Questions Answered
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AN organization in the metal industry states that it is carrying out an appraisal of its transport arrangements and asks for comment on three points which have arisen. Regarding vehicle specification, the relative merits of full air braking as opposed to other braking systems, such as air hydraulic on rigid and articulated vehicles of around I5-ton carrying capacity, have been considered, and guidance on selection is requested. Whilst full air braking is recommended it would in any case be the normal standard equipment on this size and class of vehicle.
The second request is for the operating costs of various classes of vehicles and these are set out in detail in the new. edition of ' The Commercial Motor Tables of Operating Costs ", recently published and available from the London office of this journal at 4s.. or 4s. 6d. postage paid.
The third query raised concerns the economics of alternative transport replacement policy—namely, whether it is more economic to buy cheaper vehicles and trade them in relatively frequently, or select more expensive vehicles which would then be expected to be serviceable for a longer period.
The alternative policies practised in relation to vehicle maintenance and subsequent replacement give rise to what is probably the most contentious aspect of transport operation. Briefly, there can be no finality in this matter, much as some economists and accountants might wish to devise some convenient formula which will " prove " the opportune time at which fit is most advantageous to replace a vehicle. The reason why there can be no finality in this matter is that transport is primarily a practical exercise. The very flexibility which is road transport's prime asset must reflect on the varying policies successfully adopted to meet differing needs.
Many large and efficient transport operating companies do, in fact, often practise two different policies in the same fleet— namely, the more frequent replacement of mass-produced vehicles and the renewal over much longer periods of qualityproduced vehicles. The fact that both policies are successful emphasizes that basically this subject is essentially a matter of determining which policy best fits a particular set of circumstances rather than attempting, erroneously, to make an overall decision as to which of the two policies is best in all—or at least the most—circumstances.
7-TONN ER COSTS The driver of a 4-tonner states that his employer is now finding this size of vehicle inadequate. In addition to considering the economics of employing a larger vehicle the possibility of the driver himself owning the vehicle and hiring it out to his present employer is also under review.
He anticipates that the average weekly mileage will bearound 600 and asks for information as to the likely operating costs, adding that it will be impossible to charge for the hire of the vehicle on a tonnage or hourly rate as this varies too much. He therefore suggests a fixed weekly charge based on a minimum of 600 miles, with an additional charge per mile above that figure.
Although not stated in the letter it will be assumed that the proposed 7-tonner would be fitted with an oil-engine, with the operating costs calculated accordingly.
With an unladen weight of 3 tons 4 cwt., the annual licence duty will be £46 10s., giving a weekly standing cost of 19s. 5d. Driver's wages for a basic 42-hour week would normally cost the employer £11 2s. 8d., inclusive of insurance contributions and an allowance for driver's holidays with pay. Garaging of the vehicle is nominally reckoned to cost the equivalent of £1 Is. 3d. per week and vehicle insurance based on comprehensive cover in a medium-risk area, £2 9s. 9d. Interest charged at 5 per cent on an initial outlay of £1,383 adds £1 7s. 8d., giving a total standing cost for these five items of £17 Os. 9d. per week or, alternatively, 97.35d. per hour.
Dealing similarly with the five items of running costs, it will be assumed that oil fuel is purchased in bulk at 4s. 20. a gallon and, additionally, that a rate of consumption of 15 m.p.g. is maintained by this 7-tonner. This gives a fuel cost per mile of 3.35d., while lubricants are reckoned at 0-28d. per mile. Tyres are reckoned to cost £191 per set, and with an average life per set of 30,000 miles the resulting tyre cost per mile is 1.54d.
Maintenance is assessed at 2-71d. per mile and depreciation 1-69d. per mile. This latter calculation is obtained by first deducting the equivalent cost of the original set of tyres from the initial price of the vehicle, followed by a further reduction in respect of the ultimate residual value which is here assumed to be 10 per cent of the original cost. Allowing a vehicle mileage life of 150,000, the depreciation cost per mile then becomes 1.69d.
TOTAL OPERATING COST
The total for these five items of running costs is therefore 9.57d. a mile. The addition of standing and running costs gives a total operating cost of 16.39d., or £40 19s. a week when averaging 600 miles.
Normally to obtain a recommended minimum charge to be made by a professional haulier to a customer as distinct from the actual cost of running a vehicle, additions have to be made in respect of overhead costs and profit margins. Allowing an addition of 20 per cent in both cases, the recommended minimum charge for operating this 7-tonner 600 miles a week would be £57 7s. Additional mileage would be chargeable at 13.39d. per mile, i.e., the running cost of 9.57d. plus the two additions of 20 per cent.
In this particular case, however, individual negotiations would be necessary as to what additions would be acceptable to both parties and the amount of such additions. Where appropriate, the basic cost of driver's wages (£11 2s. 8d. for a 42-hour week) could be deducted from these costs and charges if, in fact, the driver continues to be on his present employer's payroll. In that event the carrier's licence would continue in the employer's name.
ROAD TRANSPORT LAW At a time when comprehensive reviews of the carriers' licensing system are being made or contemplated, experienced road transport operators are often surprised at the complete ignorance shown as to road transport law generally by otherwise competent executives in trade and industry not normally concerned with transport. A recent request for a "brief resumd " of all those regulations affecting road transport is typical of the layman's attitude to this complex subject.
Nevertheless some attempt at a summary is helpful to a complete newcomer so as to give an overall outline of this subject before studying each act and regulation in detail.