Further and Further
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Page 78
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WHEN discussing municipal haulage a month ago in this series comment was made on the common practice of quoting a charge for haulage in the form of a flat rate. Whilst it was agreed that there was a commercial need for such rates if innumerable calculations were to be avoided for virtually every journey made, it was emphasized how important it was that the operator fully acquainted himself with all the factors likely to affect his costs. Particularly he should concern himself with the terminal facilities and the resulting time likely to he involved in each return journey. For several reasons there has unfortunately been a deterioration in both terminal times and travelling times for many types of haulage work. Unless the operator makes corresponding adjustments in his charges the inevitable result is that profit margins which were previously adequate will be substantially reduced, Or even eliminated altogether.
The effect of terminal time is of particular importance on work involving relatively short leads because the effect of any delays, or original underestimation when formulating charges, will be accumulative.
First, it is to be understood that the term "lead mileage" is the distance involved in making the single journey from the point of collection to that of delivery. As a result a vehicle effecting such a delivery and returning for a second load would cover double the lead mileage. This point is stressed here because in many rate schedules of this nature the actual grouping of charges is based on lead mileages, rather than the total mileage for the return trips, and obviously note of this practice must necessarily be taken when formulating charges.
In a further endeavour to reduce the amount of calculations necessary for formulating charges, schedules can be drawn up on the basis of radial miles from a central point. But, as public roads do not, in general, take a direct route between loading and unloading points, nine road miles will, on average, be travelled between two points on a map of seven radial miles, and costs and charges will have to be adjusted accordingly.
TWO MAJOR FACTO RS As emphasized before in this series there are two major factors involved in the operation of commercial vehiclesnamely, time and mileage. Accurate costings are first dependent upon an appreciation of the manner in which these two factors are interrelated and, in specific instances, a prudent assessment of both the time and mileage likely to be involved in any particular job.
But before considering the method of calculating the cost of haulage appropriate to various lead mileages, it will first be necessary to determine the basic operating costs of the selected vehicles. For this purpose a 3-ton platform vehicle such as might be used on local road maintenance work, and a 7-ton tipper, have been chosen as representative of types of vehicle likely to be employed on work involving lead mileage,
It will be assumed that both vehicles are fitted with oilengines and that the unladen weight of the 3-tonner is 2 tons 8 cwt. With a resulting annual licence duty of £36 and a proportional allowance for an A-licence fee, the equivalent standing cost per week in respect of licences will be 15s. 3d. This is based on a 50-week year to allow for two weeks when the vehicle may be off the road for major overhaul or driver's holidays.
The cost of wages to the employer for a basic 42-hour week, assuming that the vehicle operates in a Grade 1 area as laid down in the Road Haulage Wages Regulations RH(74), is reckoned at £10 13s. I Id., inclusive of the recently-increased National Insurance contributions, and an adjustment to permit holidays with pay. Rent and rates in respect of garaging the vehicle amount to the equivalent of 17s. 9d. per week. Assuming comprehensive insurance cover, an annual premium of £87 12s, would be incurred, with a resulting weekly cost of £1 15s. Id.
The initial outlay on this 3-tortner is f1-,005 and, with interest charged at a nominal rate of 5 per cent, £1 Os. ld. a week is added in respect of this item.
This gives a weekly total of £15 2s. id. for these five items of standing costs. As this particular vehicle will be employed only on relatively short journeys, the average weekly mileage will be assumed to be 200, with corresponding standing costs per mile of 18.13d.
Oil fuel is reckoned to be purchased in bulk at 4s. 271d. a gallon and, with a rate of consumption of 22-5 m.p.g. maintained, fuel cost per mile is 2.23d. Lubricants add 0.25d. and tyres 0.76d. per mile. This latter figure is derived on the basis of a cost per set of £76 and a mileage life of 30,000. Maintenance adds 2-28d. and depreciation 1-61d. per mile. This calculation is on the basis of an assumed vehicle mileage life of 150.000, plus an addition in respect of obsolescence on account of the exceptionally low mileage.
The total running cost per mile is therefore 7-13d. or £5 18s. 10d. per week. Added to the standing costs, this gives a total operating cost of 25-26d. per mile or £21 Os. 11d. per week.
The addition of 20 per cent in respect of overhead costs and a further 20 per cent for profit margin gives a total charge per week of £29 9s. when averaging 200 miles a week. Alternatively this charge can be expressed as 120.83d. per hour (say 10s.) plus 9.98d. per mile (say 10d.).
Dealing now with the 7-ton tipper, it will he reasonable to assume that as compared with the previous vehicle the tipper will be engaged on much more arduous work, of which due note must be taken in formulating charges.
Fitted with a standard tipping body the unladen weight will be around 3 tons 14 cwt., with a corresponding annual licence duty of £55 10s. or £1 3s. per week. Wages are calculated as before, but being in the next higher category relative to vehicle carrying capacity, now amount to £11 2s. 8d. Similarly rent and rates are increased to 11 Is. 3d. and vehicle insurance to £2 19s. 9d. The initial outlay now amounts to £1,550, with a resulting equivalent weekly interest charge of £1 I Is.
Total for these five items of standing costs is therefore £17 17s. 8d. A higher mileage will be assumed for this larger vehicle, although still relatively low for its size-namely 400 a week. This gives a standing cost per mile of 10.73d. and the standing cost per hour, assuming a 42-hour week, of 11)2-19d. Dealing now with running costs, the actual conditions under which tippers can operate vary substantially and, correspondingly, so do the appropriate items of running costs. A major example is fuel consumption. Normally an average rate of consumption of 15 m.p.g. might be considered reasonable for a 7-tonner fitted with platform body operating on general haulage. It will now be assumed that this is reduced to 10 m.p.g. for the tipper, although in individual cases it is recognized that this rate could be better or even worse. With fuel purchased at 4s. 21d. as before, the fuel cost per mile becomes 5103d. With a corresponding addition to the cost of lubricants this item amounts to 0-34d. a mile.
A set of tyres for this 7-ton tipper is reckoned to cost £202 4s., but the estimate of likely mileage can be made only with some reservation. This is because the likelihood of a5I accidental damage to one or more covers after only a relatively small mileage could substantially reduce the average mileage for the set Nevertheless, this will be assumed to be 20,000, giving a tyre cost per mile of 2.43d.
Maintenance cost for this 7-ton tipper will probably have to include at least repairs or replacement of sides and tailboard, as well as some repair to the floor of the tipper body. Consequently a 331 per cent increase over standard maintenance costs will be allowed, with a resulting total of 4.03d. per mile.
Depreciation would normally be calculated on a basis of a vehicle mileage life of 150,000 in the case of a 7-ton platform vehicle, but this will be reduced to 100,000 for a tipper. The resulting depreciation cost per mile is then 2.83d., giving a total running cost per mile of 14.69d., or €24 9s. 8d. when averaging 400 miles a week. Correspondingly the total operating cost becomes 25-42d. per mile, or £42 7s. 4d. a week.
With the same additions as before for overhead costs and profit margin, the charge per hour becomes 143.07d. (say 144d.) plus a mileage charge of 20.57d. (say 21d.).
Having obtained the combined charges per hour and per mile for the 3-ton platform vehicle and 7-ton tipper, their application to the compiling of a hypothetical rates schedule relative to increasing mileage leads, will now be considered.
As stated earlier the time factor is of particular importance in connection with charges for relatively short leads, for which reason the charges have just been compiled on the basis of the combination of time and mileage. Superficially it might be thought that charges for short leads should be calculated pro rata to corresponding charges when the mileage increases. But it will be found in practice that the contention is not valid.
This is because on extremely short leads allowance has to be made for additional factors. For example, where loading is done manually, or partly so, it is natural that because of the human element the time taken to load and unload tends to become spasmodic in the rate at which these duties are performed. Moreover, where several vehicles are employed in such work, even the most efficient organization cannot completely eliminate several drivers waiting with their vehicles to load. In such circumstances it is unfortunate, but inevitable, that the slowest time tends to become the average time for all vehicles employed on that particular job. Whilst modern loading equipment and its efficient management can eliminate avoidable terminal delays, there is a limit to which the process of improved efficiency can be extended. Where several vehicles are employed on relatively short leads, delays have not only to be accepted but made due allowance for when formulating charges.
Apart from the additional time—and therefore cost to the operator—resulting from such terminal delays, special consideration has to be given to actual running time which will be involved on short leads. This is because an average speed which would be considered quite reasonable for a journey of, say, 20 or 30 miles, would be found to be quite unattainable over a lead of two or three miles. Consequently some care should be taken in assessing both terminal and travelling time if accurate costing and charges are to be made.
There are several ways of making allowance for the proportionally higher cost of operation when employed on short leads One of these is to determine a relatively arbitrary amount to be added to the shortest lead and to taper it off to nil at, say, 20 miles. The method to be employed here, however, is to calculate the cost of travelling time on the basis of variations in the average speed from the shortest mileage to what might be considered normal at the top end of the scale. The qualification has inevitably to be made that any assumed average speed is subject to variations under differing operating conditions or indeed under similar operating conditions owing to variations in the traffic conditions in any given time.
Nevertheless, some estimate has to be made of the likely variation in average speeds, and it will be assumed here that the first mile in any lead will be completed in 12 minutes, i.e., 5 m.p.h., and the second mile in six minutes, or 10 m.p.h. Then, from the third to the tenth mile inclusive, a vehicle will assume to average 15 m.p.h., or four minutes to the mile.
In order to calculate the travelling time shown in the accompanying table it is necessary to add the time taken for each successive mile on the basis of the assumed speed just given. Thus, on this basis, although the eighth mile in any particular lead is assumed to be run in four minutes, it is not correct to multiply that time by eight so as to give 32 minutes for the time taken to run eight miles. Actually the time taken would be 42 minutes for the single journey, a difference of 10 minutes which expressed as a charge for the 7-ton tipper would amount to a 2s. Undercharge.
The charge for mileage run is obtained by multiplying the appropriate charge per mile for either the 3-tonner or 7-tonner by the total mileage for any particular lead, bearing in mind that the actual mileage run per trip would be double the actual lead mileage.
As already suggested any operator contemplating tendering for such work is advised to examine carefully the terminal facilities, particularly as these will be used much more repetitively than in general haulage. Consequently any original error in assessment could prove very costly in its accumulative effect. For the purpose of this table of charges it will be assumed that the terminal time is one hour in respect of platfon-n vehicles and half an hour for the tipper, including in both cases loading and unloading.
The, time charge shown in the table consists of a combination of terminal time and running time. To this amount is added the mileage charge, so giving a total charge for the trip. Finally, relative to the size of vehicle, a charge per ton can be formulated relative to the respective lead miles.
NEW COMPANIES
F. James and Son (Transport) Ltd. Can. £500, Objects: To aCqUiTC the business of haulage contractors, carried on by James Transpon at Carmarthen. tic. Dirs.: E. F. James. 22 Giannant Road, Carmarthen; R. M. James, Post Office. Angle, S. Wales; E. G. James, 22 Dunraven Road, Sketty, Swansea. SM.: B. J. James. Reg, office: Carmarthen Hide and Skin Market, Blue Street, Carmarthen.
MeNieholas Haulage Ltd. Cap. flail Dim.; M. P. McNicholas and R. D. McNicholas, 77 Coles Green Road, London. N.W.2. Sec.: M. P. McNicholas. Reg. office: 77 Coles Green Road, London. N.W.2.
United Carriers Ltd. Cap. £1,000. Objects: To acquire and hold shares, stocks, etc. Dim.: G. J. Willis, 68 Ecion Lane, Sywell, Northams; K. K. Willis, 87 Emits Barton Road, Great Doddington, Northants; R. R. Kearsley; T. D. Kearsfey end M. Kearsley of K. and D. Transport Ltd, Sec.: R. R. Kearsley. Reg. office: 119/121 Midland Road, Weilineborough, Northants. J. and C. M. Smith (Whlielneh) Lid. Cap. £100. Objects; To carry on the business of motor haulage contractors, etc. Subs.: J. Herbert and T. A. Herbert, 156 Strand. London, W.C.2. Sec.: T. A. Herbert. Reg, office: 19 Walker Street, Edinburgh. 3.
Silver Line Coaches (CarInke) Ltd. Cap. £100. Objects: To acquire the business of omnibus opera' tors and private taxi cab hirers carried on by A. B. Carson as " Silver Line Coaches" at James Street, Carluke, etc. Subs.: A, B. Carson, 23 Larksfield Drive, Carluke: A, 3, F. Cook, 33a Gordon Street. Glasgow.
EnHer and Allen Ltd. Cap. f100. Objects: To carry on the busineas of haulage contractors. etc. Dirs.: E. B. Enifer, L. V. J. Enifer and J. W. Allen, 23 Ruscoe Road, London, E.16. Sec.: J. W. Allen. Reg. office: 25 Ruscoe Road, London, E.16.
A. Suthrell (Haulage) Ltd. Cats. £10,000. Dim.: A. Suthrell and E. Suthrell, 54 Long Leys Road, Lincoln, Sec,: H. Young. Reg. office: Albion Works, Long ICYS Road, Lincoln,
emgeld Haulage Lid. Cap. £100. Subs.: D. J. Tricker, 7 Goodge Street, London, WI; I. L, Walker. 47 Finborough Road, London, S.W.I0. Dir.: F. W. Sando, Sec.; D. J. Tricker. Reg. Office: mia-mta, Green Street, Enfield,
L.S.D. (Haulage) Ltd. Cap. £10,000. Dirs.: G. Perkins. 6 Rothbury Road, Scunthorpe; G. L. Kennett. IVY House, Whitton, Scunthorpe, Sec.: G. L. Kennett. Reg. office: Neap House Wharf, Scun ihorpe.
J. H. Radius (Middleton) Ltd. Cap. £4,000. Objects: To acquire the business of haulage contractors carried on by I. H. Eachus at Linnefield Garage, Manchester Old Road, Middleton, Lancs. as " Eachus Bros "„ etc. Dim.: J. H. Eachus and M. Eachus, Littlefield Garage, Middleton, Manchester: W. S. Eachus, 1 Greenson Drive. Middleton. Sec.: M. Eachus. Reg. office: Liniefield, Manchester Old Road, Middleton. Lanes.
Guff Transport. 41963) Ltd. Cap. £100. Dim.: ). Burgess, 34 Lon-y-celyn. Whitchurch, Giant: R. Rees, The Bungalow. Alpha Garage, PwIlinerric. Chepstiaw. Mon, Sec.: R. Rem. Reg. office: 38 Nev.purt Road, Cardiff,