Problems of the
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HAULIER and CARRIER
Some of the Extra Expenses the Existence of Which is Often Overlooked by Lessexperienced Hauliers
THE extra expense to which I referred in the preViOUS article, as not being included in the Tables of Operating Costs, were: (1) national health and unemployment insurance, (2) employer's liability insurance, (3) overtime, (4) drivers' road expenses, (5) goods-in-transit insurance, and (0) contingencies allowance—six items, a considerable number if it be remembered that there are only 1-0 included in the Tables. A 00-per-dent, increase is surely formidable, no matter how favourably it be regarded.
It is no answer, either, to suggest that some of them are small. Every one of the 10 items in the Tables is not of tremendous significance. Consider that of oil, for example. In a vehicle covering 200 miles per week and using only a gallon of oil per 800 miles, the cost per vveek for oil, assuming the price to be no more than 4s. per gallon, would be only is., or 9d. if the lubricant was purchased at 3s. per gallon. Even the national health and unemployment insurance amounts to more than that per week.
In order to be able to arrive at the comparative importance of each and all of these items in their relation to the budget of the individual haulier, it is necessary first to ascertain approximately what the actual amounts are likely to be.'
The first, national health and unemployment insurance, amounted, up to the week ended October 3rd, to is. 5d., being 9d. on account of health insurance and 84.1. for unemployment. Now the total is Is. 711., the unemployment contribution on the Dart of the employer having been increased by 211., to 1611.
The second item, employer's liability, at the rate,of 45s. per cent., will, of course, vary according to the wages paid. If I assume that the amounts quoted for wages in the Tables of Operating Costs prevail, the cost of this item will vary from 1s. 14d. per week in the case of drivers of small vans to is. Tit]. per week in the case of the heaviest vehicles, These amounts may, however, be doubled if, as is suggested in the next 1344 paragraph, a considerable amount of overtime be worked, because the amount paid is based on the actual wages disbursed and not on the nominal figure. Overtime, according to the correspondent whose letter I am considering, amounts to so much as to double, in the majority of cases, the wages paid. The additional cost per week will, therefore, vary from £2 10s. to £3 12s., according to the size of vehicle.
Drivers' road expenses, that is to say, those involved in payment of ferry charges, tools, trunk telephone calls, telegrams and a host of other small items each insignificant in itself but totalling in the aggregate quite appreciable SUMS, average 35s. per week per driver year in and year out.
The insurance of the goods carried is a matter the necessity of which some haulage contractors appear to deny. They are, of course, quite wrong in taking that attitude and in the case of work for clearing houses the insurance is forced upon them. Even if the hauliers do not pay it themselves, it is paid by the clearing house and the necessary adjustment embodied in the rate that the haulier receives. The proper thing to do is to insure and to make known to customers that there is an insurance policy in force, using that as an advertisement.
The amount varies, but I shall take the figure of 2iper cent, on the gross earnings, which is the quotation given me. Naturally, there will be wide divergence of the actual total per week, according to the size of vehicle. To simplify the calculation I bropoze to, assume 5s. per week in the case of a small vehicle and 10s. per week for a large one, these being average figures.
The sixth and last item, contingencies allowance, is absolutely incalculable. Some of it can be covered by insurance, although not one in 100 hauliers appears to take that precaution. The loss of trade involved by accident, as well as that resulting from breakdowns, is, to a certain extent, insurable. As a general rule, however, insurance against these losses is not effected. I cannot imagine that many hauliers take the precaution of insuring against the loss arising from trade depression or from general elections-and one is to take place on October 27th.
Bad debts are
always a problem : no business is entirely free from that, and, whilst we do not often have such tremendous interference with road transport as was occasioned by the heavy snowfall of a couple of years ago, scarcely a winter passes but there is sufficient snow in some parts of the country as seriously to interfere with traffic. Similarly, it is true to state that no winter passes without a few days, and more particularly nights, on which the presence of fog holds up the traffic to a greater or less extent.
Actually, however, the figure for item 6 is Included in our Tables of Operating Costs under the heading of establishment expenses. I have frequently called attention to the fact that part of the amount set out in the Tables under that heading is meant to be used as a fund to set aside for contingencies. In my calculation of additions of cost I am, therefore, going to leave this Item out of consideration.
Total Additional Expenses.
Now let us see what is the total. In the case of a small vehicle it will comprise is. 7d. for national health and unemployment ; 2s. 3d. for employer's liability ; £2 10s. for overtime; say, £1 10s. for drivers' road expenses and 5s. for goods-in-transit insurance. The total is £4 8s. 10d. per week. That is as much as the total standing charges arising from the use of a 30-cwt. lorry.
Admittedly, this total additional expense is likely to arise in connection only with long-distance haulage, but, even so, assuming the weekly mileage to be 1,000, it is equivalent to an additional id. per mile, bringing the total cost per mile from 3.901., as given in the Tables, to 4.90d. To that sum, however, must be added establishment costs, a further £1 per week, which is another id., bringing the bare operating cost to 5.15d. per mile.
Now see how this cost compares with some of the prices which I am aware are being quoted for longdistance haulage with this capacity of . vehicle. Only the other day I was shown a quotation for a load from London to Birmingham and. back (full loads in both directions) at £1 per ton each way, which is £3 for the round trip for the fully loaded vehicle. The distance is 240 miles, including extra mileage at each end involved in making calls, returning to garage and other incidentals, so that the actual revenue was equivalent to 3d. per mile.
Of course, I appreciate that on regular journeys from London to Birmingham some of the foregoing expenses would not apply, as, for example, the driver's road expenses, which would in that case be limited to an average of, perhaps, 5s. per week for telephone calls. Even that amount would reduce the cost per mile by only id., bringing it hack to the 4.00d. per mile previously quoted. On that basis it is clear that the lowest possible commercial rate for 30-cwt. loads carried between London and Birmingham, assuming return loads in every case -and sufficient work to keep the vehicle filly employed, must he enough to bring in a minimum of 5id. per mile, which is approximately 36s. 6d. per ton.
Owners of this type of vehicle who are operating on that route might well bear this figure in mind. It shows a net profit of approximately 0.6d, per mile and that. on a full week's work of 1,000 miles, is only £2 10s, per week.
In the case of a heavier vehicle, say an 8-tonner, the corresponding figures would be : for national health and unemployment is. 7d.; for employer's liability 3s. 3d. ; for overtime 13 12s.; for drivers' road expenses 11 15s. and for goods-in-transit insurance, say, 10s, 2d. The total is £0 2s. per week. That, again, is nearly as much as the standing charges involved in the operation of such a vehicle and, assuming that it covers 800 miles per week, is equivalent to an addition of 1.82d. to the cost per mile.
London to Birmingham at 15s. a Ton.
With a vehicle of this type the loads to Birmingham are often quoted at as low as 15s. per ton. That means the total revenue from a round trip, loaded in both directions, would be 112. The cost would be practically is. Id. per mile, which, on a 240-mile run, is £13. In this brief calculation I have not made any allowance for establishment costs, On the other hand, neither have I made any allowance for the fact that again there should be in the case of regular work on that route no ferry or toll charges, so that probably 5s. per week would on the average cover the drivers' road expenses.
Eig-hteen shillings per ton would bring the revenue up to £14 4s. per trip, and even that would be equivalent to a profit of only 13 12s. per week, assuming it_to be possible to obtain loads in both directions three times per week regularly throughout the year. One pound per ton is somewhere about the minimum figure acceptable for work of this kind, and even that only where regular return Ioads are available,