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Municipal Work Costs More
Page 98
Page 107
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ONE aspect of municipal work which should be kept well in mind by hauliers who consider quoting for it is that the cost of running vehicles is much higher than when engaged in ordinary haulage. On refuse collection, in particular, the fuel consumption is extremely heavy; some data I have for a medium-sized vehicle show that, with petrol as fuel, the consumption rate is from 4 to 4,4 m.p.g.
Ordinary haulage for local authorities does not involve such heavy cost, but it is, nevertheless, high enough to upset the calculations of the haulier who is without experience of the pitfalls of this type of work. Another point of importance is thelact that oil-engined vehicles show to advantage even more than they do in ordinary employment. in the case of refuse. collectors, the rate of fuel consumption of an equivalent vehicle engaged on similar work is as little as 12 m.p.g.
Greater Favours
In ordinary municipal work the differences in favour of oilers are not so great, but, even so, they are greater than is customary in ordinary straightforward running. This brings me to my first point, which is meant to be a guide to operators who are tendering or are about to tender for municipal haulage. I can best illustrate the matter by an example.
Referring to the table on the next page, the charge per mile for an oiler is 9d. The total cost per hour will be governed by the mileage run per hour. Assuming an average figure of 6 m.p.h., then the total charge per hour will be six times 9d., which is 4s. 6d., plus the charge per hour, shown in the table to be 12s. 10d., making a total of 17s. 4d.
If, however, the vehicle be petrol-engined, the time and mileage figures are I2s, 6d. per hour and Is. Oiel. per mile respectively. The charge for a six-mile-hour will thus be 18s. 9d. That is Is. 8d. per hour more for a petrol-engined vehicle than for an oiler.
There is a difficult problem here which the haulier will have to consider. If he can obtain the rate which he ought to get for a petrol-engined machine, but appreciates that he will save if he buys an oiler, I think he is entitled to make the higher charge.
03/ If competition be keen, he can, of course, reasonably reduce his charge to make it compatible with the cost of operating his vehicle and thus gain an advantage over his rival who runs a petrol job. Whichever course he follows will be dictated largely by circumstances.
And now to discuss the method of arriving at the figures which together make up the table. I have taken £2,000 as being the first cost of the oiler. This covers the cost of the chassis, with high-sided body, painted, lettered and finished, ready for the road.
Deduct Tyre Cost
From that cost I deduct the price of a set of six tyres£100—leaving £1,900 as the price of the vehicle less tyres. This procedure, well known to old readers of these' articles, is followed because the tyres are dealt with otherwise, as will shortly be seen. Dealing with the difficult question of depreciation, as the tyres are depreciated separately, their cost must be deducted otherwise they would be written down twice.
For vehicles engaged under the rough and tumble conditions which are often met with in hauling for local authorities, I propose to allow for a vehicle life of five years. Again, as the annual mileage is low, I am taking depreciation as a standing charge and not as a mileage charge, as is customary in connection with other types of use. When calculating the depreciation of a vehicle, provision must be made for what is known as its residual value, that is what the owner is likely to get for the machine when he disposes of it, probably in part-exchange for a new vehicle_ I imagine that £200 will be the most that will be allowed, and the next step is to deduct that amount from the value of the vehicle, less tyres. Thus we get a sum of £1,700 on which depreciation must be calculated. For a life of five years, the depreciation figure is £340 per annum or £6 16s. per week, allowing 50 weeks to the year. I can now set out the fixed charges per week in connection with this oil-engined 4-ton high-sided lorry. First comes the tax, and as it is unlikely that the vehicle will weigh as much as 3 tons I shall assume that the tax is £30 per annum or 12s. per week. The standard rate of wages is £7 10s. per week to which must be added 15s. on account of holidays with pay, 6s. per week for National Insurance, and is. 9d. for insurance under the Workmen's Compensation Act. The total is £8 12s. 9d. per week.
Next there is the levy at 3s. 3d. per week; garage rent at 10s.; insurance £1 5s.; interest on first cost at 4 per cent. per annum, £1 12s.; depreciation, £6 I6s.; and establishment costs at £3 per week. The total is £22 Its, per week. To that must be added 25 per cent. for profit, which is £5 12s. 9d., so that the total time charge-a basic figure to which must be added the charge for mileage-is seen to be £28 3s. 9d.
Charge Per Hour It is more convenient to have this charge set out on an hourly basis and, as the standard week is one of 44 hours, the foregoing amount must be divided by 44, giving 12s. 10d. as the charge per hour.
Now for the running costs. The fuel consumption rate will be in the neighbourhood of 14 m.p.g., bearing in mind the fact, to which I have already referred, that the consumption is likely to be much more than average. Taking the price of oil fuel to be 4s. Old. per gallon, that means that the cost per mile for fuel will be 3.5d. as near as makes no difference.
For lubricants I take 0.22d., a little more than average, because experience shows that where fuel cost is high that of lubricants is also above average. Tyres I shall assume to last for 24,000 miles. I give that figure with a little diffidence, but I am inclined to stand by it because tyres are now giving better mileages than was formerly the case. As I have already taken a set as costing £100, I must register Id. per mile on this account.
Maintenance costs are considerably higher on this class of work and some figures I have show an average of 2.5d. per mile. That is the last item of running costs, which thus total 7.22d. per mile. Add 25 per cent.-1.8d.-for profit and we get a mileage charge of 9d.
The petrol-engined vehicle will cost less to buy than the oiler, the difference varying according to make, but an average is around about £200. The initial cost of the vehicle we are considering may therefore be taken as £1,800. Deduct £100 for tyres and £170 as residual value, and we get £1,530 as the figure to use when calculating depreciation.
1306 a Year
Over five years, that represents £306 per annum, or 16 2s. 6d. per week to the nearest penny. I can run through the standing charges quickly along the same lines already followed in dealing with the oiler.
The tax will be the same, I2s. per week; the levy stays unaltered at 3s. 3d.; wages also the same at £8 12s. 9d.; garage rent 10s.; insurance £1 5s.; interest £1 8s. 10d.; depreciation £6 2s. 6d. and establishment costs £3. The total is 121 14s. 4d. Add £5 8s. 7d. for profit and the weekly time charge becomes £27 2s. lid., or 12s. 6d. per hour.
So far as the running costs are concerned the important item is that of petrol consumption, and I have found that 8 m.p.g. is applicable. With petrol at 4s. Id. per gallon that is 6.1fkl. per mile. For lubricants, 0.22d.; tyres, 1.00d.; maintenance, rather more than with the oiler, will be 2.68d. The total cost per mile is thus 10d. Add 25 per cent, for profit-2.5d.-and we get 12.5d. per mile as the charge.
A good deal of the work for local authorities necessitates the use of tippers. Operators should beware of charging the same for tippers as for lorries with fixed bodies; if they do so they are likely to lose on the deal. A set of figures for the operating cost and recommended charges for the hire of tippers is given in the table in the next column. The following explanation of the details contained in it may be of assistance.
The first cost of the tipper is likely to be more than that of a sided lorry of the same capacity, for the simple reason that there is the tipping gear to be dealt with. 1 have assumed that the difference in first cost is £200. In that way I arrive at the amounts quoted in the table. The first cost of the oil-engined tipper is taken to be £2,200. Proceeding in the usual manner, the first thing to do is to arrive at a net figure for depreciation. Deduct the cost of a set of tyres, £100. leaving £2,100. Then assume that the value of the machine after five years of use is £210, and subtract that amount from £2,100. The remaining £1,890 is the amount which must be used as the basis for the calculation of depreciation. Dividing £1,890 by five-for the five years of life of the vehicle-we get £378 as the provision which must be made each year on account of depreciation. That is £7 4s. per week.
The other items of fixed costs are the same as for the fixed-body lorry except in so far as the tax, at 14s. instead of 12s., and interest on first cost, £1 15s. instead of £1 12s., are concerned. The total difference between the two is 13s.. in favour of the petrol-engined machine.
Every item of the running costs for the tipper is undoubtedly higher than that of the ordinary sided lorry. For fuel I shall assume 12f m.p.g. which, with fuel costing 4s. Old. per gallon, is 3.85d. per mile. For lubrication take 0.24d., a little more than for the normal lorry, for the reason I have already given, that when fuel consumption goes up, so also does that of lubricating oil. Tyres cost considerably more on a tipper, owing to the harder conditions: 1.15d., an increase of 0.15d. on the amount quoted for the lorry, is a minimum. Maintenance, too, is an item which is higher and the amount set down in the table. 2.70d., is moderate. I have been informed by experienced operators that 3d. per mile is not excessive.
The total running cost is, therefore, 7.94d., and if 1 add 2d., as being 25 per cent. profit, I get nearly 10d. per mile for the appropriate charge. The time and mileage rates for a 4-ton tipper are, therefore, 13s. lid. and 10d. respectively. I do not propose to go into detail in respect of the petrolengined tipper; the procedure is the same as that described and the results are set out in the table. The haulier is recommended to study the figures if and when he is preparing to tender for municipal haulage. S.T.R.