SOLVING THE PROBLEMS OF THE CARRIER
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The Danger of Thinking of Haulage Rates in Terms of Mileage or Time, Without Giving Proper Regard to the Conditions of the Job
0 N Wednesday evening of last week, when I addressed the local meeting of the Associated Road Operators, at Chatham, I was asked a question which, simple enough in itself, raised a point of considerable importance.. I had dwelt at length on the need for taking both time and mileage into consideration An assessing a proper rate for haulage. After describing the method, I cited, as an example, the case of a 10-mile haul of some material which I did not specify.. I allowed I-hour for loading and -i-hour for unloading, and an hour's wait. I assumed thatthe 20-miles to be travelled would be covered in f-hour.
I took as an example a 2-ton lorry loaded with 3 tons and had already assessed the basic rates for such a vehicle, employed in that manner, as 4s. per hour, plus 3d. per mile run. On the foregoing basis the charge is easily calculated as follows :-21 hours at 4s. per hour, cost us.; 20 miles at 3d. per mile, 5s.; total, 1.9s. That sumis equivalent to 5s. 4d. per ton for the 10-mile lead.
The question was: were there many occasions on which 5s. 4d. per hour was paid for conveying materials for 10 miles? I had to answer "no," and, at the time, other questions arose, and I missed the opportunity of enlarging upon a fallacy which I later realized was existing in the mind of the questioner.
It is always a mistake either to condemn or acclaim any rate for haulage without knowing all the conditions. In this particular case, as I gathered later, when formal discussion ended and informal conversations were proceeding, the questioner had in mind sand and gravel haulage. Now, the conditions of that work are quite different from those instanced in the 'example quoted.
If gravel be collected from a 'well-organized pit, in a
tipping lorry, the time for loading, Obtaining the weight ticket and all formalities, is no more than 10 minutes. The time for unloading, including manoeuvring into position, tipping the load and getting away, is no more than a further 10 minutes. With favourable conditions it is quite possible to cover the 20 miles in 40 minutes,
so that the time for a couple of round journeys need be no more than an hour.
In that case, the rate is calculated by adding the charge for one hour, 4s., to the 5s. for 20 miles at 3d. per mile, making 9s., which is only 39. per ton. Again, assume more or less normal conditions of loading and unloading of a 3-ton load, but no necessity of idle time at each end of the journey or in transit, and allow i-hour for the 20 miles, as in the original example. The time is then 14 hour, the total charge 13s. and the rate 4s. per ton.
Under those three simple sets of conditions is justification for• three different rates, varying from 3s. to 5s. 4d. per ton. If, instead of the wait of an hour specified in the first example, the time actually lost in that way be 11 hour, the other conditions remaining unaltered, the price per ton would rise to 6s. The maximum price is thus 100 per cent, in excess of the minimum. How, therefore, can it be possible to answer a question as to what is a reasonable rate for any job of haulage, without knowing all the particulars?
Again, suppose the vehicle employed were a maximumload outfit carrying 71 tons over the same route. In comparable circumstances and reverting to the first example quoted, it might reasonably be anticipated that the loading and unloading time would be 11 hour each. There would still be a wait of, say, an hour, and the travelling time would be at least an hour. The total time would be 41 hours and a fair rate, 55. 21d, per hour and 6d. per mile ; 4 hours at 55, 21d. cost 23s. 5id., say, 235. 6d.; 20 miles at 6d. cost 10s. The total charge is 33s. 6d., which equals about 4s. 6d. per ton.
A tipping lorry carrying 7 tons could be loaded by chute and leave in 1-hour and be unloaded, in the same time. The total time, including travelling, would thus be 11 hour, for which the charge would be Os. 10d. and the total charge, including the 6d. per mile for the 20 miles, 16s. 10d., which is 2s. 5d. per ton.
With a larger vehicle, no doubt the minimum price could be reduced still further, so that it is quite possible to justify a range of rates from 2s. to 6s. per ton, any one of which would be only just reasonably profitable under the conditions named, Hence the folly either of asserting that a particular rate is high or that it is an example of rate-cutting. Hence the difficulty, too, of establishing a series of standardized rates.
Another question asked at the same meeting concerned the possibility of hauliers varying their rates, not in accordance with cost of service, which is the rational way, as described above, but according, to some. indefinite formula having as.itsE principal -factor the value of the commodity carried. That is the basis of railway rates and it is commonly described as "charging what the traffic will bear." It is just as logical for the railway companies to charge after that fashion as for road-. transport contractors to charge according to cost of service.
The railways, under their plan, carry a considerable tonnage of low-grade materials, such as coal, ore and goods of that description, at uneconomic rates, the plea being that otherwise the cost of transport would be a drag upon industry. To recompense themselves for the alleged loss on those classes of goods, they charge higher than economic rates on more expensive commodities, which will withstand a little extra cost of transport without the likelihood of the demand for them being diminished.
The question, in this case, was whether hauliers could not themselves adopt the same methods, that is to say, carry, for example, sand and ballast at cut rates, but charge comparatively excessive rates for the conveyance of the more expensive luxury goods, such as radio apparatus.
There is a host of reasons why" this scheme is not practicable for road operators. Of those reasons, perhaps the one which makes the most direct appeal is that the haulier who carries sand and ballast rarely transports radio apparatus. That method of assessing rates will, therefore, become practicable only when all road transport is in the hands of a few big concerns, each of which handles all classes of goods and so can afford a loss on low-grade goods.
Even then, it will be inapplicable so long as traders and manufacturers are allowed to use their own vehicles, for, in that case,. those whose products are expensive will, when faced with uneconomic rates, purchase their Own machines. That will leave hauliers with the task of cOniv.eying low grade good at unecOhor.nic rates, without any haulage in high-grade materials. to .offset the
losses involved. S.T.R.