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HAULIERS U THE NEW COSTS TABLES

9th September 1938
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Page 38, 9th September 1938 — HAULIERS U THE NEW COSTS TABLES
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Which of the following most accurately describes the problem?

"The Commercial Motor' Tables of Operating Costs are an Accurate Guide to Cost of Operation and a Safe and Sure Indication of the Minimum which should be Charged for Work

with any Type of Vehicle

THE other day I met a man who had but recently come to appreciate the value of The Commercial Motor Tables of Operating Costs, and had found no difficulty in obtaining rates the equivalent of those suggested. In his opinion the data given are invaluable. He told me that he was making a reasonable profit and was quite satisfied.

It is becoming more and more a common experience for me to meet hauliers who hold these views. It is, nevertheless, still true that I also meet those who say that the rates are quite impracticable—that they cannot possibly get them. I have been at meetings where men holding such contrary views have sat side by-side and, as has been disclosed, are engaged in the same class of work. More curious still, the man who states that he cannot work to the Tables is usually the one who complains most bitterly of rate-cutting by others. The man who does find the Tables applicable makes no such complaint, but he goes his way

serenely and lets the rate-cutter "get on with it."

It is, I am sure, largely a matter of business capability_ The man who demands a fair charge, conforming with that recommended in the Tables, is a business man. He gives good service and expects to be paid for it. True, some of his customers may go elsewhere because they are offered lower rates by competing hauliers, but such a haulier devotes his energies to improving and consolidating his goodwill with the customers he retains, at the same time seeking to replace the customers who leave him—looking for those who appreciate good service and are willing to pay a fair and reasonable price for it.

With this issue of The Commercial Motor, a new edition of the Tables is included. It is given free, but subsequent copies will cost 6d. each. It provides ample

opportunities for those readers who are doubtful of their ability to obtain rates recommended in the Tables, to reconsider the position and to check over the figures for operating cost, realizing, while doing so, that these figures are the basis of the minimum rates. They should compare them conscientiously, and in a businesslike manner, with what they imagine their own costs to be.

The arrangement of the figures has, in this issue, been much modified as compared with previous editions. The Tables are more

useful than ever before in that they take more directly into account the often widely differing conditions under which operators of motor vehicles have to work. The haulier who is chiefly engaged in local work -will find data suitable to his requirements, as also will the man whose work is entirely different (chiefly such as that consisting of trunk services involving high annual mileages).

Maintenance Assessed in a New Form.

Of especial interest to hauliers is the new scheme for assessing maintenance by dividing it into two classes— Maintenance (d) and Maintenance (e)—the full significance of which is explained in detail in the introduction to the Tables. From the point of view of the small operator, this division is particularly helpful, especially in the case of the manwho arranges for a good deal of routine maintenance work to be .carried out by the drivers or, as is so often the case, by himself, if he be an owner-driver.

In previous editions of the Tables, the figures for maintenance comprised the whole of that work, and hauliers in the position just described often found it ' difficult to reconcile their own figures for maintenance cost with the total given in the Tables. That difficulty arises because they make no debit on account of the work carried out by drivers, or by the owner-driver himself.

Because, in the ordinary way, that is a considerable proportion of maintenance cost, it has seemed to such operators that the figures quoted in the Tables were excessive. That difficulty need not now arise : if hauliers so situated will deduct the amount for Maintenance (d) from the running costs, they will arrive at a figure which will very closely approximate to what their own experience must be.

No allowgzice whatever has been made for this difference in routine, and the corresponding difference in maintenance cost, in the data for minimum charges. There is a good and sufficient reason for this. Haulage rates, if they are to be, in any sense of the word, rational, must provide for a full schedule of expense. The haulier who is in the fortunate position above described can still compete on 'level terms with his less fortunate brethren ; any savings on account of this maintenance he should put in his pocket.

Improved Depreciation Figures.

The figures now quoted for depreciation are more accurate than ever before—at least, that is so in regard to vehicles covering comparatively small mileages per annum. Previously, a haulier on such work, using the' average figures for depreciation which appeared in the Tables, was likely to find himself, when disposing of his vehicle, a little behindhand in the provision made for the change. That defect is obviated in these new Tables by making provision for obsolescence as well as wear and tear when the mileage is small.

Above all I recommend the figures for operating costs as being sufficiently accurate for all practical purposes. To the man who has no idea what his costs are, I suggest that he use the figures as an absolute guide. To the man who does keep some sort of costs record and finds some apparent discrepancies as between these figures and his own, I still recommend that he should use them as an absolute guide.

I would suggest to the latter that he go through his own figures again, having particular regard to the possibility of omissions in providing for gradually increasing expenditure in respect of all the items of running cost, except depreciation as the vehicle grows older.

It is not permissible for hauliers or passenger-vehicle operators to make any cuts in the minimum rates which are quoted in these Tables. In giving this warning, I 55 refer not only to the rates per mile and per week for various weekly mileages, but also to those for charges on the basis of time and mileage.

There is no room for any discount in these figures. They are based, in the•first place, upon the data for cost of operation, which cannot be challenged, and the margin allowed for gross profit in which, I should emphasize, is provision for establishment costs. A cut of any appreciable magnitude will, in all probability, wipe out the margin for net profit even if it does not actually make inroads upon the provision for establishment costs.

Hauliers all over the country are keenly interested in what is being done to stabilize rates. Some of them are afraid of whatwill happen when that objective is reached. Many do not yet appreciate that the rates thus fixed will be obligatory. It is, therefore, a matter of

pressing importance that they should first have in their minds definite ideas as to what rates should be for the work in which they are interested, and, secondly, that they should appreciate that the rates thus fixed must inevitably be upon some average basis, for which there can be nothing better suited than the figures in the Tables.

Once the rates are set business will go to the man who gives the best service. The maximum profit will accrue where the operator proceeds in the most efficient manner, using his vehicles so that their operating cost is at a minimum, and conducting his business so that his establishment expenses are as little as they may be. The rates must inevitably be fixed upon a basis of cost plus profit. The cost cannot be the same In every case, but the rates will be the same and the difference between cost and rates will be profit. S.T.R.

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