RATES SELF-DECEPTION IS SO EASY
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THERE was a paragraph in The Commercial Motor on page 153 of the issue dated March 11. in which a member of the Plymouth Sub-area of A.R.O. was reported to have stated that "hauliers would all be millionaires if they could work to the speaker's figures."
Now I shall, before I have finished this article, expose the absurdity of such a comment. Before I do so, I want to point out that such statements, presumably unintentional, undo much of the good which, it is sincerely hoped, accrues from the addresses which I deliver, in all parts of the country, to hauliers.
Here, in this Plymouth Sub-area, is a definite example. I have addressed four meetings in Devon and Cornwall, at Exeter, Plymouth, St. Austell and Camborrie. The burden of my address was the same in every place. The intention, in which I have the fullest support of every broad-minded haulage contractor throughout the Kingdom, is to diminish the extent to which rate-cutting is prevalent throughout the industry.
Rate-cutters Do Not Need Encouragement.
When someone gets up at a public meeting and, with neither figures nor sound arguments to back him, says something which is bound to have the effect of encouraging rate-cutters in their pernicious practices, it is sure to give them the impression that, after all, they are right in their rate-cutting and that there is something (which they themselves, it should be appreciated. were absolutely unable to discover) which makes these S.T.R. figures inapplicable to their businesses.
Now, let us look at the facts. I am going to do something which, hitherto. I have flatly refused to do—that is reproduce, on these pages, some part of the address I have recently been giving to hauliers on this subject of costs and earnings. The figure mentioned in the paragraph was £10 per week. That must refer to the data which I give forthe cast of operation and the reasonable earnings of a vehicle carrying 2/3-ton loads and covering an average weekly mileage of 300.
In dealing with the operating cost of such a vehicle I give, in my address, the following figures for standing charges on an annual basis. For tax, £.25, for insurance, 225, for garage rent, 215, for interest on capital outlay. 415, and for wages, 2150, that including, it should be noted, provision for three classes of insurance (National n30 _ Unemployment, National Health and Employers' Liability) and having in mind the conditions which are certain to be evolved when the Baillie Report is implemented—provision for a week's holiday with pay.
These figures have never been challenged, except that. in the Devon and Cornwall area, there was some comment to the effect that £15 per annum was somewhat excessive for garage rent. I will accept that correction, taking leave to make a corresponding amendment also arising from conditions in Devon and Cornwall, when I come to my running costs.
I will go so far as to accept 25 per annum as a fair figure for garage rent, thus reducing my total for the annual outlay on standing charges to 2220, instead of the £230 which is the figure I take as reasonable. That is equivalent to £4 8s. per week, instead of the £4 12s. per week which I use as a basic figure for arriving at weekly totals for cost and rates.
Figures Modified to Suit Local Conditions.
Now, as to my figures for running costs (still, be it noted, for a vehicle carrying 2/3-ton loads). I will set out the figures as I gave them in Devon and Cornwall. Actually, I have come to the conclusion that those figures are inadequate to cover running costs of a vehicle carrying this load anywhere and, in recent lectures, I have modified them so that the total, instead of being, as I shall show, 24d. per mile, is 2W. per mile.
I take petrol as costing Is. 3d. per gallon and assume that the average m.p.g. is 15, That is 1d. per mile. For lubricating oil I take id. per mile. For tyres, I' assume that the cost of a set is £30 and that the average mileage is 20,000. That gives me a figure approximating closely to id per mile. For depreciation, I take a life of 100,000 miles and, after making proper allowance for tyres and part-exchange value, arrive at a figure of Id. per mile. Actually, if I am thinking in terms of 300 miles per week, this W. is ridiculously low. It means that I am allowing only 202 10s. for depreciation per annum. For maintenance I allow Id. per mile and I show, in the course of my address, by citing actual examples of cost, that this figure, if anything, is less+ than may
be expected. The total is 24d. per mile, which is £3 2s. lid. per week. Now, I am going to make modifications in these figures to meet conditions prevailing in Devon and Cornwall. A. figure of 12 m.p.g. is as much as can be expected for the petrol consumption return. Moreover. petrol costs Is. 4d at least so that, instead of 1d. per mile I have 1.33d. per mile.
Tyres, I was informed, do not last so long in that area as elsewhere, and I was advised that 16,000 miles or, at the most, 18,000 miles are all that can be expected from a set. If I take the upper limit of 18,000. I get 0.4d. per mile instead of It is probable, moreover, that the cost of maintenance is higher in Devon than elsewhere, but I will let my figure for maintenance stand. The net result of the modifications increases my cost per mile from 21d. to 2.855d. and, on a 300-mile week, that brings the total running cost per week to £3 11s. 4d., instead of 4.3 2s. 6d. The total operating-cost figures may now be shown for comparison. My original figures were: standing charges, 24 12s.; running costs for a 300-mile week. 43 2s. Cxl. : total £7 14s. 6d. The revised figures are: standing charges, 44 Ss.; running costs, £3 us. 4d.: total, £7 19s. 4d. per week.
That, I think, disposes of any suggestion that my original figures were in any way optimistic as regards what is to be expected from vehicles operating in Devonshire, and I challenge this outspoken critic to find any fault with the foregoing.
I proceed, in my address, to point out that, in addition to his vehicle-operating expenses, an operator has certain establishment costs to meet. All who are in business are aware of them, and I suggest that a figure of £2 11s. 6d. may fairly be taken as sufficient to cover those expenses add provide for a margin of net profit. If I take the absurdly low estimate of us. 6d. to be sufficient for these establishment costs there is left a net profit of 42 per week. Is 42 per week sufficient to make a man a millionaire? S.T.R.