Problems f the
Page 58
Page 59
If you've noticed an error in this article please click here to report it so we can fix it.
HAULIER and
CARRIER
I HAVE been at great pains, from time to time, to emphasize that The Commercial Motor Tables of HAVE
Costs exemplify average figures and that, whilst it may sometimes happen that a user cannot achieve results quite so favourable as those indicated, there are just as many who are able to improve upon them. In order to prove my point I have frequently cited individual data of actual cost and explained, whenever possible, the divergence from "average," whether the difference be in favour of the vehicle or otherwise.
Some figures Which have just come to hand are so striking, with reference to this special and peculiar aspect of motor-vehicle costing, that I am going to give them here and now, breaking in upon the series of articles now current: The information relates to the oil consumption of two touring .cars, both of about the same age—they were Dearly new—and both of about the same gross weight.
These two cars were utilized by the Royal Auto
mobile Club in order to test the qualities of a new brand of lubricating oil which is now being marketed by the Vacuum Oil Co., Ltd. The results of the tests were most favouraible, and reflect credit both upon the oil and its producer. I, however, am concerned with the figures for consumption.
In the case of one car, which covered 10,000 miles at an average speed of 58.6 m.p.h., the quantity of oil consumed was 4i gallons, which is equivalent to 2,399 m.p.g. The other car, running the same distance at 59.4 m.p.h., needed no fewer than 201 gallons of oil, equivalent to 490 m.p.g.
• Now, here is my point. Assume, for the saks of argument, that this oil costs 6s. per gallon ; the cost per mile for oil for the first car is almost 0.03d. For the second vehicle the cost of oil works out at 0.147d., or nearly five times as much. These, it should be noted, are practically new machines, in the hands of experts. How much more variation, therefore, may be expected in the course of dealing with vehicles of all makes and of all ages, from brand new to five years old?
Now to return to the case of the haulier who has purchased a 2-tenser and is paying for it by instalments, which involve him in, finding £3 2s. 9d. per week in order to liquidate them. In a table which accompanied the previous article, I outlined the story of his progress, showing how he could use the reserve fund for tyres, maintenance and depreciation to enable him to tide over the naturally difficult period of starting in business.
A similar table, appearing herewith, continues the story. Read in conjunction with the other, it shows how, by judicious manipulation of the reserve fund, this haulier has been able to meet his liabilities and gradually to approach the position, reached for the first time after six months, in which he is able to make a profit over and above that out of which he is paying his hire-purchase instalments.
In the first line of this table is shown the amount brought forward from the previous one. For the week ending July 15, and for the two following weeks, this haulier covers 240 miles, earning, as before, 10d. per mile, a total of £10 per week. Expenditure per week, as previously described, is £5, comprising £1 10s. for 20 gallons of petrol at is. 6d. per gallon, 10s. for garage rent and £3 for wages (to himself).
Out of the balance,of £5 per week, 13 2s. 9d. is needed towards the hire-purchase instalments and 1C)s. for establishment expenses (these were 5s. the previous week, but are increasing). There is left £1 7s. 3d, for the reserve fund, as against £2 7s. 2d. actually re. quired. The debit balance of that fund, therefore, continues to grow, as the table shows. The important thing is to keep watch over it week by week.
Towards the end of July he obtainS another small contract, bringing the week's mileage up to 300. His revenue is thus increased by £2 10s. to £12 10s. per week, whilst his expenses increase by only 7s. 6d., that being the additional expenditure in fuel. He is thus able, in that week, to put £3 9s. 9d. to the reserve fund, as against £2 14s. 3d. actually required. For the first time he puts away more than he needs, for that particular week, and at last begins to reduce the debit balance.
For a 360-mile week the revenue is £15, the expenditure on petrol £2 5s., garage 10s., wages £3, establishment 10s., hire-purchase instalment 13 2s. 9d., the total being £9 7s. 9d., leaving £5 12s. 3d. for the fund-a most useful contribution.
When the weekly mileage reaches 420 the corresponding figures are :-Revenue, £17 10s. and total expenditure £9 15s. 3d., leaving £7 14s. 9d. for reserve, as against £3 8s. 7d. demanded. At this point, however, the establishment expenses are discovered to have increased to £1 per week, reducing the reserve-fund contribution accordingly to ET 4s. 9d.
Even that sum, however, is considerably in excess of the actual amount needed for the week, and the debit balance continues to diminish until, in the week ending October 7, the 27th week of the operations of this
fortunate haulier, it vanishes altogether, the reserve fund is brought up to date and a real net profit, additional to the £3 2s. 9d. per week for hire purchase, accrues.
Fig. 1 shows in graphic manner how these funds, the theoretical one and the actual one, grew. Particularly clear is it that the actual fund makes little progress until the weekly mileage passes 240, evidently a critical figure in this haulier's operations. Early recognition of the importance of such a " turningpoint " figure is vital to the man who is starling in business.
Fig. 2, however, indicates that about 220-240 miles per week is, in any event, a critical figure. On this graph I have compared the operating costs (including establishment charges) and revenues of two contrasting sizes of vehicle, a 2-ton3er and an 8-tonner. In both cases the minimum weekly mileage at which a profit begins to show in the booksis near to the 240 mark.
This is again demonstrated in Fig. 3. The diagrams pass from " loss " to " profit " at 220 miles per week in the ease of the 8-tonner and 240 miles per week for the other, S.T.R.