Do Return Loads Pay?
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AREADER of my articles dealing with differences between town and country rates has suggested that I . have overlooked an important factor in that I made no reference to the atTaiIability, of return loads. Let me mention the factors which are likely. to have some effect on the question. One of -these is the -speed which can be achieved from point to point. That is bound to be slow for a short lead, because it is likely that most of a short lead will be through a congested area. I have found, for example, that in the case of the 15-mile lead, the average speed over the whole journey will be no more than 15 m.p.h.
Now let me test the possibilties of a 20-mile lead. I shall assume that the average speed from collecting point to delivery point is 16 m.p.h. First let us assess the rate and earnings per day without endeavouring to find a return load. The travelling time for the full 40 miles at 16 m.p.h. will be 21 hours. I shall assume that the time at terminals will be 11hours altogether so that the full period will be 4 hours.
I have arrived at the figure for terminal delays by allowing 6 minutes per ton plus 10 minutes for the signing of documents etc., sheeting up, turning the vehicle and getting into and out of the loading bay. For a 6-ton load that will give me 46 minutes: for the sake of simplicity I shall assume that 45 minutes are sufficient, that is 45 minutes at each end, 11 hours altogether, as stated.
Daily Revenue
I propose to take it that the rate for the vehicle is to be based on 7s. per hour plus ls. per mile. The charge for the traffic will be made up of 4 hours at 7s. per hour plus 40 miles at Is. per mile, which is £2. The total is £1 8s., plus £2, making £3 8s. in all, or I Is. 4d. per ton. Two trips per day will be easily possible and in that time, therefore, 12 tons will have been carried. The daily revenue will thus be £6 16s.
Now assume the same conditions as regards distance, loading and unloading, etc., but reckon that arrangements have been made for a return load to he collected. I assume that between delivering the first load and picking up the return load there is a delay of 15 minutes and that two miles are covered in travelling from the delivery point for the first Toad and the picking-up point for the return load.
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At the other. end of the journe there will be a further 15 minutes antwo miles extra between delivering th return load and getting back to th original starting point for the nex outward load. •I also 'assume tha the time necessary for the loading am unloading is the same as regards th return load as in the case of the out ward load. That means that the addi tional time involved in collecting, bringing back an delivering the return load is 2 hours, J hours. for th. loading and unloading and -h-hour for the: extra travellin: at each end, so that we have 6 hours instead-of 4. hour and 44 miles (including the two extra miles at each end instead of 40 miles.
The total charge must now be made up of six hours a 7s. per hour, which is £2 2s. plus 44 miles ar ls. per mil. (£2 4s.), a total of £4 6s. In the course of the round journey 12 tons have been carried and the minimum rate must b. 7s. 2d. per ton. This 7s. 2d. per ton is a cut rate: the ehargi should not be less than lis. 4d.
That, however, is not the whole story. In assessinj revenues where return loads are taken into consideration i is not practicable to assume that there will always be a retun load: To allow for deficiencies in that respect what is cane( a balance loading factor must be introduced, arid, accordinj to my view, it means that 331 per cent, must be added 1( the calculated rate, which brings 7s. 2d. up to 9s. 7d.
Limited Earnings
There is therefore a saving to the customer because he i. now asked to pay only 9s. 7d. per ton instead of I Is. Ad The outlook for the haulier, however, is not so good, for hi has taken 6 hours on the round trip and, as a result, canna complete two journeys in one day. Therefore, unless he ha: a job for the vehicle to do in the remaining time at hi; disposal, his earnings are limited to £4 6s. per day compare( with £6 16s. It is fairly obvious, I think, in such dream stances, that it does not pay to take on return loads for st short a lead as 20 miles.
In this connection, another point of interest arises, Is i justifiable, when assessing a rate for traffic which does no take up a full 8-hour day but which makes it impossible fo: the operator to put his vehicle to practical use for 111( balance of that time, to charge 8 hours or 81-, hours, as tin case may be?
If we take 8 hours as the length of the normal day in thi( case, the time charge will be 56s., and with the rnileag( charge remaining at £2 4s. the total will be £5, whicF involves a net charge of 8s. 4d. per ton, and an actual chargt (including the 33i per cent. on account of the balance loading factor) of us. Id. per ton.
In other words, the charge to the customer when a load it carried would be very nearly the same as if there were nc hack loads. The earnings of the haulier would be muck the same in either case: he will get £6 13s. per day with no return load and £6 16s, with.
Continuing this process of hit or miss, it is worth whil€ to note the details in connection with a 25-mile lead, a.1 another point of importance arises there. Over that distance I shall assume that the average speed is 18 m.p.h., so rhai
the point-to-point time for the 25 miles is 1.1 hours. That means that the return journey, without picking up a return load, will be 41 hours-3 hours for travelling and 11 hours for terminals. The total revenue for the journey, estimated in the same way as previously, should be £4 Is, 6d., the rate per ton 13s. 3d, and the revenue per day (it will be possible to get in two journeys per day) £8 3s.
If a return load has been collected under conditions similar to those already laid down, the time would have been 61 hours and the revenue per day, assuming that the 6/ hours are all that are included in assessing the charge, only £4 I5s. 6d. The-net rate per ton would be nearly 8s. and the gross rate, allowing for the balance loading factor of 331 per cent., 10s. 8d. Once again the customer benefits but not the-haulier.
Even if, as in the case of the two-way traffic, the vehicle is charged out for the full 8 hours, ..the revenue would still be no more than £6 8s., the net fate 10s. 8d., but the actual rate charged to the customer 14s. 3d. per ton, that is 3d.
more than when a return load is sought. or obtained. '
The important point in connection with this example is this. The vehicle can just complete the two journeys per day when working over a 25-mile lead. Obviously if this lead is extended by any 'appreciable distance it would not be possible to make two journeys per day, even if no return load is collected. On the other hand, it may stilt be possible to pick up a return load and get back with the vehicle within the permitted driving hours.
Travelling Time
Obviously a good deal depends on the actual loading and unloading time and upon the total travelling time, if, for example, the legal speed limit is exceeded and it becomes possible to extend this minimum distance up to 40 or even more than 40 miles. It is of interest, before leaving this subject, to take an example of a lead .distance over which two round journeys per day are impbssible even without return loads, to try out the rates and earnings without a return load and with a return load. Takq 45 miles as an example. For the travelling time for the 90 miles I shall take 4/ hours. Add the 1/ hours assumed in the previous examples as terminal periods and we get a total time of 6 hours, just too long for it to be possible to complete two journeys in a day.
Nowt, without a return load, the rate will be made up of 6 hour at 7s. per hour--42s.-plus 90 miles atds. per mile which s £4 10s. so that the total is £6 12s. which is £1 2s. per to . The revenue earned by the vehicle is £6 12s. and that 'thout making any charge for the balance of the 8 houlls in the day. If a charge is made on the basis of 8 hours instead of Six, the rate will have to go up to £1 3s. 2d, and the daily revenue earned by the vehicle becom s £7 Gs.
If r return load is collected under the conditions previo sly described, there will be an additional 2, hours added to the time and four miles to the distance, so that we must charge for 8 hours at 7s., which is 56s., plus 94 miles at Is. per mile, which is £4 14s. The total is thus £7 10s, and that is the revenue earned by the vehicle, now, of course, more than when no return load is picked up. The net rate for carrying the 12 tons would be 12s. 6d. Adding the 33/ per cent. on account of the balance loading factor we get 16s. 8d. as the appropriate rate.
Minimum Distance
Under these conditions it is obviously more profitable to pick up a return load and it does seem, on the loading and unloading times I have assumed and the average speeds expected, that about 35-40 miles, depending on other conditions, is the minimum distance below which it does not pay to bother about return loads.
When the one customer provides regular return loads between the same points, so that there is no extra travelling and no delay at either end, conditions are much more favourable than those set out above. It is quite possible that the minimum distance recorded above may be diminiShed. That is something which only experience can decide.
There is a custom prevalent in the industry, and quite a reasonable one, of giving some extra consideration to a customer. This usually takes the form of a differentiation on the ordinary rate for the return load, There is justice in that, because over the class of journey we have been considering there is i'-hour saved on the round journey as well as,four miles of running: That is because the vehicle does nit have to run from one point to another to pick up a retinQn load or, afterwards, when that load has been deliver4d and the vehicle returns to its starting point for the round journey. That would mean a saving equivalent to 3s. 6d. for time and 48. for mileage, a total of 7s. 6d. which is equal to 7id. per ton on the total bulk carried.
I must again stress the importance of the figures I have used for calculating loading and unloading time, that is six minutes per ton carried plus 10 minutes for making contacts, signing documents, sheeting down, turning the vehicle round and so on.
In sp ial circumstances, when the loading and unloading times re much shorter than the above, the tendency is toward making it less profitable to collect return loads at least w thin the minimum mileages. At any rate, I think I have demonstrated that the claim made by the writer of the original letter which started this series of articles that the average haulier could profitably carry return loads over a 20-m le lead is not correct, unless there is something speciall • favourable in the prevailing conditions of his
operati ns. , S.T.R.