Must Hauliers Operate at
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Cost Price?
Solving the Problems of the Carrier /WAS astounded during a meeting which I addressed when one of the speakers, himself an experienced haulage contractor, said, in 'hiking of occasional return loads, that he considered that, when it was possible for a haulier to give industry some advantage, it was only right and proper that the benefit should be presented.
To make his attitude quite clear, I had better state what precisely was the example he had in mind. He quoted the case of a vehicle which had completed an outward journey with a load. A return load was offered, subject to acceptance at a rate considerably below what the consignor would have to pay in the ordinary course of events.
' The trick is an old one and simply takes advantage of the fact that theltvehicle is available, that it has to make the journey, so that a return load at any price would appear to be profitable. The speaker justified the acceptance of a return load at a cut rate because, in his view, it was up to the haulage industry to take every opportunity to help other industries by giving them such advantages as this case exemplified.
It is perfectly safe to take it for granted that every industry, which requires transport facilities, will strain every nerve to obtain the best possible transport service at a minimum of expenditure. The need for the haulage industry to go out of its way to meet these requirements seems to me to be non-existent.
While on this subject, I might refer to a letter published on page 87 of the issue of The Commercial Motor dated August 28. It criticized a "This Week's Problem," because the haulier inquirer was recommended to ask, as payment for some work of haulage, Id. per mile more than the bare cost of running his vehicle for that mile.
Knowing the writer of that letter personally, I am of opinion that his criticism was penned in 'error, and that he had not appreciated the true meaning of the figures he criticized.
B28 The attitude implied in his criticism is, nevertheless, a familiar one and is on a par with that described above. It appears in many quarters to be regarded as an accepted practice that the profit which a haulage contractor may make—and little enough' it is in all conscience, sometimes—must be strictly limited and his terms so arranged that once that limit has been reached he must not expect any more, although the work he may be called upon to do may be in excess of the normal.
Let me now cite another case similar in character. It arose out of the time and mileage figures which appear in The Commercial Motor Tables of Operating Costs. As was recently explained in these columns, those figures are inserted with one particular end in view. They are devised to assist a haulage contractor who is called upon to quote for a job of work for which there is no standard rate and concerning the charge for which, therefore, he is likely to be in doubt.
For, simplicity a minimum profit is provided for in the figure for "time." There is a fractional addition to most of the figures for "mileage," but that is almost incidental and, in one case atleast, that of the 5-tonner, there is no such addition.
It follows, therefore, that, under certain conditions of use of these figures, just that circumstance is bound to arise that we must at all costs prevent, namely, that a haulier should be expected to add to his labours with out earning any proportionate addi tion to his profits. • • _
Recently, I was called in to adjudicate in a dispute between a haulage contractor and his customer, on a matter of this kind. The haulier :12s as engaged upon a contract which . involved the customer in the payment of a fixed .sum per day of 8-3., hours, :provided the mileage covered in: that time did not exceed 40. The vehicle was a 5-tonner; and I may say the rate
quoted, 18s. per day, was a perfectly reasonable one, bearing in mind all the circumstances The haulier, ,furthermore, proposed that he should charge 7d. per mile for any excess of the 40, and with that figure I expressed entire agreement. The customer thought it excessive, and the haulier had turned to me for support. He told me, too, that he thought I had queered his pitch by the "time and mileage" figures for this size of vehicle, since I quoted 41d. per mile.
On the face of it, it does appear that my figures justify the customer in asking that excess mileage should be run at 4/d., and my only answer is that the figures given in the Tables are to be regarded as irreducible minima. What the customer was asking, in effect, was that this haulier should be content with the same profit running, say, 440 miles per week as when he was running 220 miles per week.
This attitude leaves out of consideration the important fact that the haulier, in running those additional 220 miles, must find an extra £4 7s. per week in order to keep the vehicle on the road. It makes no provision for him to earn a fair proportion of profit on that expenditure. A customer taking this view could, with equal logic, expect a vehicle running 1,000 miles per week to earn no more for its owner than if it ran only 10 miles.
Arising out of this is the fact that it is possible with these time and mileage figures to calculate the charge
for a mile run and to show that it varies with the average speed. In the case, for example, of a vehicle doing 150 miles per day, the average speed in operation is about 18 m.p.h. The time charge for a mile at the " time " figure of 4s. 7d. per hour is thus approximately 3d. To ascertain the total charge for that mile, 4/d. must bo added, making that charge 7/d.
In the case of the above example, in which a vehicle is covering 40 miles per day at, say, 5 m.p.h., then the time charge for that mile is one-fifth of 4s. 7d., which is 11d., plus 41d., total is. nd.
. I should recommend any haulier who is faced with the • need for assessing a charge for excess mileage to add not less than 25 per cent. to the running cost per mile as quoted in the Tables. In the case of a 5-tonner, for which the running cost is 4.76d. per mile, the minimum rate for excess mileage must be 6d. S.T.R.