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The Unforgiving Minute
Page 92
Page 95
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Just How Much Are Modern Traffic Conditions and Bans Costing Urban Operators?
AULIERS and ancillary ' users whose work is mainly • in towns and cities have reason to reflect ruefully on an
H
age when it was possible to "fill the unforgiving minute with 60 seconds' worth of distance run." In recent months both. operators and traders have shown increasing concern in proposals by the Government, at both national and local levels, to introduce or extend bans or restrictions on the loading and unloading of goods vehicles.
From the experience which the Minister of Transport is obtaining from the introduction of such schemes in the London area, further proposals may be made for similar schemes in the provinces. It is a situation to which national road transport organizations are fully alive and treating as a matter of urgency. Meanwhile, the operator has to foot the bill for all these delays and restrictions, with every prospect that traffic conditions in general, irrespective of statutory bans, will deteriorate. " Customers, and even some operators, may tend to ignore the effect, of delays on the cost of collection and delivery, dismissing it as little more than an occupational hazard to be absorbed within whatever margin was originally allowed, either for exceptional contingencies or anticipated profit. . ,
Though this policy might be permitted when delays were exceptional, 'such a' situation no longer applies. Unless urban operators adjust their estimates and charges accordingly to make allowance tor increasing delays on the road, their profit margin _ must inevitably be whittled away, or even a loss incurred.
: Before estimates and charges are adjusted, however, an assessment has to be made of just what these delays are costing. This is far from easy because such increases in cost can be caused by both direct and indirect factors arising from traffic delays, and the incidence of these factors can vary relative to the type of delivery. Thus, for example, after some experience of urban operation it could be determined reasonably accurately the extent to which peak-hour work increased the fuel cOnsumption of a petrol-engined van.
THE indirect effect on the true cost of delivery caused by
delays accumulated during a working day could, however, vary substantially. In one instance it might amount to little more than the payment of the appropriate Overtime to the -driver concerned although, week by week, this could prove a substantial addition to the operator's expenditure.
• In other circumstances, the real addition to the ultimate cost of delivery might prove to be much greater. Because of the limitation of shop or factory hours part of the load may not be delivered the first day and have to be brought back for redelivery later. Whether or not a transhipment is then involved, further vehicle hours will certainly be necessary to effect the ultimate delivery and the whole of this rearrangement will add substantially to the operator's expenditure, both in vehicle and overhead costs, without any compensating increase in revenue. Rather the reverse, because it is more than likely that there could be a loss of goodwill, which late delivery invariably incurs, and which could have a tangible value in the future if not immediately.
Functionally, transport operation can be readily divided between engineering and traffic departments. The engineering department is concerned with the supply and maintenance of the vehicle, whilst the traffic department is responsible for its economic employment. By selecting the appropriate vehicle for the job and ensuring efficient maintenance, the cost of operation can be kept to a minimum. Skilful marrying of journeys and loads by the traffic department can likewise c54 exploit to the maximum the amount of useful work done by vehicle.
There is, however, an obvious limit to the amount of contra which either an engineering, or traffic department can exercis. over operating costs or traffic revenue. There have alway been several factors over which both have little or no control The physical properties of a particular traffic may inherentl: incur extra cost because, for example, it is either perishable o fragile. Despite long experience and intelligent estimating wide fluctuations in the amount of goods available to be carriel must inevitably increase the amount of uneconomic working The growing tendency of trade and industry to limit stocks an demand quicker and more frequent deliveries, may reduce thei own internal costs, but only at the expense of the transpor department or operator.
THESE, and similar factors, are ones with which experience 1 transport operators have had to grapple for many year: What is of especial significance now is that the number an extent of factors which are beyond the operator's control, bt which affect his costs, are growing with every increase in traffi and restrictions on loading or unloading. It is, therefore, vital] important to the road transport industry that any such addition to overall operating costs should be reflected in subsequer charges.
If, despite strong and reasoned objections by their appropriat associations, restrictions on operators' activities continue to b imposed in "the wider public interest," then it is equitabl that the same "public "—as hauliers' customers—should contr bute to that cost. To allow such additions to costs to go b default because of inadequate publicity would be a psych( logical error, because the inevitably reduced profit margi would then become an accepted fact, both by the 'customer an operator.
I now give the cost of operating a goods vehicle of the tyr likely to be used on urban collection and delivery, namely, 30-cwt. van fitted with an oil engine. The unladen weigl would be around 1 ton 18 cwt., incurring an annual licence dut of £25 per annum. This is the equivalent of 10s. per wee based on a 50-week year to allow for two weeks a year whe the vehicle may be off the road for driver's holidays and majc overhauls. Although van boys may sometimes be employed on this type af vehicle, it will be assumed in this instance that the driver is an adult worker and that his vehicle is based in a Grade 1 area as defined by the Road Haulage Wages Regulations Ft.H.(70). Inclusive of additions for both National Health and miployers' insurance contributions, and an allowance for lolidays with pay, the total amount payable by the employer in
44-hour week in respect of wages would be £9 14s. 8d. Rent )1. rates in respect of garaging the vehicle will be reckoned to :ost 8s. 8d., whilst insurance adds 10s. 10d. a week, based on in annual premium of £27 10s.
With an initial outlay of £890 on this 30-cwt, oil-engined van, nterest charged at a nominal rate of 3 per cent, on this outlay would add 10s. 8d. a week, giving a total of £11 14s. 10d. for hese five items of standing costs. Where the vehicle averaged 100 miles a week, the equivalent standing cost per mile would ie 7.04d.
Fuel cost per mile is estimated to cost 1.83d. This is calcuated on the assumption that fuel oil is purchased in bulk at s. 102d, a gallon and that an average 1.ate of consumption of 5.5 m.p.g. is maintained. Lubricants add 0.22d. and tyres 1.56d, per mile. This latter calculation is based on the issumption that a set of tyres cost £70 and have a mileage life if 30,000. Maintenance is reckoned to cost 1.26d. per mile, nclusive of washing and servicing.
In order to calculate the amount to be written off as lepreciationu the cost of the initial set of tyres is first deducted rom the price of the vehicle, with a further deduction quivaIent to the estimated residual value. In this instance. a )alance of £718 is left to be written off. Allowing a life of 00,000 mites for this van, the depreciation cost per mile will hen be 1.73d. The total for these five items of running costs ;, therefore 5.60d. which, when added to the corresponding landing cost per mile, gives a total operating cost of 12.64d.
,11TILL assuming that 400 miles a week are averaged with this van, the running cost per week will be £9 6s. 8d. and the orresponding total operating costs will be £21 Is. 6d. a week. Whilst the calculation of operating costs in this manner is tandard practice in both "The Commercial Motor Tables of )perating Costs" and this series of articles, the employment of le results obtained to calculate the ultimate cost for each unit elivered, except in specified instances, must be largely ypothetical. Nevertheless, some benefit can be obtained by oting the percentage differentiation in cost according to arying conditions.
For the purpose of this exercise, we will assume that this van ,orks a five-day week and effects collection or delivery of 00 units a day.Assuming in the first example that the day's • ork was accomplished within standard hours, the total peratirig cost for the day would be £4 4s. 4d. and the cost etunit collected or delivered, 10.12d.
Next, we will assume that two hours' overtime a day is incurred. If this were to continue throughout the week some of the overtime, namely six hours, would be payable at time and a quarter and the remainder at time and a half. Taking the average, we will assume that the daily addition amounts to 1 Is., giving a total for the day of £4 15s. 4d. The resulting cost per unit is then 11.44d.
Despite the overtime incurred due to traffic delays, it has so far been assumed that the day's work as originally plannednamely, 100 collections and deliveries-would, in fact, be accomplished. Because of customers' limitations on the time they are prepared to accept or load the goods, such a situation may not arise in practice, with the result that some of the work may not be completed. If, as in the second example, two hours overtime a day were incurred because of traffic delays and, in addition. only 80 of the 100 units were collected or delivered, then the cost per unit would go up to 14.30d., an increase of 40.59 per cent. in distribution costs. Though the number of units and time taken in this example are hypothetical; similar circumstances are commonplace with many urban operators today. It is doubtful, however, whether the extent to which costs can be increased in this manner is always fully realiied.
APPLY a similar situation to the largest vehicle which would normally be used on urban collection and deliveries, namely, a 4-ton platform oiler, the five standing costs a week, calculated on the same procedure as before, would be: licences, 13s.: wages, £.9 14s. 8d.: rent and rates, 10s. 3d.: insurance, 12s. 4d.: and interest, 13s. 41.: total, £12 3s.. 7d. Correspondingly, the five running costs per mile would be: fuel, 2.23d.; lubricants, 0,24d.; tyres, 0.95d.: maintenance, 1.84d.; and depreciation, 1.39d.; total, 6.65d.
Again assuming an average weekly mileage of 400, the corresponding running costs each week would be El 1 Is. 8d.. giving a total operating cost per week of £23 5s. 3d. This would amount to £4 13s. Id, a day, again assuming a five-day week.
This time the total number of units collected •or delivered a day will be reckoned as 150. This increase is, of course, not directly in relation to the difference of carrying capacity of the two vehicles. but the time factor will limit the number that the larger vehicle can collect and deliver. Where no overtime was involved, the cost per unit would be 7.45d., increasing to 8.32d. when two hours overtime a day were incurred.
If, however, the total number of units delivered or collected during the day was limited owing to traffic conditions to 80 per cent. of the original total, as in the previous example, only 120 units would be dealt with by this larger vehicle. This would then give a distribution cost of 10.41d. a unit, an increase of 39.73d. over the basic cost and too large to be absorbed by existing profit margins. , S.B.