Undercutting in Sugar-beet Haulage
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ASHORT time ago " in reply
to a question, had to tell a reader that he was not making a sufficient charge to cover his costs and to provide himself with a living for hauling sugar from the Kidderminster beet-sugar factory to Birmingham, and it is feared that a similar answer would have to be given to very many owners of motorlorries who contract with growers to haul the raw beet to the factory. Now that the sugar-beet harvest is about to begin again and contracts with farmers are being made, this serious matter should receive notice.
The trouble occurs mainly in the case of small firms and owner-drivers of lorries and arises as a result of their not working out in sufficient detail the total costs of doing the job. The points
on which they fail are generally found to be (1) not including all details of standing charges; (2) underestimating running costs. In practice many lorry owners when making a quotation merely give a rough guess at the costs, with the result that when the job is done and settled for they are actually out of pocket, or, in other wards, have had to live out of capital while doing the job with nothing at the end to replace this capital. Sometimes even more than a living is taken out. Obviously, no business can last long on such a basis and the sooner any person engaged in it either alters it or goes voluntarily out of business, the more likely will he be to succeed, or save himself the indignity of being forced out.
The details of the items of overhead
and running charges, for which en many operators fail to make full alto ance, are : (a) Depreciation; (b) Interest on capital; (c) Maintenance; (d) Own wages. It seems scarcely credible that there are large numbers of meta,fiauliers who never, when quoting for a contract, make any allowance whatever for depreciation' whilst interest rarely receives a thought, and why an ownerdriver should think that he can live without wages ik beyond the imagination.
In no industry is working for nothing ISO easy and so insidious as in road transport, and every hardier contemplating taking up sugar-beet haulage should, before he starts, make quite sure of his costs. The Commercial Motor's Tables of Operating Costs will help him.