Curbing the Cost of URGENT DELIVERIES
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Unsuitable Vehicles Employed for Work at Short Notice Can Mar the Overall Economy of a Fleet : Expenses for Light Vehicles with Petrol and Oil Engines
13ARADOXICALLY, the continued drive for economy in trade and industry has often increased the cost of providing appropriate transport services. Reduced retail stocks, for example, coupled with a more rapid sales turnover, have necessitated more frequent deliveries of smaller loads. Correspondingly, big industrial units, employing large labour forces, may be geared to a high rate of production and yet be brought to a standstill unless .a small, yet vital, item of machinery can be replaced immediately.
On such occasions, transport managers are expected to provide the necessary service immediately, almost regardless of cost. Traders and industrialists may rightly decide that these urgent journeys are justified, although they may add substantially to the transport department's expenditure, with little balancing revenue in terms of tonnage carried.
Such instances are not infrequent, and because of the increasing tempo of industry generally, they are more likely to increase than to decrease. However efficiently journeys may be planned in advance it is unlikely in any medium-sized or large organi= zatiori that these urgent, yet uneconomic, trips can be eliminated. It remains the transport manager's responsibility to ensure. that such journeys are undertaken by vehicles with the lowest operating cost: assuming that the consignment involved is small in dimensions and weight.
In this context, let us examine the operating costs of the popular fur-wheeled 5-eivf van, and. by way of comparison, the corresponding figures for a three-wheeled vehicle of similar capacity, both fitted with petrol engines. It will be assumed that the four-wheeler costs 1400. With an unladen weight of 14 cwt., the annual licence duty will amount to £12 10s.. or 5s. per week, based on a 50-week year. Driver's wages will -be reckoned at £9 4s. 3d. per week. It is appreciated that this type of vehicle may well be operated under C licence, and statutory rates of pay will not necessarily apply. Additionally, adult workers may not be employed, but to provide ready comparison between the four-wheeler and the three-wheeler, full rates of pay will be assumed in both cases. Allowances for holidays with pay and insurance contributions are included.
Rent and rates in respect of garaging the vehicle are estimated at 6s, 8d. a week. Vehicle insurance is reckoned to cost £15 10s. a year, or 6s. 3d. a week. Allowing a nominal rate of interest of 3 per cent., this item will add a further 4s. 9d., giving a total of £10 6s. 11d. a week for these five items of standing cost. On a 44-hour week, the amount per hour would be 4s. 81d.
With petrol purchased at 3s. 10d. per gallon and a rate of consumption of 32 m.p.g., fuel costs per mile would amount to 1.44d. Lubricants are reckoned to add 0.15d. With a set of tyres costing £27, and an estimated life of 20,000 miles, tyre cost per mile would be 0.28d. Maintenance, including washing, _servicing and repairs, is estimated to cost 0.76d.
Depreciation is calculated by first deducting the cost of the original tyres from the initial price of the vehicle,
giving a ,balance of £373. From this amount a further deduction of £47 is made on account of the estimated loss', on resale, of 121 per cent, of the initial cost, leaving a finals balance of £326 to be written off. Assuming a life of 75,000 miles for this type of vehicle, the depreciation cost per mile becomes I.04d.
Running costs per mile total 3.67d. and, first assuming an average weekly mileage of 400, the total operating costs per mile are 9.88d.
If the vehicle is used only for occasional work, with a resulting lower weekly mileage, some of the running costs will have to be adjusted. Assuming that the weekly average is 200 miles, it would be reasonable to conclude that there would be a greater proportion of stop-and-start work, with a resulting higher consumption of fuel, Allowing a nominal increase of 10 per cent., fuel cost per mile would become 1.58d. The cost of lubricants and tyres remains the same, but maintenance is increased to 1.04d. This is because washing, and possibly -some light servicing, would continue to be carried out weekly, despite the lower mileage.
Also because of the lower mileage, an element of obsolescence may eventually be introduced, necessitating disposal of the vehicle before it was justified by mechanical unfitness. ' Depreciation cost per mile will, therefore, be increased to I.14d.. giving a total running cost of 4.I9d.
Dividing the standing cost per week of £10 6s. 11d. by 200 gives an operating cost per mile of 16.61d. The corresponding operating costs per week would be £13 17s. for 200 miles and £16 9s. for 400 miles.
• Lower Insurance With an unladen weight of 8 cwt., the three-wheeler would carry an annual licence duty of £5, or 3s. per week. Wages• remain at E9 4s. 3d. and rent and rates are reckoned at 6s. 2d. The annual insurance premium will be slightly less at £14, or 5s. 7d. per week. Assuming the initial cost of the three-wheeler to be £360, the interest charged will amount to-4s. 3d. per week. Total standing costs per week will be £10 2s. 3d., or 4s. 71d. per hour.
Where the average weekly mileage is 400, ftiel cost per mile is reckoned to be 1.21d., on the basis of a consumption rate of 38 m.p.g. Lubricants add 0.15d. per mile. as 'before, but the cost of a set of tyres becomes. £18. With the same life of 20,000 miles, tyre cost per mile wilt be 0.21d. Maintenance is ieckoned a little lower at 0.69d., whilst depreciation will .be reduced to 0.96d, These five items of running cost total 3.22d., • giving a total operating cost per mile, at 400. miles per week, of 9.29d.
If the weekly average is only , 200 miles, fuel cost will be increased to I.33d., maintenance to 0.93d. and depreciation to I.06d. This gives a running cost per mile of 3.68d., and an operating cost per mile of 15.82d. Total operating costs per week would be £13 4s. for 200 miles, and £15 10s. for 400 miles.
• By comparison with the four-wheeler, the three-wheeler would, operate at 0.79d. per mile less at 200 miles per week and 0.59d. less at 400 miles. There would be corresponding savings of 13s. and 19s., respectively, in favour of the -threewheeler in the total operating costa per week.
An alternative vehicle suitable for conveying small urgent deliveries as economically as possible is the oil-engined version of the 15-cwt. van. The economies provided by the oil engine offset, to a substantial degree, the proportional increase in Operating costs normally expected because of the greater carrying capacity. This particularly applies now that oil-engined 15-cwt. vans are included in manufacturers' lists, as distinct from conversions.
An unladep weight of 1 ton 9 cwt. would result in an annual licence duty of £20, or 8s. per week. It will be assumed that wages will remain at £9 4s. 3d., whilst rent and rates are assessed at 75. 8d, per week. Because of the increased size of the van, the annual insurance premium is reckoned at £20, or 8s. per week.
Cost per Hour With an initial outlay of £630, interest charges will amount to 7s. 6d. per week, resulting in a total of £10 I5s. 5d. for the five items of standing costs. The corresponding cost per hour would be 4s 101d., assuming a 44-hour week.
Allowing for an average fuel-consumption rate of 33 m.p.g. and oil fuel at 3s. lOid, a gallon, fuel cost per mile amounts to 1.41d., whilst lubricants add 0.20d. With a set of tyres costing £45, and an estimated life-of 25,000 miles per set, tyre cost per mile would amount to 0.43d. Maintenance is reckoned at 0.84d. per mile. .
Adopting the same, procedure as before, and again assuming a vehicle life of 75,000 miles, depreciation cost per mile will amount to 1.64d. Running costs thus total 4.52d., giving an aggregate operating cog of 10,98d.
These calculations have been made on the assumption that the weekly average mileage is 400. If it were 200, some adjustment in the running cost would be neceasary, but because the van is fitted with an oil engine, no addition will be Made to•the fuel cost, despite the expected stop-and-start work.
Maintenance cost will, however, be increased to 1.20d., because some of the duties will be performed on a time, rather than mileage, basis. Similarly, depreciation will be increased to allow for pcissible obsolescence and will amount to 1.80d. Running costs thus total 5.04d. and operating costs 17.97d; per mile tvhen the weekly avrage mileage is 200. The corresponding cost per week' would be £14 19s. at 200 miles and £18 6s. at 400 miles per week. S.B.