forward the rates per ton over the whole schedule ff distances. It should not be necessary to work out each nile of the lead; far better to assess the rate for the shortest ind average those between.
Rate for One-mile Lead
The first thing to do now is to work out the rate for the ine-mile lead. The time needed per trip, if worked out as ollows, would allow for only the same times per journey or terminals as in the case of the 10-mile lead, There eould thus be provision for half an hour each for loading nd unloading, plus travelling time over two miles. If I Ake it that 10 minutes would suffice, as theoretically, it hould. then the time for one complete round trip would e 1 hr. 10 min. .
This means that the number of journeys per day might e taken as seven, the time taken being 8 hr. 10 min. That ,ould not do because it involves paying an excess in the 'ay of wages which is to be avoided. There is another oint too. On minimum lead-mileages, some provision must c made for fatigue, 'and in practice it is found that with hi-a-short leads, as in this case, it is better to provide for nly six journeys per day.
The week's work over the one-mile lead will provide for x journeys per day from Monday to Friday, which is 30, lus three journeys on the Saturday, The total number of airneys per week •is thus 33, and the tonnage 198.
The cost per week is unaltered at £36 8s. 4d., so that the Lte per ton must he 3s. 8d. per ton. The rate for all tervening leads can be assessed in this way: Deduct the te per ton over the one-mile lead-3s. 8d.-from the rate the 10-mile lead-5s. 6d.-and the difference, 22d., may divided by 9, the number of steps in the scale of mileages, that the step from one lead distance to another is 2.44d.
Charge3 per Ton from 1 to 10 Miles
In that way I get a schedule of charges per ton for lead ileages from I to 10 as follows: 1, 3s. 8d.; 2, 3s.
4s. Id.; 4, 4s, 31d.; 5, 4s. 6d.; 6, 4s. 81-d.; 7, 4s. I Id.: 5s. ltd.; 9, 5s. 4d.; 10, 5s. 6d.
Now suppose that overtime, which has up to now been nned, is worked to the extent of two hours per day, from onday to Friday, so that there are 10 hours in each day itead of only eight.
The 10-mile lead still takes two hours per trip but the mber of trips per day is increased to five. In one week. :refine, there will be 27; that is five per day for five days d two on Saturday. The tonnage per week will amount to 2. The weekly mileage will be 540 and the figures for a of operation will now be made up as follows: f he standing charges will be increased by £2; that is the ra cost due to the payment of overtime. The total nding charge is now £12 6s. Establishment costs may be reased slightly, owing to a small amount of overtime rked by the office staff, extra expense on lighting and tting the office, and so on.
shall assume that the increase is 6s, per week per vehicle the total is £3. The fixed charges per week are now 6s. Profit on that should be £4 per week and the total te charged per week becomes £19 6s. That is 7s. 9d. hour.
-here is no need for any correction to the 11d, per mile running costs, but the total of those costs is increased ause. instead of running 440 miles per week the vehicle
now covers 540. The revenue for that mileage must be £24 15s. plus £19 6s. for time, making 144 Is. The tonnage carried is 162 per week and the minimum rate per ton over the 10-mile lead must be 5s. 6d., as compared with 5s. 5d. without overtime.
The operator's gain per week when running eight hours per day and carrying 132 tons is £6 3s. 4d. When overtime is worked and 162 tons carried his profit is £8 10s.
A further point raised by my correspondent, concerned the rate he should offer sub-contractors whom he might engage to assist him in carrying out any work he was offered, assuming that he, himself, had not sufficient vehicles to do all the haulage.
The Rates for a Sub-contractor
The answer is that if any haulier is to make a fair profit then he must charge at the rate set down in the body of this article. Consequently, any sub-contractor will expect to get the same money as I have quoted. If some of the work is to be sub-let, then, it will be necessary to increase the price against the main client unless the original contractor is prepared to make less profit on the work which is done for him.
This question brings up once more a point which I have tried to make again and again in these articles, that the payment for haulage work is just that which can be obtained against competition. When I say that with six-tonners working on this contract, fair rates to charge are those included in Table 1, I do not necessarily mean that a haulier should not get more than the rate recommended. On the contrary, I would suggest he gets as much as he possibly can. If, in this case, the inquirer is able to get more for the work than the rates which I have calculated, then he can sub-let at my rates and retain, as profit, anything he can get over and above that amount.
On the other hand, of course, there is this point of view. The original inquirer, having discussed the matter with me, puts in a tender quoting the rates I recommend. lie has probably been at some trouble to visit the other party to the deal, the buyer of the transport. Ile has had the good fortune to get the contract.
He is entitled to deduct from the sub-contractor's rate, sufficient to reimburse himself in respect of the costs incurred in securing the business. After all the sub-contractor has done nothing to get the work and it is only fair that he should accept a rate somewhat less than that which the main contractor is getting. The only question which arises is " how much." Perhaps half the net profit would be fair and, in fact, that is the maximum the main contractor should take.
Old Hands Caught Out
Another point which is even now hardly understood even by old hands at the game of haulage. In providing for profit I have allowed 25 per cent. Someone is sure to ask: How comes it that, after providing for a profit of 25 per cent. only 10 per cent, is quoted as being half the net .profit. Should it not be 121 per cent.?
The difference is, of course, in the manner in which the percentage is calculated. It is usual in assessing haulage rates, to take the percentage on the original cost. If, for example, the expenditure is £80 and the appropriate percentage for profit is agreed at 25, then the amount of the profit becomes £20 and the total price £100.
When calculating the amount which is to be deducted from the price in order to assess the payment to the subcontractor it is usually a percentage of the total, in this case £100. Ten per cent. of £100 is £10, which may be taken to be the discount, or as the part of the £20 profit to be
handed to the sub-contractor. S.T.R.
• It is only now that the legal problems involved In denationalization are becoming apparent to buyers of British Road Services' assets and others. Many of the answers can be found in The Operator's Guide to the Transport Act, 1953," by T. G. Field-Fisher, barrister-at-law, published by Temple Press Ltd., Bowling Green Lane, London, E.C.1., at 1s. 6d. (1s. ed. by post).