Opinions and Queries
Page 50
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Suggested Index for Costing
MAY a complete outsider venture some comments on the ton-mile? The trouble seems to be that the units are badly chosen, as neither revenue nor costs depend in a simple proportionate way on either tons or miles. For example, so far as revenue is concerned, a haulier carrying feathers can hardly charge by the ton: a haulier whose business takes his trucks to the docks can hardly charge by Mileage alone, and a removal man cannot do either. So far as costs are concerned, the total cost per mile depends not only on waiting time, but also on mileage.
The weight/bulk problem can be got round by using a full load as the basis for comparison (presumably the haulier, like his cousin the shipowner, charges by either weight or. bulk so as to make the journey as a whole profitable). The fixed-costs problem can be got round by remembering that what the haulier is really interested in is 'whether his miles at the difference between freight
revenue less total Costs earn him 'enough profit. For this purpose it is just as good (and much more manageable and revealing) if his miles at the margin of revenue less running costs earn him enough to cover his fixed costs and give him enough profit.
• This way of treating the fixed costs deals automatically with the cost side of waiting time. All that is necessary then is to deduct from the revenue received whatever amount is charged in respect of the estimated waiting time (it can be compared with the cost of the actual time spent in waiting if desired).
I suggest that the index (freight revenue less the charge made for waiting time and less running costs) should be called the "payload margin per mile." It avoids the psychological surprise given by the old index, and whether it really is possible to multiply tons by miles in any sense other than that of a rather artificial arithmetical convenience.
The advantages of this index are twofold. First, it depends very directly on (a) the average load carried in relation to the full load, (b) the average freight rate charged, and (c) the average running costs. The haulier is deeply interested in all of these, so the index will enable him in a very short time to establish standards, and operate a purposive control over his activities.
The second advantage seems even more striking. This is that the index can be multiplied by any number of miles and still give an answer that will be fairly nearly right—such as was never possible with the old index
owing to the fixed costs. In consequence, once the haulier has established his standards, he can make two calculations:— (a) Fixed costs divided by standard payload margin per mile equals break-even mileage (at which all his fixed costs will be paid off).
(h) Standard payload margin per mile multiplied by the excess of mileage over break-even mileage equals profit.
London, W.11. D. R. C. HALFORD.
[Whilst it is true to say that costs do not depend in a simple proportionate way upon tons or miles, the need for a simple charging schedule understandable and acceptable to both small haulier and customer alike has been the reason for the use of just those two .factors in most published tables of rates for many years. However much one may strive to evolve a more accurate charging scheme based on the literal cost of traffic carried, the multi1116 tudinaus range of traffics offered by trade and industry, coupled with an equally extensive range of operating conditions, inevitably necessitate some form of averaging. Before Quoting a rate for a new traffic, the wise operator will naturally make all possible inquiries as to the relevant factors, e.g., loadability, traffic flow, loading facilities, etc., in addition, of course, to tonnage and mileage, it may well be that his initial 'estimation of those factors may have more bearing on his ultimate net revenue than the choice of index to evaluate his costs, important though that m_ty be.—Ern.]
P.S.V. Drivers' Rest Periods
WAS interested in the article by your legal adviser on drivers' hours andrest periods in your issue dated March 8, as I have always been puzzled by the different interpretation of the law .concerning drivers of goods and passenger. vehicles..
When I first went into passenger transport • shortly after the war I was surprised to find drivers working duties of between 7 and 8+ hours on one bus withoitt any break. When I queried this I was informed that the ,layover period at the terminus at the end of each run was totalled and Comprised the period of rest.'
If, for example, the duty consisted of 10 journeys with an average layover of six min. per journey, the driver was deemed to have had a rest period of 60 min. But Section 31(1) of the Road and Rail Traffic Act, 1933, clearly states that "where a driver is bound by the terms of his employment, even when not driving, to remain on or near his vehicle, or where no reasonable facilities exist for him to rest away from his vehicle, such periods will not count as rest periods.."
Quite obviously then, the layover period cannot be counted as a rest period. I have come across very few bus termini where there are any facilities for a driver to rest away from his vehicle, and particularly on city routes with short-frequency services.
Why is it then that public service vehicle operators are not compelled to give their drivers a 30-min. break away from the vehicle after a maximum of 5+ hours driving? The aim Of the Road and Rail Vac Act, 1933, is clearly stated to be the avoidance of danger from tiredness in drivers. Perhaps it is considered that driving a double-deck bus through dense city traffic, making 5-6 stops per mile, is not so tiring as driving a vehicle of comparable size on, say, the Great North Road, and therefore does not warrant a 30-min. rest pe-iod during an 8-hour driving period.
Nottingham. P. F. TUNER.
No Disagreement Between Corporation and Company
1HE heading of the item concerning Middlesbrough on page 285 of The Commercial Motor dated April 5 is misleading. We have not disagreed in any way with United Automobile Services, Ltd. The application for the amendment of the licence was from an outside body. Middlesbrough merely required a straight renewal.
Middlesbrough. FRANK LYTIIGOE, M.Inst.T.,
General Manager, Middlesbrough Transport Department.