Problems of the
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HAULIER and CARRIER QLTITE a number of readers may have been somewhat puzzled by seeming discrepancies in the totals in Table II, which appeared in the previous issue. I refer particularly to the "sum of the totals to date," which was set down at £301 is. 6d. If all the money items along that bottom line be added up, the total is £331 13s. 6d. That difference is brought about by the fact that, in the total, ag set down in the table, I do not include the item of £30 12s. for actual maintenance expenditure to date. To do so would be wrong, because that figure is supposed to be included in the £68 19s. 2d. which appeared at the foot of Column 8 for the estimated cost of maintenance.
Those remaining of the figures summarized at the bottom of the table do not need much explanation. They have the advantage that the operator is able to check, week by week, the running cost of his vehicle. He is, therefore, not liable to underestimate that cost when he is quoting for work, nor will he overlook any sudden increase in the cost, due, possibly, to excessive fuel consumption. It is still necessary to make some provision for the actual expenditure on tyres and maintenance, so as to be able, in the long run, to differentiate between actual and estimated costs.
The most likely event is that, at the end of the first year's operation, the estimated costs will exceed the actual expenditure on both maintenance and tyres. Maintenance should be low during the first year, and, unless the mileage be high, it is not likely that there will be much expenditure on tyres. In the case under consideration, when the vehicle appears to be doing upwards of SOO miles per week, it may well be that considerable expenditure on tyres will be involved to the extent of, say, the purchase of a complete set, costing £180.
Estimating Tyre Cost.
The vehicle will probably have covered, in the year, 44,000 miles, so that the estimated expenditure on tyres will be £275. Thus, the operator is £95 to the good on account of his expenditure for tyres. It may not, however, indicate that the estimated amount of 1.50d, per mile is too much. To arrive at a decision on that point there must be some indication as to the mileage covered by the tyres before they had to be replaced. lf, for example, the tyres wore out after about' six months of use, that is to say, at 22,000 miles, then clearly they are about due for renewal again at the end of the year, and the operator has only £95 available
towards an impending expenditure of £180. That would mean that, in actual fact, the estimated expenditure on tyres was low. On the other hand, if the tyres have only just been replaced, the old ones having given way at, say, 40.000 miles, then obviously the haulier has more in hand towards tyre expenditure, than he needs. The way to deal with this problem, which, inci dentallye occurs only once per annum, is to set out each year what I might call a tyre account, as follows
Tyre Account.
Estimated cost of tyres Expenditure, to date ...
Actual expenditure to date Balance carded forward By drawing up a little account of this description, the operator cbtains a rough check as to the accuracy of the figure which he is using for the estimated cost of tyres.
A similar procedure can be adopted with regard to maintenance. There is, however, this difference concerning the importance of the figures: there should be, at the end of the first year of a new vehicle, a considerable amount available to be carried forward, as otherwise it will mean that the vehicle has cost much more than it should. The arrangement of the accounts for this item is similar to that for tyres.
The practical use of these figures is to indicate to the operator that the two amounts carried forward on account of tyres and maintenance should be available for him to use on tyre replacement and maintenance, as and when such expenditure is called for. If, for example, at the end of the year, there be a credit of 280 to be carried forward for tyres and £120 credit for maintenance, the operator should appreciate that, out of his bank balance, 2200 should be set aside as a sort of tyre and maintenance fund, not to be touched for any other purpose.
The Depreciation Account.
The same condition applies to the estimated figure for depreciation, but for that, of course, the total can be taken at any time from Table II. The amount indicated there must also be available as a contribution towards the purchase of a new vehicle.
In the present case, for example, at about the end of a year's use there will be something like 2450 debited to depreciation in this account. Therefore, assuming that the above figures for maintenance and tyre costs still stand, the operator, at the end of a year's working, should have about 2650 put away for those items.
It may be of interest to show how it is possible quickly to obtain a net figure for running cost, as distinct from standing charges, with reference to the vehicle for which accounts are compiled in this manner. It appears to be covering approximately 8 m.p.g. of fuel and rather more than 800 m.p.g. of lubricating oil. The fuel costs 5d. per gallon, so that the expenditure per mile on that item is, say, 0.63d. The lubricating oil costs 4s. per gallon, and, if 48d. be divided by no, the result is 0.06d. Add that figure to the 0.631.
By reference to Table I, which appeared in the previous issue, the sum of the other three items of running cost—tyres, 1.50d. per mile; maintenance, 2.50d., and depreciation, 2.53d.—is seen to be 6.53d. Add that total to 0.69d. and the aggregate, 7.22d. per mile, is the running cost.
By reference to two other items, the hourly cost on account of standing charges can be ascertained. The two items are the total of fixed charges, namely, 20 Ss. 1041 per week and the total wages, 26 17s. 6d., amounting to 213 6s. 4d. This is the expenditure over a 48-hour week, presumably, and is equivalent to a little more than 5s. 64d. per hour. A practical approximation is to take 5s. 6d. per hour and 74d. per mile as the net operating costs. These figures can be used to calculate the net operating cost of any particular job.
If, for example, the vehicle had tc go to the docks, 20 miles away, through London, it is conceivable that it would take 14 hour to reach its destination, where it might have to wait for a couple of hours. It might take 14 hour to load, 14 hour to get to the destination of the load, and another 11 hour to unload, then another
hour to return to headquarters for the night.
The total time is eight hours and the total distance, say, 44 miles (allowing four miles to reach home after unloading). The net cost is thus eight times 5s. 6d., which is 44s., plus 44 times 74d., which is 26s. 7d. The total is 23 10s. 7d. net operating cost. That figure is not the charge which a haulier should make, being subject to considerable additions on account of both establishment costs and profit before that end can be reached. S.T.R_