PROBLEMS OF THE HAULIER AND CARRIER.
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Two Difficulties are Presented. in the One Query Considered in this Contribution—the Need to Estimate for Different Weekly Mileages and to Quote Separately for Two Sizes of Lorry.
S0111E of the problems which are put to me appear, I regret to say, really impossible of solution. I have before me at the moment one of this kind. It is typical of many and, as a matter of fact, is one which most hauliers have presented to them for solution from time to time.
The inquirer from whom this letter comes had been offered a contract to cart tarmac over distances up to ten miles. He proposed to use 27ton and 4-ton tip wagons, one-man-operated, and the loadiag, he told me, was by means of a chute. He had to quote. a price per ton, he said, and wanted to know what he should do about it. In a further note, in answer to one of mine asking for additional information, he told me that the journeys might be anything from one mile up to ten
Two Problems in One.
Now there are here two problems. There is, first of all, the difficulty in quoting a flatrate per ton when two types of . vehicle, differing so much in capacity as a 2-tonner and 4-tonner, are to he employed. Secondly, there is the difficulty of assessing the weekly mileage when the journeys may differ so much in length, and, although it is true that this haulier is only -being asked to quoteon a tonnage .basis, nevertheless he must arrive at some idea of the probable weekly mileage before he can estimate his own costs.
First of all, I will show how greatly the size of vehicle employed affects the results. . To .facilitate this calculation, I. will take a case where the distance travelled is five miles out and five miles home, so that a complete round journey will be ten miles. The loading and unloading should not take more than a quarter of an hour, and with a 2-tonner in use the total time necessary for a round journey, including loading and unloading, should be no more than an hour.
On that basis eight journeys will be possible a day and 44 in the course of a five-and-a-half-day week. The total mileage in those circnmstances would be 10 times 44, which is 440 miles per week.
Costs of Operation.
Nothing is stated about the vehicle itself beyond its capacity, but I am going to assume that it is solidtyred. In those circumstances the cost of operation will work out thus :—The petrol consumption will be about one gallon per eight miles. This may seem excessive, but the reader must remember that in all probability the engine will not be stopped at either end of the journey. No blame attaches to the driver for this, for he will most likely be engaged most of the time manceuvring ;nto position either beneath the chute or for convenience of tipping, as the case may be. The consumption of oil will also be excessive in something like the same proportion, whilst, as this is ob vioualy a job in connection with roadmaking, t he tyres will be cut about and will have to be renewed much sooner than would be the case on. ordinary straightforward running. The running costs can, therefore, be roughly estimated as follow :—Petrol, 1.25d.; oil, 0.4d.; tyres, 0.64.; maint enanc e, 1.3d.; and depreciation, 0.8d. Total, 4.35d. per mile.
The standing charges • are as follow :—Licences, 16s.; wages, £3 Os.; rent and rates, 7s. 6d.; insurance, 6s. 8d.; interest on first cost, 10s, 44. Total, £5 6s. 6d. a week. Thus the total cost per week will be £5 Os. 6d. plus 440 times 4.35d. (which is £7 19s. 6d.). Total, £13 Os. a week. The load carried is 88 tons, so that the net cost is a fraction over 3s. per ton. If we assume that the haulier wishes to make a profit of £4 10s. per week for each vehicle of this size and his establishment charges work out at 30s. per vehicle, then, in order to cover those two items, he will have to add another 1s. 41d. per ton to the cost, so that, using a 2-ton lorry, his charge should be 4s. 41d. per ton.
A Bigger Lorry Means Less Cost.
With a 4-ton lorry each journey will take a little longer. Probably the time for loading and unloading would not be much more—say, a further five minutes e41 in all-but the run to and fro might very well take three-quarters of an hour instead of half an hour, thus bringing the round trip up to one hour twenty minutes. That means that, instead of being able to_do eight trips a day, only six would be possible, and in the week 33 instead of 44; the weekly distance will, therefore, be 330 miles.
The operating cost would work out as follows, bearing in mind, again, that the consumption of petrol, oil and tyres will be excessive, the first and second because of the fact that the engine will be running all the time both while the wagon is loading and during unloading, the last-named because of the unfavourable condition of the road surface. Six miles per gallon is all that can be expected in these circumstances, and that only if care be exercised. It may very well be five or even four and a half. If we assume six miles to the gallon, then the running costs will be :-Petrol, 1.66; oil, 1.54; tyres, 1; maintenance, 1.60; depreciation, 1.20. Total, 6d. per mile. The standing charges will be:-Licences, 19s. 2d.; wages, £3 12s.; garage, rent and rates, 11.s. 6d.; insurance, 7s. 10d.; interest on first cost, 16s. 3d. Total, £6 6s. ed. The total of running costs at 330 miles a week amount to £8 5s., so that the cost of operation is £14 11s. 9d., or 2s. 21d. per ton. If we assume that the establishment charges still remain at 30s. per week, but that the profit expected from the operation of a 4-ton lorry is 15 per week, then the total revenue which must be obtained Is 121. The tonnage conveyed is 132 and the charge must be 3s. 21d. per ton.
A Difficult Proposition.
It is difficult to see just how this particular contractor is going to assess his charges if he looks at the matter from the point of view of cost. It is quite certain that he will not be able to say to his client: "I will charge you 4s. 41d. for all the stuff I carry in my 2-ton lorry, but only 35. 21d. for that which is conveyed in my 4-ton machine." The obvious retort to a suggestion of that kind is that the work shall be done in 4-ton lorries only. If the job is good enough to make it probable that a quotation of 4s. 41d.-or, if you like, more than 45. 41d.-per ton will get the order, well and good ; wa have nothing to worry about and the problem ceases to be a problem at all. If things are not quite so favourable as all that, and if there is sufficient competition to make it necessary for a contractor to quote his very best price, then he should try to manage without the 2-ton lorries at all and to get hold of some 4-tonners and do the work with those. If, on the other hand, it seems likely that, whilst he may not be able to get his full 4-ton lorry price, there is still a chance that he may be able to get the job at a rate which
will allow him to use both sizes of vehicle and still make a profit, then he will want to know how closely he may quote (having in mind the numbers of each size of vehicle which he is able to employ) and yet make a profit on the whole transaction.
Tonnage the Basis for Calculation.
He must base his calculation on the tonnage conveyed. He will have to reckon that every 2-tonner that he has will carry 88 tons a week and the price which he must obtain to show a reasonable profit is 4s. 41d. per ton, whilst with the 4tanners he can carry 132 tons a week with profit to himself and at 3s. 21d. per ton.
If, for example, he has three . 2-tonners and two c42 4-tonners, then he is able to carry 264 tons on the 2-tanners at 4s. 41d., which is £57 15s., and a like amount on the 4-tonners at 3s. 21d., which is £42 7s. With those five lorries, therefore, he must see a total revenue of 1100 2s., and for that he is able to carry -528 tons; that is, 3s. Did. per ton.
It is of interest to note how the cost continues to rise as the size, and capacity of the vehicle employed decreases. I have made a little diagram to show this, and have included machines of from 1 ton to 5 tons inclusive. As a guide to an understanding of the diagram, the following figures are helpful :-A 1-tonner is assumed to be capable of ten journeys per day, or 55 per week. It covers, therefore, 550 miles in a week, but only moves 55 tons. If we assume a profit of £3 a week and establishment charges amounting only to £1
a week, the rate per ton which would have to be charged would be 5s. 9d. In the same way a 3-tanner would make seven journeys a day, covering 380 miles per week, but carrying 114 tons in that time. To get a profit of £5 per week with establishment charges at 30s. a week, a charge of 3s. 10/d. per ton would have to be made. Similarly with the 5-tonner. It would make 28 journeys a week, covering 280 miles, but moving 140 tons. To make a profit of 15 10s. a week and establishment charges of 30s., the haulier would have to quote a rate of 3s. per ton. The other part of this problem-that of estimating for different mileages-will have to be dealt
with later. S.T.R.