Problems of the
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HAULIER and CARRIER
Utilizing Our Understanding of the Term "Overheads" to Enable Us to Appreciate Variations in Tonnage Rates
IHAVE shown that, in assessing his , charges, a haulier must take into account three main items, namely, materials, overheads and profit. In the ordinary way there is no labour to be taken into consideration, but if, as happens in some classes of work, extra help has to be provided to facilitate loading and unloading, there will be a fourth item, labour, and the amount of it will be the wages paid to those who are employed in that work,
My present purpose is, however, not to go deeply into the actual methods of assessing charges. I have done that frequently and, I suppose, shall do so again and yet again, but not just now. What I am trying. to do at present is to make clear to readers how important a factor is the size of the vehicle when tonnage rates are being determined, or, having been determined, are being criticized by competitors.
I have shown, by examples, that there is something about the size of the vehicle which does affect the matter, but now I must make the underlying principle of the subject understood.
Comprehensive Data.
If the _reader will take up his copy of The Commercial Motor Tables of Operating Costs (the latest edition appeared in the issue of The Commercial' Motor dated July 14th), he will find that most of the data be requires in order to assess his charges are there set out He will find, in respect of all sizes and types of commercial motor, information as to running costs per mile, standing charges per week, and establishment charges and profits.
Now, of those four, the first and second approximate fairly closely to the actual amounts which will have to be expended by each and every owner. They may not be the exact figures, but they will be near—at least, they are sufficiently near for my present purpose and I shall assume that they are exactly right.
Of the third and fourth items I am not so sure. Establishment charges vary a good deal and there is no standard of comparison. An amount which, to one man, may, in his circumstances, seem to be reasonable, may. appear to another to be exorbitant: The figures in the Tables are at least reasonable. A man may spend the amounts quoted and face the official a348
receiver with a clear conscience, that is, always supposing that he is -so'utrfortunate as to have to explain his expenditure to that official. Perhaps it will sound less ominous if I state that the amounts quoted are not likely. to cause anyelevation of the eyebrows of the income-tax assessor.
At 'any, rate, suppose, to cut a long story short, I take it for granted that the figures for establishrnant costs are admissible equally with those for the' running costs and standing charges of the vehicles themselves
So far as the figures for profit are concerned, they are minimum figures. It is of interest to recall here that this is the very point on which this short series of articles turns. Readers have written to me stating that the rates I recommend are unobtainable. My reply has been, and always will be, that the rates are the least that are acceptable if a proper profit is to be earned. In what follows I am, therefore, going to adhere to the figures for profit given in the Tables, qualifying them only by the statement that the anaounts earned should be greater rather than less than those I advocate.
Some Helpful Examples.
Now, I must make certain assumptions so as to put, all the various sizes of vehicle on a common basis. I am going to take a nine-hour day as standard. I am going to assume that no actual running is done on Saturday, that day being shed day.
I shall assume that the average time needed to load a ton is 12 minutes and that only eight minutes are necessary for unloading. That means the terminal delays amount to 20 minutes per ton, no matter what may be the size of vehicle. I am going to take it that the average speeds are two-thirds the legal maximum for distances of legs than five miles from point to point; three-quarters the legal limit when the out or home distance is over five miles but less than 10 miles, and up to the legal limit when the distance is10 miles or over.
The meaning of the foregoing is that, for all capacities of vehicle up to and including 2 tons, for which the legal limit of speed is 30 m.p.h., the average" speed over a run of less than five Miles will be assumed to be 20 m.p.h., for distances over five miles but less than 10 miles the average will be 22i m.p.h., but if the journey be 10 miles or over, then the average speed will be taken as being 30 m.p.h.
For heavier vehicles, those having a capacity of 3 tons or over, the legal limit of speed for which is only 20 m.p.h., the corresponding figures will be: 13-i m.p.h, in respect of a run of less than five Miles, 15 m.p.h. for distances of five miles or over but less than 10 miles, and 20 m.p.h. for all journeys which are 10 miles or over.
Before proceeding farther I will cite a couple of examples of the application of the above data. First of all take a tomer, as being easy to discuss. It needs 20 minutes to load and unload. If It is to carry its load a distance of only a mile, it will do so at an average speed of 20 m.p.h., and will, therefore,. be occupied for a period of six nainutR3 (three miniutes
each way) in travelling. The total time for a complete trip will, therefore, be 26 minutes, which is 13 minutes per mile run.
Now imagine the same vehicle taking a full load for a distance of 120 miles. The time for loading and unloading will be the same -as before, namely, 20 minutes, but the travelling time will now be eight hours (240 miles at 30 m.p.h.). The total time is now 8 hours 20 minutes, which is equivalent to 2A minutes per mile. Compare this with the 13 minutes per mile of the other example.
Now to go to the other extreme and assume the vehicle to be a 12-ton rigid six-wheeler. For the mile lead, always supposing that a wagon of this size were to be employed on such work, the times would be as follow :—Loading and unloading, four hours ; travelling, two miles at 13i m.p.h., just short of nine minutes, and total, four hours nine minutes, which is equivalent to 2 hours 4i minutes per mile. For the 120-mile journey the travelling time, which is, of course, all that differs, would be 12 hours and the total 16 hours, which is just four minutes per mile.
There is something in those four examples which should give readers an inkling of the point that I am going to make. Over the short run the tanner takes
13 inimutes per mile, as against the large vehicle's two hours odd. On the long run, however, the small lorry takes 2 n minutes per mile, -whilst the big one takes only four minutes.
The small vehicle has, therefore, a tremendous advantage over the large one when on short runs, but loses most of that advantage when the distance increases. That advantage disappears altogether if the weight of the load be taken into consideration as well as the distance. I can do that by taking the times per ton-mile.
For the 1-ton machine, as a total time of 20 minutes is needed for the round journey of a mile each way, the time per ton per mile is 26 minutes. On the long journey, taking, as we must, the total time, 8 hours 20 minutes are necessary to carry a ton for 120 miles ; the time per ton per mile is, therefore, 4minutes.
Turning now to the large vehicle, for the short jour ney the time per ton-mile is the total divided by 12, that is, 201 minutes, and on the long run the time per ton per mile is only j minute. Our chief interest is, however, with cost rather than time and, although time is money, it is not possible to equate them exactly. The question is, how much should these jobs cost, assessing the amount according to the method I have just outlined? The basic figures for the tanner are 2.29d. per mile for running costs (materials) ; £4 8s. 9d. , standing charges and fl establishment charges (£5 Ss. 9d. per week overheads) and £4 per week profit. Spreading the weekly standing charges over 45 working hours, they are equivalent to 29d. per hour. The profit is 21d. per hour. The charge for the one-mile trip should therefore be 2s. 3d., made up of is. 10d. for the overheads and profit and 5d. for the mileage.
For the long journey the charge, similarly calculated, should be £3 10s. Ocl., comprised of £1 14s. 9d. for 8 hours 20 minutes at 4s. 2d. per hour for overheads and profit, and 240 miles at 2.29d. per mile, making £2 tis. 9d. These amounts, namely, 2s. 3d. and £4 Os. 6d., are also the prices per ton for the work. S.T.R. (To be continued.)