PROBLEMS OF THE HAULIER AND CARRIER.
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How to Tender for Work. Flat-rate Offers and Their Pitfalls. Regard to be Paid to the Return Mileage.
IN the endeavour to get work done at the cheapest rate, the policy of putting jobs up for tender is popularly adopted by those to whom transport costs mean a good deal. This practice_is a favourite among local government authorities who have much road material to carry about. In consequence, I get many letters on the topic, especially from those who have never had to do much estimating of costs. It may be comparatively simple to arrive at a suitable price for a job which lasts a day or so, but to agree to work to hard-and-fast prices for a period, probably extending up to a year or so, is rather a serious undertaking if one be in doubt as to whether the right basis and method of working have been chosen.
As an instance, I propose dealing with the queries raised by one correspondent, as the subjects are of interest to hauliers. First, he wants general infotTna tion on the way to work out costs and profits in order to arrive at the figure to be quoted. Secondly, he wants to know how many ton-miles must be covered per week to pay the owner of a vehicle when he and a loader are employed to keep it filled and running. Thirdly, he is keen to find out whether £2 7s. 6d. per day is a paying price for a tonner.
Dealing with the query regarding general methods of estimating, the obvious premier point is to get together all the information about the job in order that the circumstances may be accurately weighed up; without this, a quotation is merely a shot in the dark. Mileage, loads, working hours, loading facilities, distances between terminal points, penalties for irregularities, certainty of loads being available and the time at liberty for maintenance work of the vehicle are all points upon which information is desired before the estimator can visualize, the work sufficiently to foresee contingencies and to allow for them when calculating his price for the job.
The Need for Knowledge of Operating Costs.
Next, there must he operating costs figures at hand to guide one when deciding how much money must be Spent to do a known quantity of work. Obviously, the most useful data consists of the private records of the vehicle which will be used for the job. Failing these, say in the case of a new machine of a capacity with which the haulier is unfamiliar, the tables of operating costs published by The Commercial Motor are the only reliable substitute. When applying them, however, the user should bear in mind the fact that average conditions are presupposed and, wbere anything out of the ordinary is likely to be met, such as in timber haulage over unusually bad tracks, the allowances must be increased to cover the inevitable higher costs of running. Armed with these facts and figures, the next thing is to decide the basis on which the tender is to be calculated. As a rule, the schemes are (1) by mileage only, (2) by mileage and time, (3) by time alone, by (4) tonmiles and (5) by the terms of a contract which may involve special considerations. In the case of the plain mileage basis, the operating costs per mile, plus a suitable allowance for profit and establishment expenses, have to be quoted as a comprehensive figure to the customer. This means that the haulier says: "I will do the work at so much per mile."
When mileage and time are used in conjunction as a basis, the circumstances of the case are taken into account and the estimated yield ter week in £ s. d. has to cover all expenses, plus the profit and establishment costs. Where time only is adopted as the basis, the weekly profit to be gained is merely added to the operat
lug costs for the period according to the mileage estimated as likely to be done, plus the incidental charges connected with the business side of thework.
The Ton-mile and the Dead Mileage.
A ton-mile is obtained by multiplying the distance covered by the load borne in tons. Beware of multiplying the loaded miles only by the tons, ignoring the unladen mileage, as the result will then take no account of dead miles and the haulier's pocket will suffer materially. Half a ton carried two miles equals one ton-mile, and 10 tons carried two miles equal 20 tonmiles ; these figures are given as examples to demonStrate the principle. In the case of a special contract, the terms of the document must be available in full for the vehicle owner before he works out his tender for the job. No hard-andsfast rule can be laid down for this class of estimating, as the circumstances vary to such an enormous extent. The main thing to remember is that, where the machine is to be employed solely on the contract duties, the total desired profit must be obtained from the job.
My correspondent's second query anent the number *of ton-miles which must be covered per week to make the task remunerative is not capable of a definite answer in terms of miles. It all depends upon the price which the customer will pay. If the rate accepted be good enough, there is no reason why so small a total as 10 ton-miles should not be a paying proposition for the week. On the other hand, when the rate which will be paid is low, the mileage must be considerable for a profit to be earned. This is accounted for by the fact that the greater the distance accomplished in a week the lower the cost per mile to the operator. When It is remembered that the standing charges are a fixed sum in relation to time, it will be seen that the greater the distance covered in that period the lower will be the ton-cost per mile, so to speak.
The querist can best solve his own problem by ascertaining the price he is likely to get and then running his finger down the appropriate column of " Hauliers' Figures" in the operating costs tables until he comes to the nearest to the selected price per mile. Then moving the finger horizontally to the left, he will find the weekly mileage at which this price is economical. This will be the answer in miles and from it he can calculate the ton-mites he requires.
Third on the list was the question whether the 12 7s. 6d. offered per day was likely to pay the owner of a one-ton vehicle. This again is a moot point, as it depends upon the work done in the day. Say the lorry starts at 8 a.m. and finishes at 5 p.m. During that time it may be on the road over half its time and cover something like 80 miles. On the other hand, the loading delays may be responsible for over half the working time and the distance may drop to 30 miles. In the two cases the running costs will be in the ratio of 80 to 30, and the expenditure on the part of the haulier may be so great in the former instance as to render the work not worth the trouble. The idea of a rate per day is quite satisfactory so long, as circumstances do not vary and the distance to be accomplished is within the economical limits. For the sake of illustration, let us take a few figures applicable to the tonner in question. As the querist does not state the wage payable to the loader, I am treating the query as a plain one for the moment, ignoring the loader's services. Presuming the working week to be five and a half days, the total earnings will be £13 is. 3d. A light one-tonner will cost /4 8s. id. per week in standing charges, so this must first be subtracted. This leaves us with £8 13s. 2d. If a profit of £4 be desired, this amount must be deducted, leaving £4 13s. 2d. The last-named figure is that which can he expended in running costs during the week; If more be spent it comes out of the haulier's pocket. Taking the running costs for the vehicle at 3d. per mile, 373 miles can be run for the £.4 13s. 2d. At a daily rate, therefore, roughly 68 miles is the economical maximum. Over and above this daily total, the running costs will be eating away the profits.
The answer to my correspondent's question is, therefore, that the £2 75. 6d, offered will be paying up to a total of 68 miles daily. If the distance be less, the profit will be more than the £4 per week, whereas any excess distance will reduce the profit. Those who wish to _work out similar problems have only to adopt the same principle, namely, working backwards from the agreed rate to the permissible expenditure on running costs during the period.