Problems of the
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HAULIER and CARRIER IN the previous article I commenced to record a conversation with a haulier who was engaged on haulage principally of the jobbing class, and mainly in town, but oCtasionally carrying loads into the country. For the former work he charged 4s, per hour and for the latter 6d. per mile run. His weekly mileage varied between 200 and 300, and I showed that on the basis of the smaller mileage his weekly profit from the 4s.-anhour work was 22 15s. 6d. and, when covering 300 miles, 21 17s. 9d. I expressed a doubt as to the remuneration from the 6c1.-a-mile work and concluded the article with the haulier's question : "How's that?"
"Well," I said, "look at it this way. At 200 miles per week your total cost is 26 16s. 6d., or 8.19d. per mile, so that you are losing considerably more than 2d. per mile for every mile you run at 6d. Even at 300 miles per week, where your cost per mile is a little less, it works out at 6.17d. per mile, and you are still losing at 6d. You ought to charge at least 8d.
El for 40 Miles' Haulage.
"As a matter of fact, it is hardly fair to calculate on that basis. I can tell you whether a particular job is profitable at 6d. per mile only if I know just what the job is and how long it takes. Can you give me an example?"
"I had a job last week to carry drain pipes to a building site 20 miles away. That was 40 miles and I got 21 for it"
"The point is," I said, "how long did the job take? You see, if it took you a whole day, that is, 8i hours, you might have been earning 34s. at 4s. an hour, and if that was the case you were losing on the job, but . • ."
And here he interrupted. " Oh ! it didn't take anything like so long as that. I picked the load up at 2 p.m. and was back by the end of the day, 6 p.m."
"So it took you four hours. That's rather a long time."
B44 "Yes, that's the snag about some of these jobs. They weren't quite ready to load up ,when I called for the pipes, and when my man got to the other end—or so he tells me—there was a bit of a dispute between two of the people concerned as to where he ought to unload. And, of course, these things have to be loaded and unloaded by hand and with reasonable care."
"The point that concerns us, at the moment, is that it took four hours?"
"Yes," he said, "and that is where I think you must be wrong, because I earned 21, and if I'd been on an in-town job I should have been able to make only 16s."
Actual Calculation Necessary.
"You can't reckon your profits so easily as that," I answered. "It may be that you're right in this case, but we can tell only by actual calculation. What it really turns on is the average mileage. In your town work you cover, on the average, about 240 miles in a 48-hour week, or 5 m.p.h. On this run with the drain pipes you did 40 miles in four hours, or 10 m.p.h., and that costs you more. Really you did 20 miles more than you would have done in the ordinary way on town work, at a cost of 2.18d. per mile, which is nearly 4s., so that, so tar as that particular job is concerned, there was nothing in it.
"Give me another example of your out-of-town work," I requested.
"There was a load of sand and gravel to the same site," he said, "but that didn't take anything like so long. The lorry was loaded in five minutes from a hopper at the gravel pits and the load was tipped at the other end. I don't think I was two hours on the job, but you can call it two hours if you like."
"And did you get 11 for that?"
"Yes, 21 instead of 8s."
"There ought to be more profit in that, then," I said. "Lot us see. You did 40 miles in two hours, instead of 115 miles, so that your costs were increased to the extent of 30 times 2:I8d. That 'S an extra Ss Gd Your profit was 'increased by 12% and your cpst by 5s. 6d., so you
were dell up on that job." • "Yes," he answered, "but it seems a bit of a muddle to me, First you Say I am not makihg a profit at 6d. a mile. Then I tell you• what I'm doing for that 6d. a mile. In one job you show me that I am making just about the same profit as on the 4s.-an-hour work, and on the other job that I'm making much Moreprofit than on the 4s.-an-hour work.
"And another thing. You hinted, in discussing the first job that took four hours, that I was likely to lose because I was doing more miles in the hour than the average, yet on this second job, where I'm doing many more miles in the hour, I make more profit. Surely there's something wrong? "
"It all conies of applying average figures loosely, without proper regard to their meaning," I said. "For instance, it is wrong to take your total of 200 or 300 miles per week and calculate from that your average mileage on the hourly work."
" Why is it wrong?"
"Because if in that, say, 240 miles per week you happen to include a couple of out-of-town runs, such as the last one you have described to me, then the average for your hourly work is entirely altered."
"I'm afraid I don't quite see."
"Two of those trips total 80 miles and they are completed in four hours. That leaves 160 miles out of the 240 to be spread over the remaining 44 hours. That's less than 4 m.p.h."
"But there's not a lot of difference between 4 m.p.h. and 5 m.p.h."
"Not if you look at it that way, but it makes a lot of difference if you're trying to calculate charges."
Interdependence of Time and Mileage.
"How, then, should I make calculations to know whether a job taken at a given rate is showing me a profit or not? " .
"By the simple process of taking into account both the time you spend on the job and the mileage covered. Take the three cases we have just discussed."
"Two, not three, isn't it?"
"No, because I want to include my own original suggestion that the 40 miles out of town might have taken a whole day, that is to say, 84 hours. To get at the figures for your time and mileage you must divide that fixed charge that we discovered . . ."
• "-You mean the 1:5 a week?
"yes. Take that and spread it over 48 hours. That is 2s. 1d. au hour, and take 2id. a 'mile ; that's a little more than 2.19d., but you want to be on the safe side. Now, in reckoning up what any job is going to cost you
-mind, I say °cost, and not what you must chargetake the total time, including loading, travelling out, un
loading and travelling back again, and reckon that at 2s. id. an hour. Add for the mileage at 21d. a mile."
" But I get into trouble for making out an account like that. You remember I wrote to you about it?" Loss and Profit.
"Yes, all right, I'll come back to that in a minute. I want to apply that rule to these three examples : hours at 2s. id. is 17s. Sid.; 40 miles at 21d. is 7s. Gd. The total is 25s. 21d. At Gd. a mile you get LI and you incur a dead loss of 5s. 21d. At 4s. an hour you get 34s„ and you make a profit of 8s. 9id. Now take the second job, which occupied four hours. The time . cost you 8s. 4d., the mileage as before, 7s. Gd.; that's 15s. 10d. At 6d. a mile • you make a profit of 4s. 2d. At 4s.
an hour you make a profit of 2d. As the time factor comes down, you stand a better chance of making a profit charging by the mile, and vice versa.
"Now consider the third example, when you did the 40-mile out-of-town run in 2 hours. Your cost was 4s. 2d. for time and 7s. 6d, for mileage, a total of us. 8d.
Your revenue, on the mileage basis, is 21, showing a profit of 8s. 4d., but your revenue on the hourly basis is
only 8s., a dead loss of IN. 8d. Now perhaps you see why it is so necessary to take each job on its own and work out the cost in that way, rather than rely on aver
age' figures."
"But the avetage figures have paid me pretty well up to now, as you've seen."
"They have, because you have not had an undue proportion of out-of-town jobs, taking a long time to load and unload. If you were to have many taking four hours for 40 miles or, perhaps, even, as might well have happened in that case, four hours for 30 miles, you 'would have had a different tale to tell."
"But that doesn't get me over my difficulty that customers object to my making out my bills on that basis."
"If your customers object to your making out a bill in any particular form, draw it up in another way. SG long as a customer pays you the price you want, the way in which you make out your bill is of no consequence. Nor does it prevent you from calculating your cost and your profitable charge as I have suggested. Calculate your cost, add a reasonable prefit and that is the price you want. You can charge by the mile or by the hour, as the customer pleases." S.T.R.