The £-s,-d. of TRAILER USE
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THE inquiry which led to this article was perhaps as simple and straightforward as an inquiry could be. The operator wrote to say that he was interested in the operating costs of a maximum-load oil-engined lorry with trailer. He said he knew the standing charges, driver's wages, fuel, lubricants, etc. The items which he was not sure about were tyres, maintenance and depreciation.
There were two types of trailer in use, an ordinary platform type and a tanker. The former, together with the. vehicle, carried a load of 12 tons, the latter 14 tons. The average weekly mileage was given as 600.
As the result of some further correspondence I found that the operator had several vehicles and several trailers varying in age, cost and equipment. There was, for example, one vehicle which cost £1,500 in 1939 and which was working in conjunction with a normal trailer.for which £250 was paid. At the other end of the scale was a similar vehicle bought in 1948 and costing £3,000and a similar trailer costing £420. The tanker trailer was bought in 1948 and cost altogether £1,370. That information, as will be realised, I required before I could deal with the subject of depreciation.
The tyre sizes were given as follows: On the lorry 9 ins. x 20 ins, with twin tyres on the rear wheels; on the normal trailer four 34-in. x 7-in, heavy-duty tyres and, on the tanker, four 13-in. x 20-in. It appeared that separate costs were required for the lorry and trailer, and the trailers were interchangeable and were used alternately.
Assessing Depreciation First, I will deal with the depreciation figures. As regards the 1939 vehicle, taking the initial cost of £1,500 and deducting £100 for tyres, I obtain -a net figure of £1,400. Taking a residual value of £234 leaves £1,166 as the figure on which to assess depreciation and on an estimated life of 200,000 miles that gives 1.4d. as the basic figure.
Next I have to take into consideration the fact that the vehicle is running only 30,000 miles per annum, whereas the basic figure, as I have before indicated in these articles, applies to an annual mileage of 48,000. The difference is accounted for by adding five per cent, for each 2,000 miles below 48,000, so that I have to add 45 per cent, to the 1.44. which gives me 2d. per mile.
For the ordinary trailer at £250, less £50 for tyres and £33 residual value, I get £167, and that again, at 200,000 miles, life, is equivalent to 0.20d. per mile. In the case of -trailers I make no correction for annual mileage, taking the view
• that there is little in the way of obsolescence to worry about in connection with the average trailer. For the vehicle and normal trailer, therefore, the depreciation becomes 2.20d. per mile.
Similarly, for the tank trailer, deducting £170 for tyres and £200 residual value and allowing in this case 240,000 miles, I get a depreciation of Id. per mile so that depreciation for the vehicle plus tanker is 3d. per mile.
Turning now to consider the 1948 solo machine. costing £3,000 new, I deduct £100 for cost of tyres, leaving £2,900 and £500 residual, giving me £2,400 on which to calculate depreciation; that works out at the basic figure of 2.90d., which, corrected for mileage as in the first case, brings the depreciation to 4.20d. per mile.
On a similar basis the modem trailer costing £420 gives me a.depreciation of .57d. per mile, so that the depreciation of the 1948 lorry with 1948-trailer is 4.77d. and the depreciation of the 1948 lorry with tanker is 5.20d.
Turning next to maintenance, I took figures from my own data on which "The Commercial Motor" Tables of Operating Costs are assessed and obtained the following interesting figures:—
Maintenance of vehicle operating solo, 1.17d. or I.50d.; maintenance of vehicle with ordinary trailer, 1.45d. or 1.94d.; maintenance of vehicle with tanker, 1.60d. or 2.20d.
The second figure is sufficient to cover cost of washing and polishing and greasing, whereas in the first and lower figure that work is assumed to be done by the driver and therefore paid for in the driver's wages.
On the question of tyres, I have first those on the solo vehicle, which actually will cost £105 per set to-day. Current quality of tyres is-such that a mileage of 24,000 may reasonably be expected, so that the cost per mile is 1.05d.
Increased Tyre Wear When the vehicle is hauling a trailer, however, tyre wear is usually more rapid and that 1.05d. is likely to be increased to 1.20d. To that must be added the cost of the trailer tyres. Taking a set at 456 and allowing 35,000 miles per set, I get .32d., so that the tyre cost on the vehicle with the ordinary trailer amounts to 1.52d. per mile.
The tanker tyres, 13 ins. x 20 ins., are more expensive and would run to £170 per set. These, however, appear to me to be ample in size for the job; as trailers are not .particularly heavy on tyres we could expect something approximating to 50,000 miles, which gives me .8d. for the tyres on the tanker and the total cost for the vehicle and tanker tyres is therefore to be assessed at 2.00d. per mile.
As regards the depreciation, I deemed itwise to point out to my inquirer that it would be advisable for him to ignore altogether the figures for depreciation of the 1939 vehicles. 'As readers of these articles know, it is my view that, when assessing costs of transport, depreciation should be taken as a means for providing for the purchase of new vehicles and should be assessed, therefore, on the basis of what the new vehicle would cost rather than on the price of the old machine.
Readers may ask if it would not be advisable to increase the amount allotted for depreciation on the vehicle when it is used in hauling a trailer. My answer to that is that adequate provision is made in the amount allotted for maintenance.
Considering the " Overheads "
Having got so far it seemed to me that it might be useful to take in the other itemsof operating costs—establishment charges and so on, with a view to comparing the all-in cost of operating these vehicles. . I took first the solo machine and arrived at the following figures which, although they may not tally exactly with the experience of my inquirer, are nevertheless reasonable averages and in any case will be found quite sufficient for the purposes of this article.
Standing charges, per week.:—Tax, £1 4s.; wages, including allowance for insurances and holidays with pay, £6; garage rent, 10s.; insurance at hauliers' rates, £2; interest on the capital outlay (I am taking the current-priced vehicle at , £3,000), £1 16s.; overheads, £3 15s.; total, £15 5s.
Running costs per mile:—Fuel (131 miles per gallon at • Is. 9c1, per gallon), 1.55d.; lubricants, 0.18d.; tyres, 1.05d.: maintenance 1.17d. (assuming that the driver takes care of the washing, polishing, greasing and oiling); depreciation,
as calculated above. 4.20d. The total is 8.15d. per mile and that, for 600 miles, is £20 7s. 6d., so that the total cost per week—standing charges, establishment expenses and running costs—is £35 12s. 6d. or Is. 21d. per mile run.
Next, I took the vehicle with the tanker trailer. The tax is, of course, £20 per year in addition, to the tax on the vehicle, making £1 12s. per week; wages (driver and mate with allowances for insurances 'and holidays with pay), £1 1; garage rent, 15s.; insurance. £2 12s.; interest on capital outlay £2 12s.; overheads, £5. Total, £23 I Is. per week.
Turning now to the running costs, I have 2.40d. for fuel, 0.30d. for lubricants, 2.00d. for tyres. 1.60d. for maintenance, 5.20d. for depreciation: the total is 11.5d. per mile, which is £28 15s. per week for 600 miles per week, and the total cost per week is £52 6s., which is, as near as makes no matter, Is. 9d. per mile.
For the vehicle and ordinary trailer I have, as standing charges, tax, £1 12s.; wages, £11: garage rent, 15s.; insurance, £.2 12s.; interest, £2; overheads. £5; total, £22 19s.
Running costs per mile:—Fuel, 2.33d.; oil, 0.27d.; tyres, 1.52d.: maintenance, 1.45d.;• depreciation. 4.77d. The total is 10.34d. per mile or £25 17s, per week of 600 miles.
The total cost is the sum of the above two which is £48 I6s., or closely approximate to Is. 71d. per mile.
Certain Problems Involved
It was when I had reached that stage of my calculations that I realized that there were some pretty problems involved which had not had consideration in those assessments of cost. Before I go on to these, however. I shall have to make certain assumptions as a means for suggesting to the reader the sort of problem that will arise.
I am going to assume that the following is a week of work done by this vehicle and two interchangeable trailers.
On the Monday the solo machine runs 140 miles; on the Tuesday the vehicle with tanker runs 80 miles; on the Wednesday the solo vehicle runs 130 miles; on the Thursday the vehicle and ordinary trailer do 100 miles; on the Friday the machine runs 150 miles a total of 600 miles per week.
I will also assume each day's journey is a straightforward out-and-home run, the vehicle returning empty having delivered its outward load. If I do that, I then have one of those rare occasions when it is possible to make use of the ton-mile for purposes of comparison. First, consider the vehicle running solo and carrying. say, 8 tons. In that condition it runs 420 miles during the week and its cost, Is. 2d. per mile, is 5,985d.
The ton mileage comprises 8-ton times 70 miles on the Monday, which is 560, 8-tons times 65 miles on the Wednesday (520) 8-tons times 75 miles on the Friday (600), a total of 1,680 ton-miles carried by the solo vehicle during that week. If I divide 5.985d. by 1,680 ton-miles I get a figure of 3.57d. per ton-mile.
Ton-miles for the Tanker Now take the vehicle and tanker-trailer which, on Tuesday. run 80 miles and carried 14 tons for 40 miles which is 560 ton-miles. The cost per mile run is Is. 9d., so that the total cost of running the journey is 1,680d.: the cost per ton-mile is thus exactly 3d. On the Thursday, the vehicle with trailer carried 12 tons for 50 miles, which is 600 ton-miles. It covered altogether 100 miles at a cost of Is. -ad. per mile, which is a total of 1,950d. and the cost per ton-mile is 3.25d.
These comparative costs, 3d. for the I4-tonner, 3id. with the I2-tonner, 3.57d. with the 8-tonner might be accepted as reasonable. I have already stated, however, that there are some pretty involved problems in this assessment of costs. How involved they are, may be judged if I point out that all the figures are more or less inaccurate. They do not represent actual costs of operation, either of the solo machine— that in particular is wrong—or of the vehicle with either trailer.
The principal error, the fundamental error in the above calculations, is in debiting either of the trailers with just one day's overheads, whereas it should carry in effect the overhead costs in a week and if that were to be done the extra cost of operating the trailer would be so great in comparison that the solo machine would show to advantage.
It is, however, unlikely that anyone either compiling or estimating costs would take that view or go to that trouble, as it would mean a special calculation for almost every journey—just the kind of thing I have deprecated with the assessment of ton-mile costs in the ordinary way. It is
probable that the majority of what I might call costconscious operators would prefer the most convenient method, which is to take the overheads in such a way that they apply to all three machines. as follows:—
The tax would be taken as £1 12s. per week and that should be debited against the vehicle even when used solo. The item "wages " causes some difficulty because unless the operator habitually employs two men, whether the vehicle be solo or with trailer, then there will be a difference in the amount of wages accordingly.
In this case I am going to assume that the driver's mate is employed only when the trailer is attached and that when this mate is not employed on the vehicle, other work is found for him so that there is no need to debit his wages against vehicle or vehicle and trailer.
We will therefore take merely the wages of the driver as already set out for the solo vehicle at £6 per week.
Interest on Money Invested
Garage rent is for one solo vehicle and two trailers, which would be £1 per week. Insurance is £2 18s. per week to cover the three vehicles, and interest on capital outlay must of course be that on the money invested in the three machines, which is £2 17s, per week.
What the overheads would be would depend on circumstances. The figure might be as little as £3 15s., the amount quoted in connection with the solo vehicle; it might be the £5 which I have taken in assessing the cost of the vehicle with either trailer, or it might even be more than that. 1 think the best compromise is to take the £5 per week and leave it at that. If any operator knows his overheads accurately enough to make a correction to that figure he is welcome to do so.
The total of standing charges is thus £19 7s. That is exclusive of the wages of a mate, as and when he is employed. That, on a 600-mile week is equivalent to 7/d. per mile. It is now a simple matter to assess the cost of operation with the solo vehicle, as it is 7d. plus 8.15d, already set down, giving 15.9d. per mile. That is compared with Is. 21d. as previously assessed.
Taking the figures already given for ton-mileage as still applying, the cost of operation is for 420 miles at 15.9d. per mile, which is 6,678d.. and that is for 1,680 ton-miles so that the cost per ton-mile is 3.98d. instead of 3.57d.
Three Basic Items
In assessing the cost of operation of either trailer, we have three items to take into consideration. We have the above fixed charges, including standing charges and establishment expenses as one item. We have the running costs already calculated as another, and for the third we have approximately LI per day for the mate's wages.
For the vehicle with ordinary trailer, then, we have 71d. per mile for the standing charges and establishment costs and we have once again 10.34d. per mile for running costs, which gives us, so far, 18.09d. per mile.
On the particular day on which this trailer was employed in that scheduled.week it ran 100 miles, and 100 miles into £1 (the mate's wages) is 2.40d. per mile and that must be added to the above 18.09d. That gives 20.49d. per mile for the total cost, and 100 miles thus costs 2,049d. The tonmileage is 600, so that the cost per ton-mile is 3.42d., comparing with 3.25d, as previously calculated.
In the same way, and I am sure there is no need for me to give it in detail, the tanker trailer with the vehicle can be shown to cost Is. 104d. per mile to run and the cost per ton mile to be 3.18d.
I have made this problem easy by taking simple figures for weekly operation and tonnage so that I could the more easily establish a principle. Actually, it is unlikely that any two weeks will be alike in their use or alike in use of the trailer, and, even if there be a few weeks in the...year that are alike there will be vast differences according to the season.
If. however, the above principles be applied and the costs established on a correct basis throughout the year, it should not be difficult to obtain appropriate data similar to that set out.
As regards ton-mileage, I am not so certain. I imagine there are not many cases where a vehicle departs with a full load, deposits it and returns empty, thus making it convenient to assess the cost per ton-mile.