PROBLEMS OF HAULIER AND CARRIER.
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Vehicles Used for a Concern's Own Goods and Haulage Contract Work.
THE following question is a very popular one in connection with costs, and it concerns many of our readers whose circumstances are similar :— What proportion of the total costs must be debited against the business of the firm owning the vehicle, and what charges can be made to outside parties for its use ? It is really a matter of simple proportion, but the conditions governing the basic figures must be carefully considered before the calculations are made.
The inquirer with whom I am concerned at the moment uses a one-ton Ford lorry for transporting coal in bags, five days a week. He pays a driver 22 a week, and a boy 12s. for a working week of five days. The ordinary coal delivery round is eight miles, and the time occupied is 2j hours per trip, three of which are executed daily. The query is : "What is a good figure for the operating costs for this work ?" The second -section of the inquiry deals with haulage charges per ton-mile and for miscellaneous deliveries per hour when carrying fertilizers.
Judging by the fact that the youth is only employed for five days a week, I gather that coal delivery is carried out on that number of days, each of which is of 7ihours' working duration plus loading time. At this rate, 24 miles per day will be covered, or 120 miles per week. For the moment, we must consider the total weekly mileage, and I propose adding 30 miles for the trips when fertilizers are carried. as it would appear that only half-a-day is available for such work.
Dealing with the costs of operation of the Ford when employed on the coal business, we must take the costs for 120 miles per week as, of course, this amount is strictly chargeable to the transport account, the remainder being put down in the haulage section of the books for basing the charges against customers. So far as the vehicle is concerned, the operating costs are affected by its total mileage, but only a proportion of the standing charges are strictly a debit against the private transport account.
The running costs will be about 3.3Id. per mite, which gives a total of 21 I3s. id. for the 120 miles. The week's standing charges will be approximately £3 us. 10d., made up as follows :—
This total is not all incurred on the coal-carrying side of the work, but only four-fifths of it, if the mileages are 120 and 30 as mentioned before. Working this out, the proportional standing charges will be 22 17s. 5d. for the coal carrying work, and adding the running costs of 21 13s. Id., the total becomes 24 10s. 6d.
On the other hand, the Ford apparently works five days on the coal business and one day, or part of it, on outside work ; therefore, according to the circumstances, it might be more correct to allocate five-sixths of the standing charges to the coals transport account.
When used on contract work for outside parties, what charges must be made ? Whether an extra man be employed for loading and unloading the heavy. bags of fertilizer is not stated, but I presume that the driver is the only man to be charged for. How-ever, if such is not the case provision must be made for the second pair of hands, and an extra charge should be made purely and simply on this account. We might, therefore, leave the matter at that, and get down to the charges in respect of the use of the vehicle and driver for the fertilizer transport. "What is the charge per ton-mile ?" asks the inquirer. With the ton-mile question, I will deal later. Charges proportional to time are also mentioned, but, before we deal with this aspect of the matter, we must ascertain the approximate costs for the work.
Assuming 30 miles are covered in the morning (I am estimating feza Saturday morning job only), the running costs will be about 8s. 4d. The standing charges as we have seen, will be one-fifth of the week's total, an amount of 14s. 4d., giving £1 2s. 8d. in all as the morning's expenses.
Establishment charges will be about 21 per week, and a minimum profit at the rate of £4 a week will be expected when on contract work ; taking a due proportion, 21 should be added to the outlay for the morning, making a total of 22 2s. 8d. Even though the vehicle may only work a matter of four hours on a Saturday morning, the proprietor should receive an adequate remuneration to cover profit, the running costs, and the day's standing charges if no further work be done ; should another job be taken on in the afternoon, the standing charges for the day may be divided between the two jobs.
The system of charging on a ton-mile basis is one which has little to recommend it, particularly in eases such as this, where circular trips are made, including miscellaneous deliveries. Taking the Ford in question, if it carries a full load of one ton for 30 miles and a charge of Is. 4d. per ton-mile is made, the receipts are £2. If deliveries are made on a 30-mile trip, something on -the following lines : 5 cwt. at point A, 10 miles out,
10 cwt. at point B, 20 miles from home, and 5 cwt. at point C, a further 5 miles on.
The remaining five miles are run unloaded ; this means that one ton is carried 10 miles, i.e. 10 tonmiles ; 15 cwt. are carried 10 miles, equal to 7 tonmiles ; 5 cwt. are carried 5 miles, equal to 11 tonmiles ; the last five miles are absolutely dead. The total, 1q ton-miles at is. 4d., will bring in 21 5s., which does not cover operating costs and establishment charges.
The dead mileage at the end of the run seems to be forgotten by many hauliers, and it is this factor which acts so strongly against the ton-mileage system.
If a time charge be made, it should be based upon the mileage costs and standing charges in the manner previously detailed, so that, whatever the time may be, the expenses are properly covered and the correct amount of profit is earned.