Rates• for Varying Leads
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How an Operator Was Advised to Quote for Carrying Goods from One Point to 26 Different Destinations, Leads being from One to Sixty Miles in Length: Higher Speeds for Longer Journeys Mean that Rates Should
Be "Tapered"
THERE are two classes of problem which are especially difficult to solve; rates for parcels or smalls, and . those for gradually increasing lead mileages, for example road-mending materials. The latter need journeys of varying lengths, picking-up at a central point, a rail-head or a quarry, and carrying over leads which may start at one mile and continue for upwards of 50 or 60 miles. In the other case there may he pick-ups and drops all along the line of a regular route.
At first sight, there might be thought to be a fairly close similarity between the two; actually, they are as wide apart as the poles
So far as parcels carrying is concerned, there is no method known to me whereby rates for smalls can be calculated on the basis of cost plus profit. My usual response to requests for schedules of rates for the carriage of smalls is to advise the inquirer to ascertain the rates being charged and to work to them. At the same time he must keep accurate records• of his earnings and cheek them against the figures in " ' The Commercial Motor' Tables of Operating Costs." .
Increasing Revenue
If, for example, he is proposing to use a 3-tonner and the weekly mileage is 300, he should refer to Table II of that publication, where he will find that the minimum revenue to be earned from the vehicle is quoted as £19 2s. per week. He should add about £1 to that total, making it £20 2s. at least. If his revenue is that much or more, he is on the right track. If it does not reach that figure, he should examine his records to see if there is any way of increasing the number and size of his parcels and thus bring his earnings up to the requisite level. Probably he Will discover that by widening the scope of his service he can achieve that end. On no account should he cut the local rate.
Parcels carrying is at the best of times a tricky business and a costly one. There is only one exception, the business of a country carrier, the man •who, with his somewhat dilapidated vehicle, attends the local markets and picks up loads from the farmers and local people, defivering them during the day.
It is usually possible for him to find six markets a week, visiting one market town after another. The markets are usually arranged so that no two in the same district clash.
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The country carriers' business is almost a time-honoured activity, hardly, to be disturbed by the new-fangled express service big-business enterprise with its country-wide organization.
On the other hand, there is no extravagant income to be derived from this type of business. It is always the case that the operator is an owner-driver and nearly always that he is content to earn no profit according to orthodox standards, being satisfied if he pockets the amount of the driver's wages, and more often, even less than that.
No Hope of Success
The average haulier cannot operate a parcels-carrying business with any real hope of permanent success. He can offer only service within narrow limits and is therefore compelled to turn down offers of parcels outside his limited area of operations. Alternatively he can come to some arrangement with a competitor who will take those out-of-range deliveries for him, subject to commission payments. The arrangement does not last. One of the two will eventually take over the traffic from the other and the business will pass to one of the larger parcels-carrying concerns.
The other type of business to which I referred in the earlier paragraphs of this article, the planning of a rates schedule to cater for full-load one-way traffics carried over varying leads, is not easy. It is true that there are several ways of dealing with the problem, one or other of which must be chosen, not arbitrarily, but according to the conditions.
I have before me &request for guidance in just the sort of traffic I have in mind; it may be useful to examine the problem and indicate the alternative solutions.
The inquirer states that he has been invited to quote for the conveyance of goods from a given centre to 26 different destinations, the leads being from one to 60 miles inclusive.
He proposes to use a 6-ton oiler and his loads will be capacity, i.e., 6 tons per load. Each journey will be complete in itself: out with one load and back, empty, for the next.
I think I can safely take it that every reader of these articles is aware of the fact that the cost of operating a vehicle depends largely upon the weekly mileage. How that mileage is affected by the length of the journey may be realized by considering one or two examples. There are three methods of attacking the problem: the first is what.I might fairly call the theoretic one. The first thing to agree upon is the time and mileage charge which is applicable in the case of the vehicle to be employed on the job. A 6-ton oiler, according to the data in the Tables, should be charged at not less than 7s. 6d. per hour plus 11d, per mile for running. Those figures are averages. The conditions' in this case are not normal nor are the costs likely to be average. The running costs, considered apart, are likely to justify a little more than 11d. per mile. At least Is. per mile will be justified; the fixed charges may be a little less because the establishment expenses are likely to be lower than average, say 7s. instead of 7s. 6d.
I have ascertained that the loading and unloading times, including some provision for delays at each end of the journey, are one hour each, a total of two hours per trip, irrespective of what may be the lead distance.
I should now point out that in applying the time and mileage method of assessing rates, the total time for any job or, as in this case, the total time per trip, is made up of terminal times, agreed in this case to be two hours, plus travelling time. These two taken together make up the total time on .which the time charges must be based.
The first thing to do is to assess the charge to be made for these terminal .delays. That charge, for two hours,. is 14s. That is equivalent to 2s. 4d. per ton for .a 6-ton load.
I propose to assume an average speed of 15 m.p.h. for the lower range of lead mileages and to make allowances subsequently for the drop in average speeds brought about by traffic delays over such short runs.
4d. Per Ton
For the one-mile lead the vehicle will run two miles at 15 m.p.h.; that will take eight minutes. The cost of that on a time basis is 11d., nearly 2d. per ton (ignoring a small fraction of a penny). The mileage charge for the two miles covered to complete a one-mile lead is 2s. For a 6-tonner that is 4d, per ton.
These amounts-2s. 4d. for terminal delays plus 2d. per ton for travelling time plus 2s, per mile (4d. per ton) for mileage-total 2s. 10d. per ton. In the accompanying Table I these charges are set out thus: terminal charges which remain constant throughout the whole range of leads, and, under the heading "Travelling charge." the total charge of 11d, for the time spent in travelling two miles and 2s. for the mileage charge at Is. per mile. That is 3s. or 6d. per ton. The total per ton is set down in the fourth column of Table I. That column shows what I propose to call the preliminary rate.
it is now necessary to make corrections on account of two factors which have not hitherto been considered, although one of them has been mentioned. One is the fact, as already pointed out, that over ultra-short distances the average speed will be less than 15 m.p.h, so that the time charge will be more than that already allowed. The other is that over short leads there is always a tendency to increase the rate by increasing the time taken at terminals. Where there is so little time between loads, drivers get bored and are more inclined to chat between loadings in order to relieve the monotony. Over longer leads, on the other hand, there will be opportunity to travel at speeds higher than is practicable over short leads, which will bring about a chance to " taper " the rate, which diminishes as the average journey speed rises.
There are several ways of making allowances for these factors. One of them, admittedly arbitrary but nevertheless reasonably satisfactory, provides for the addition of a weightage to the rate. Add a stated amount to the calculated rate for the one-mile charge and gradually diminish it as the lead increases. This " weightage " as it is called, is shown in the fifth column of Table I. It starts at Is. 6d. per ton for the first mile lead and d:minishes ld. per mile as the lead increases. At 19 miles, of course, it has gone altogether and thereafter the weightage becomes less than zero and is actually deducted from the calculated rate.
Over Average Speed
This again, is reasonable and logical so long as it is not carried so far that it brings the rate too near the economic minimum. It allows for the fact that by the time a 19-mile radius is reached the vehicle is probably, almost certainly, increasing the average speed beyond the 15 m.p.h. which has been taken for the original calculation.
This explains how I have arrived at the figures for the tonnage rates which appear in Table I. A similar schedule has been drawn up to meet the requirements of another inquirer who was operating a 3-tonner. The calculations by means of which the data in Table II were assessed assume that the time and mileage charges in connection with this oil-engined 3-tonner were 6s. per hour and 8d. per mile.
First of all, the terminal charge is for 1+ hours at 6s.
per hour, which is 9s. or 3s. per ton. I have again taken an average speed of 15 m.p.h., which means that eight minutes are necessary to cover the two miles of the onemile lead. The cost of eight minutes at 6s. per hour is 9d. To that must be added the running cost for two miles at 8d. per mile, which is Is. 4d., giving a total of 2s. Id., which to the nearest penny, is 8d, per ton. It is that 8d., increasing as the lead increases, which figures in the third column of Table II. The fourth, fifth and sixth columns are assessed in the same way as already described in connection with Table I.
The figures should be studied and the rates compared to appreciate the difference in charges made practical by the use of a larger vehicle.