PROBLEMS OF THE HAULIER AND CARRIER.
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Compiling One's Own Table of Operating Costs and Hauliers' Figures.
AM written to by quite a number of hauliers and .1 carriers who ask how much they should charge customers per mile, per ton, or per hour, when the vehicle in question is a "So-and-so." The answer is about as difficult as saying what is going to win the Derby—and as reliable ! The cause of the trouble— why I cannot give any real help in such cases—is because they tell me little or nothing upon which to work.
So many factors enter into the calculations that merely giving two or three items such as fuel consumption, oil and wages is little better than useless. Although the information may be sufficient to enable me to tell the inquirer what his costs are under the headings mentioned, three out of eleven items are very far short of sufficient for compiling a reliable total. Properly to estimate costs, and afterwards to work out charges, is not a job which may be done on a postcard or in the space of Ave minutes ; as the task does not appear to be clearly understood by many it may be well to consider the matter step by step.
First we start the ball rolling with running costs, and these are all calculated on a mileage basis, as, obviously, the expense depends upon the distance covered; the effect of time in those instances where it is concerned is completely overshadowed by mileage.
Arriving at the Cost of Fuel.
The three letters " m.p.g." and all that they signify are not sufficient to provide one with a reliable figure for fuel costs. What one must know is the price per gallon to the user, and the mileage per gallon in average circumstances for a good long period of use—this qualification is very important. The fuel consumption tested over good roads for about 40 miles on a nice, warm, summer day can be very misleading ; wait until traffic, bad roads, cold weather and the effects of wear and tear in the vehicle set in. The longer the period taken into account and the greater the mileage, the more accurate the results. Do not forget that an old Vehicle will use more fuel than a new one unless it has been kept absolutely itr the pink of condition.
As in the case of fuel, so with oil costs ; but, owing to the coraparatively low rate of use in this case, there is the temptation to be careless with the figures. For example, in one query a haulier asking for help with regard to costs tells me that his lorry "Is very light on oil." All I can say to that is that I can throw no light on his costs. A point regarding oil prices is worth mentioning, namely, that price and quantity figures are often misused ; do not be tempted when calculating oil consumption„ to say, "5000 miles on a 5-gallon drum costing 30s." unless the drum has been emptied in use for that particular distance. This is rarely the case ; therefore, allowance must be made for quantities left over and the price and the number of gallons must be amended accurately to represent the facts.
Current Tyre Costs as a Basis for Quoting.
Tyre costs depend upon price and mileage ; the former is easily gathered from bills paid or from the operating costs book, and the latter from the speedometer or mileage recorder. When estimating, however, one should not overlook the tendency of prices to rise and fall, as charges have to be made to deal with costs at the time a job is done ; therefore, variation must be made from time to time to cover any changes which arise.
Maintenance expenses depend upon many things, such as the age and condition of the vehicle, whether it be of current or obsolete pattern, workshop facilities, shed days, and general working conditions. For example, one man may have to pay £20 for an annual overhaul, whilst it may cost another man 125, because he has not the special tools and appliances at hand for doing the work so quickly and economically as his competitor. Bills or account books provide the data as to total costs and the mileage recorder furnishes the other factor ; do not overlook in the case of the first year's life of new machines that there will be heavier costs to come ; hence the charge figures must be based accordingly with an eye to the future.
Depreciation is bound up with the probable length of life of the vehicle, its condition, its cost new, its age and the maker's reputation. The first four are really the only tangible ones and are those which concern the owner to the greatest extent. Seven years or 160,000 miles is about the average useful life of a commercial motor vehicle. Consequently, one can work out the cost of depreciation per mile by dividing the cost of the new vehicle in pence by 160,000. The allowance per mile must be increased somewhat when the other factors mentioned are unfavourable towards the vehicle.
• Standing charges, of course, are in terms of time, usually so much per week, and it is imperative to realize that the average weekly mileage enters at this point and affects everything. If a vehicle does 100 miles per week, the rate per mile for standing charges is obviously double that of a similar machine doing 200 miles per week.
Items Under "Standing Charges."
Licence costs depend upon the seating capacity, unladen weight or horse-power, according to the type of vehicle. The only variable factor here is the custom of the owner, whether he pays for his licences on a quarterly, annual or other basis ; there is no room for dbubt about this heading. Wages are fairly straightforward and the costs are definitely known. A variation in the rates of pay must be accompanied by one in the charges section, as any change should be countered by an alteration in the haulier's figures. Garage rent and rates and vehicle insurance also need no word of explanation other than that proportionate allowances have to be made when vehicles share garages or any other party shares the space. As regards ,interest on capital, the only two items to consider are the Bank rate and the purchase price of the vehicle.
Before dealing with charges to customers we must think about establishment expenses and desired profit. So far as the first is concerned, all administrative charges must be added up and proportioned out among the vehicles of the fleet. The profit required is dependent chiefly on the owner's ideas; therefore he must decide what he wants to get and calculate accordingly.
The Factors Necessary for Quoting.
Now as to charges ; add up the running costs, varying the figures for past years to suit altered conditions as -indicated in the foregoing paragraphs: for example, the annual results for 1924 and 1925 cannot be treated as holding good for this year in all respects as, for instance, tyre prices are not what they were. Assume now that we have the running cost per mile brought up to date by the necessary amendments, multiply the result by the average weekly mileage and add in the week's total standing charge figure, also the establishment expenses and profit allowance in terms of so much per week. The total will give the amount desired which has to be obtained per week; therefore, the price per mile can be found by dividing the total by the average mileage covered during that period. When calculating charges per hour, the method to be • followed must take into account the average distances covered per hour and allow for all the standing charges which go on even when the vehicle is idle in some yard or other.
Alterations in the charges must be made from time to time as any of the factors vary, principally the average weekly mileage, for it is well known that the more miles that are covered in the week the lower can be the practical charge, as of course the effect on the standing charges is so great. S.T.R.