MILEAGE AND COST PER MILE.
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An Investigation of the Effect of the One Upon the Other, Taking Into Account Also the Influence of Varying ,Fuel Costs.
I N THIS ARTICLE ibis not propoSed to attempt to estimate with any high degree of accuracy the
exact importance of each item which figures in the cost-sheet of a commercial vehicle.' The idea is,
rather, to bring home to the user of such a Vehicle the irhportance of so organizing _his deliveries as to jirovide for the fullest Possible mileage to be covered by each Unit of his fleet There are, of course, practical
limits beyond which the,process of increasing mileage cannot be carried without -great extra expense ; we reach' sdinewhereoi other a point at v.-hieh any further
increase would mean the employment of two shifts of drivers and assistants. Moreover, there is obviously no point in merely increasing mileage for the sake of doing so. On the other hand, the whole organization should aina, at keeping the mileage down to a, minimum consistent with the amount of work to be done.
We have, , however, at the present moment, many schenaes for the pooling of vehicles, Mainly with a ' view to economizing fuel, but also with the object of reducing the number of vehicles necessary in view of the difficulty of obtaining new chassis. There is rather tdo much tendency to regard the acceptance of a, pooling system by a trading concern as an act of self-denial and, from this point of view, as merely a.
temporary expedient. In most instances, however, it will almost certainly prove possible, by pooling vehicles, to reduce the car mileage covered in the work of conveying the goods of any one trader without materially reducing the efficiency and promptness of
the service given. The whole point in reducing this
car-mileage so far as may be possible lies in the fact that, by so doing, the number of vehicles on the road
can also be reduced. On broad principles, it is bad to keep a large number of vehicles in service and to run. only a sniall mileage with each ; every vehicle that is working at all should La kept fully occupied.
To get at the underlying principles of the whole matter, We have to recognize first that the whole of the operating costa, can be -divided into two groups, namely, the running costs and the standing charges. Under this latter_heacting we group allthose items of oxpenditnre which cannot be avoided, even if the.
vehicle is comparatively idre, ' and which, consequently, do not vary. with, the mileage • covered. Under the heading of running costs we pit all those items which are directly' proportional to the mileage of the vehicle. This method of groliping will involve some rearrangement as against that usually adopted.
Under the heading of -standing:charges obviously come such items as interest on. the , first cost Of the vetaele,,' and insurance. Something must be allowed for the cost of Management. This is, naturally, a variable Agure, Which, as a general rule; is 6-idlest wheg the nu-tuber of vehicles operated is considerable. c50 ' Ibis custornaxy to put down depreciation of vehicles under standing charges, but this is not wholly correct. Depreciation is due to two quite distinct causes. It is brought about partly by fair wear andtear.involvecl in the use of the vehicle, and therefore directly de-. pendent upon Mileage. It-is, however; due in part to the fact that, for some time to come, commercial vehicles will go on improving. What is the best today will not be the, best in eight or ten years time.
Sooner or •later, ' any car becomes more or less obso i lete. This process s going on throughout its whole life, and the result is that its selling value steadily lessens, and some annual allowance must be made for depreciation of this kind.
The wages of the driver are almost invariably put down under running costs, tint, within the limits that apply to the present article, this is incorrect. Of course, if the vehicle were not used at all there would be no need Co pay a driver, but this is not the case that we are considering. We are assuming that it is kept in commission,, and, therefore, that a driver must be • engaged to handle it. If that be so, then the wages of the driver will have to be paid whether the car runs 10 Miles or 50 miles during its average day's work. The, same thing applies to the wages ot• an assistant, and in the following rough estimates we have assumed. that an assistant is`required to help in loading, 'unloading and delivering goods. The question of whether an .assistant is really advisable depends, in ordinary times, mainly on whether, his pre-, senee economizes any considerable amount of time and, so enables an appreciably larger .mileage to be covered in the day. Taking the ease of a.3-ton van or lorry which runs, say, 15,000 miles a year, we see that., if we take a year as, 50 working weeks—allowing two weeks for overhaul—this total corresponds to 50 miles a day on six days of the week. We may roughly estimate the principal standing charges, as defined above, as follow :—
. 2 Interest on first cost ... 10
De.preciation (obsdlesdence) 25 Insurance ... 20
' Management (say) .. 20 Driver's wages (say) ...
Assistant's wages (say) 75 Total ... 2250 The total of the running costs of this same vehicle, directly dependent upon-mileage, will be irifluenced very greatly by the cost of,,fuel. As somewhat extreme cases, let us take petrol at 2s. 6d. a gallon, and Coal-gas at 3s. per thousand cubic feet. We will assume the equivalent of one gallon of petrol to be 250 cubic feet of 4ioa1-gas. Now, if the highly-priced
petrol be used, the running costs may be somewhat as tollows In this estimate, fuel figures as costing 4d. a mile. If we can manage to use coal gas at 3s. per thousand cubic feet we shall save approximately 2175 in the year, assuming the mileage not to be affected. This will reduce the running costs to 2310. &
If we now work out these figures to find the cost per mile run, we shall see that the standing'barges amourit to 4d. per mile. The running costs with coal-gas work out at 5d. a mile, and, with expensive petrol, at 71d. a mile.
The total cost per mile with coal-gas on the 15,000mile basis is, then, 9d. If we were to increase the annual mileage to 20,000 (about 66 miles a day), the running costs would still be 5d. a mile, but the standing charges (2250) would have been incurred over a larger mileage ; we should be running four miles instead of three, and the standing charges per mile would therefore be 3d. instead of 4d., making a total cost per mile of 8d. instead of 9d.
On the other hand, if we were to 'reduce the mileage to 10,000 per annum, we should find that the cost per mile had gone up to
the standing charges now being ad. a mile. Similarly, for a mileage of 7500 .per annum, the cost per mile would be 13d., and for 5000 miles per annum the cost would be 17d. per mile. If the mileage is reduced to a very small figure, it be comes then evident that the cost per mile will become exorbitant. The results of these simple calculations can be •'best shown in diagram. In Fig. 1, the curve AB shows the cost per mile in pence for various mileages with coal-gas. Assuming our original estimate of the proper cost on the basis of 15,000 miles to have been correct, we can with the help of this curve immediately see what the cost ought to be if the mileage is increased or reduced. Thus, with a mileage of 12000, we see that the cost will be about 10d. With a mileage of 6000, it will be approximately 15d., whilst with a mileage of only 5000 the total running cost comes to nearly. 18d: per mile.
In just the same way, we can plot out, a curve showing the probable total cost of operation for various mileages when we use petrol at 2s. ad. a gallon. This curve is shown at CD in Fig. 3. The vertical' distance between the two curves is.the same throughout, but it will be noticed that the horizontal distance varies considerably. Thisshows us that, if for any reason the use of a cheap alternative fuel involves a, considerable reduction in mileage, it is conceivable that the net result may be, no economy at all. This is more likely to occur when the mileage is small than when it is large. Thus, the height of the curve CD at the. 16,000-mile point is about the same as the height of the curve AB at the 10,000-mile point. If, then, we had been running 18,000 miles a year on
petrol at 2s. 6d. a gallon,we should reduce our cost per mile by changing to coal-gas at 9d. a gallon, so long as the mileage of the vehicle was not thereby reduced to anything under 10,000 in the year. The trifling delays that might be caused by taking coalgas aboard could not conceivably make this difference.
U, however, we take points near the other ends of the eurves,*we see that if a, change from petrol to some other fuel involved a drop 'from 6000 to 4000 miles per annum, the cost of operation per mile would be higher despite the cheapness of the fuel. In practice, at would almost invaria:bly be found that if the mileage is small in any case, the use of a, fuel which might take rather longer to get aboard would not reduce it still further.
These bomparisons will perhaps apply better to electricity than to coal-gas, .since the charging of a, i
gas bag s a quick business, but that of a battery takes some little time.
Fig. 2 shows the corresponding costs for a• 25-ewt. van, with petrol at 28. 6d. a gallon, and with coal-gas at 3s. a thousand. The difference of fuel cost per mile is in this instance. less, but in most circumstances, the annual mileage can be greater. On a basis of 22,500 Miles per annum, or 75 miles a day for six days in the week during 50 working weeks, the saving resulting from using the cheaper fuel is about .2140. The running costs with petrol come, out at about 1435 for this mileage, and with coal-gas they amount to 2295. The standing charges, again including driver, but assuming a boy or girl assistant at
a week, amount to about 2210. If the. annual mileage be increased to 30,000, or 100 miles a day, the working costs with coal-gas come out at well under 5d. a mile. On the other hand, if the mileage be decreased to 7500, or 25 miles a day, the cost per mile is nearly 3.0d. On the whole, the principles that were indicated by Fig. 1 are indrely corroborated by Fig. 2. If the. user wishes to ascertain just what, in his own ease, will be the consequence of increasing or decreasing his mileage,. it is clear that he must first divide his standing charges from his working costs, and, by adding the two, arrive at the correct total figure under the present circumstances. If the mileage were" altered, the running costs per mile would remain the same, but the standing charges per mile would alter. The correct figure in any case will be got by multiplying the standing charge ,per mile used as a basis by the number -of miles at present covered, and dividing by the number which it is intended to cover. This result is then added to the running costs, which gives the total cost per mile that May he fairly anticipated.