Effects of Speed on Cost
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Simple Calculations Show Whether a 20 m.p.h. or • 3o 'm.p.h. Vehicle will be More Profitable on Regular Work Over a 210-mile -Route.
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THE other day I had a conversation with an operator which provided ample food for thoUght: He was a man in a fairly big Way: of business and was only recently released from 'Government %yr:irk and preparing to take up commercial traffic again. He had a moderate-sized fleet of a varied make-up, especially as regards load capacity.
"1 am in a position to handle regular% blocks of traffic Over a route which is 210 miles long. I can get full loads from here and, generally speaking, 75 per cent, of full loads back. I'm just getting down to a question of cost and 1 want to know the best type of vehicle to use for this traffic, in order to bring my cost per ton down to a minimum. The principal point I have in mind," he said, "is the difference between a 30 m.p.h. vehicle and others. I want to know whether I would be better advised to use some of my 6-tonn.ers or 8-tonners on the job." I can answer that question, I think," 1 replied, "almost without any calculation. You wilt find the 6-tonner the more economical proposition."
"I thought that, too," he said, "but what I would like is to get down to some practical figures," "Let's take the 6-tanner first," I rejoined. "It's easier to deal with, anyway," " What makes you say that?" he asked.
Complete Journey in a Day
"Well, it is pretty obvious," 1 said, "that with a 30 m.p.h. vehicle you can reckon on doing 210 miles in eight hours, averaging about 26 m.p.h. If we allow an hour for loading and an hour for unloading, you can do a single journey complete in a 10-hour day. And you won't be able to do that with a larger vehicle."
" Hm, yes," he said. -".I suppose you are right. Very well, let's go aheadwith the figures for this 6-tonner."
"We already have some -useful figures," I replied, " inasmuch as we know that if you work a six-day week you will do three journeys each way. On each outward run you will carry 6 tons, making 18 tons, and, with a 75-per cent. return load, eti tons on each homeward run—another 131 tons. You will carry 311 aorts per week for a mileage of six times 210, which is 1,260 per week.
"That," I went on, "is at least a start. That is, if you accept an average of an hour for loading and an hour for unloading for every load you collect."
"An hour should cover it," he answered..
"Good," I said, then let's go into the .cost. First of _ all, are you using petrol or oil?.", What," he exclaimed, " on a .1,260-mile week! I'm using ail, -clf course."
"Alt right,' I said, " that means that you probably paid about £1,000 for each vehicle, and I expect they have 34-in. by 7.-in. tyres all round."
He agreed and I continued: "Right, let's begin on the cost. First, your standing charges. Licence will cost 14s. a week. I will allow 10s, for garage rent. What do you pay for insurance? "
"Seventy-five pounds a year," he said.
"That is 41 10s. a week. Interest on £1,000 at 4 per cent. is £40.a year, that is, 165. a week. Your overheads— I know what they are," I said, "because, if you remember, we went into them very closely some time ago."
"Yes," he said, "I had to agree to 12s. 6d. per ton of payload, although it went against the grain, as it seemed to me to be high."
Wages and Overtime
"Never mind," I said, "you agreed it. That is £3 I5s. a week for a 6-tanner. As regards wages, for the time being the basic rate for a driver on long-distance traffic with a 6-tonner is £4 18s. a week. First you want to add 9s, to that to cover unemployment and health insurances, workmen's compensation, and provide for holidays with pay.
"There is also overtime of 16 hours to be considered. For the first eight hours you will pay at the rate of 2s. 9Ad. per hour. That works out at a fraction over LI 2s. 3d. On top of that you have another eight hours at time and a half, which is 35. 41d. per hour, giving £1 6s. 9d. Your total wage bill is thus £7 16s. per week. In addition, there is subsistence. The man will he away three nights a week, and at 9s. per night that is El 7s. per week. Those are all your fixed charges. Shall we add them up?"
"I've been doing it as you went along," he said. "The total is £16 8s."
." Now what about the running costs? What mileage to the gallon do you get? "
"Sixteen," he answered.
"And you pay Is. 81d. for your fuel? "
"Yes."
I worked that out at 1.13d. per mile for fuel. I gave him 0.18d. for oil, which he didn't dispute, and. then. we
turned to tyres. He said that mileage per set varied greatly, but suggested 16000 as a fair average. The cost was 1.28d. per mile.
For maintenance, my friend accepted my figure of 1.26d. per mile, which I told him was a fair average, and then we turned to depreciation.
You have paid £1,000 for the vehicle, and subtracting £85 as the cost of tyres we get £915. If I take £90 as the residual value after 120,000 mites, £825 is your depreciation figure "-which worked out at 1.65d. per mile.
That's exactly 5id. a Mile for running costs," he said _ " Now I said " we have 1260 miles at '50 a mile, or £28 17s. 6d. per week for running costs. The total operating cost of your vehicle, plus establishment costs and subsistence for the men, is £45 5s. 6d. per week, and for that aunt you carry 31i tons." A simple calculation showed that that was equivalent to a cost of 28s. 9d, per ton. .
" Novv let's work some figures out for the 7-8-tanner," I said. ." What load are you carrying on it, by the Way?"
Seven and a half tons," he said.
" Let us assume, then, that you carry 13 tons on a round journey-7i out, 54. back, Now, if you don't exceed the speed limit of 20 m.p.h with this 7-8-tonner, your average speed is going to be about 17 m.p.h. Obviously, we shalt not be able to consider a round journey in two days. We shouldn't get to the destination on the first day. We had better consider a time-table. First of all, what are we going to allow for the average time for loading this big vehicle ?"
"In proportion," he said, "I suppose about one and a quarter hours, and the same for Unloading."
Right," I said, "let's start on Monday at 8 a.m. By 9.15
he is loaded and away, and he will run until 6.30, with half an hour off for his midday stop. This is eight and threequarters hours, and at an average of 17 m.p.h. he will cover 149-shall we say, 150 miles by the time he knocks off. He has still another 58 to go. If he starts next morning at 7 o'clock he should cover that 58 miles by 10.30. By the time he has unloaded and loaded again, it will be 1 o'clock, when he will probably have his lunch, and he won't start back until 1.30. If he and you are satisfied with a._ 10-hour day, he will finish by 5.30, that is, four hours' run, and he wilt have covered 68 miles, leaving 140 for the next day. He will do that in eight hours, and if it takes him one and a quarter hours to unload, he will finish just short of 10 hours, but he will probably register it as 10 hours. On that basis he is going to do only two round journeys in a full six-day week, covering 840 miles and carrying altogether 26 tons.
Subsistence Rates Higher, "As to cost and dealing first with the standing charges, the licence will be £1 4s. a week. Wages will be the same as for the 6-tanner (V 16s.), but as the man is going to be four, nights away from home, instead of three, his subsistence will rise to £1 16s. a week. We will take 10s. a week for rent. What's the insurance figure ?"
"On 8-tonners, approximately £100 a year."
"That's £2 a week," I said.
"How much did you pay for your 7-8-tanners 7" " One thousand eight hundred pounds each," he said.
"The interest on that sum is practically £1 10s. a week. We have still the ES-a-week establishment charges, and the total is £19 16s. Now, what about running costs'? What mileage to the gallon do you get 7'.'
"About About 13."
"Well, at Is. 84d. per gallon that is 1.55d. We'll take 0.18d. for. oil. What about tyres; 36 ins. by 8 ins., I suppose ?" "Yes," he answered, "and you can take it that I'm going to get 24,000 miles to the set. Tyres cost about £114 a set." "That's 1.14d. per mile," I said. Less than for the 6-tonners."
"Yes," he replied, "that is only to be expected. You can always get a much better mileage on 36 by 8s, even carrying an 8-ton load, than on 34 by 7s, carrying 6 tons."
"I'll take your word for it, anyway, and I hope you'll take mine for 1.33d. for maintenance."
That was agreed, and we then went into the question of depreciation, allowing a 200,000-mile life. The result of our calculations was 1.80d. per mile, giving us a total of 6d. per mile for the running costs of the 8-tonner.
20 m.p.h. Vehicle Costs Too Much
"Now," I said, "840 miles at 6d. per mile cost £21. Add that to your fixed costs of £19 16s. and you get £40 16s. per week, for which you have carried only 26 tons, so that the cost per ton is practically 31s. 5d. That is about the resat I expected, inasmuch as it is considerably in excess of the cost using a 6-ton 30 m.p.h. machine. Have you enough traffic to justify using 12-tanners ?" I asked.
"Yes, I suppose I have." .
" You might find that a 12-tonner would be the most economical proposition," I said. "The big problem is time for loading and unloading. It will take two hours at least, so that assuming a 12-tanner runs at the same speed as the 7-8-tanner, you want to make use of the full 11-hour day and get a little help in loading and unloading."
"I think I could manage it," he said. "You must remember that if we take two hours in stacking a full 12-ton load, we shall ifrobably save half an hour or so on the reduced return load."
Calculation showed that tax cost £2 4s. per week, wages £9 5s. 7d., subsistence £1 16s., rent 12s., insurance £2 5s., interest £1 17s. (the vehicle costing £2,300), and establishment costs £7 10s., a total of 425 9s. 7d. per week.
He gave me a figure of 1i m.p.g. for fuel, so that our figures for running costs were: fuel, 1.76d.; lubricants, 0.22d.; tyres, 1.70d.; maintenance, 1.72d.-' depreciation, 2.10d., a total of 7N. per mile and, at 840 miles per week, that worked out at £26 5s. The cost per weekwas £51 14s. 7d. and, as the tonnage carried was 42, the cost per ton was 24s. 8d., thus showing, as I expected, that the 12-tanner was the cheapest of the three.
"I'm not so sure about the 12-tanner being a suitable vehicle for the job," he objected. "Although there is plenty of traffic, I couldn't always depend on there being 12 tons available on any particular day and, of course, if the load fell short it would cease to be a paying proposition. The same thing applies with a return load. With a 6-tanner have to get only four or five tons to bring back and I'm satisfied, and with the 7-8-tonner I've to get only five or six tons. But I have got to find nine tons as a return load for a 12-tanner" and, although I might be able to do it fairly frequently, it would probably mean pottering about at the end of the journey, picking up two or three tons here and two or three tons there, and that would knock your time schedule sky high."
"I'm afraid it would," I said.
" And, by the way," he said, "I quite forgot. Most of the people I work for have a five-day week and their people work only 44 hours, so that some of those times will be considerably upset." "That's a nice thing to say:' I said, "after we've finished these calculations. Now we'll .have to do it all over again."