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for MUNICIPAL HAULAGE
Solving the Problems of the Carrier
A Simple Method of Calculating a Rate. Why Time and Mileage Charges Must be Used THE profusion of " Tenders of Interest to Hauliers" published in The Commercial Motor at this time of year is one of many signs that municipal haulage is well to the fore just now. It is not surprising, therefore, that I am receiving quite
a number of inquiries on how best to calculate rates for that class of work.
A typical case was an inquiry put to me direct at the finish of the meeting that I addressed at Hull last week. A member of the audience tackled me when the meeting was over and most of those present had dispersed, and asked me what he should charge for the hire of a 21-tormer to a rural district council. He explained that he was domiciled in a small village a considerable distance from Hull. I mention this point because, to some extent, the locality of the work has a bearing on the rates.
I directed his attention at once to The Commercial Motor Tables of Operating Costs, and he countered by . saying; " But there is no column in the Tables for 21-tonners."
" In that case," I said, " you will be quite safe if you take figures midway between those for 2-tonners and 3-tonners. But wait a minute," I continued; "as yours is a rural area, it will probably be quite sufficient if you use the figures set down for a 2-former."
"Well, how do I use the Tables," he asked, "in order to find out how much I should ask the council per hour? "
" You should use the figdres in the first paragraph of the second column," I said, " under the principal heading of 'Charges.' In that paragraph and' the last column, you will note that you are recommended to charge 2s. 9d. per hour and 4d. per mile." "But I think 2s. 9d. per hour is very little for the hire of a 2I-tonner," he objected.
"Certainly it is,". I replied. "You have to use both those figures in estimating your price. If you turn to the notes at the bottom of that column you will see that the method of use of those figures
is explained."
" I have read that," he said, "but I am not quite sure whether I understand it aright. I think it means that I should charge 2s. 9d. per hour when working on time and 4d. per mile when I am working on mileage."
"Then I am afraid you have got it wrong," I said. "You have to use both figures for any quotation, whether your price is to be on time or 'on mileage.
"For example; suppose you're asked to do a job which you know will take you four hours, in which time you will travel 48 miles. You must calculate in this way the total that you should receive for the job : four hours at 2s. 9d. per hour equal 1 Is.; 48 miles at 44. per mile, lfis. The total revenue Must be 1.1s. plus 16s.-27s.
"If your customer wants a price per hour, you divide 27s. by four and your price is Os. 9d. per hour. If he wants a price per mile, you divide 27s. by 48 and charge him 64d. per mile. If he wants a price per ton and you are carrying 24 tons, you'll have to charge him 10s. 9d. per ton; that is to the nearest penny."
"But I'll never be able to get Os. 9d: per hour." "No; nor will the work you do for the local council be such that you will run 48 miles in four hours, or will it? " " Oh ! no, nothing like that." . "Actually, before you can quote, you really must know what mileage you are likely to cover."
"Judging by what I did last year, I usually cover
about 120 mites per week, but the council played me up a bit two or three times by giving me the job of going out to Blanktown to collect some kerbstones; that meant a run of 40 miles."
Extra Pay for Long Journeys.
"If you enter into a contract with the council for the hire of a vehicle on the basis of a fixed price per hour, you should stipulate that the work is carried out within a certain radius. A run of 40 miles should not be permissible, or, if you have to do a journey like that, you should be allowed to charge extra. Shall I take your 120 miles a week as being about right and assume that you work a 48-hour week?"
"Yes."
"Then your average mileage per hour is only 24, in _which case a fair charge would be 2s. 9d, per hour, plus 24 times 44., which is 10d.; total 3s. 7d, But are you sure about that 120 miles? Did you keep a record of the mileage? "
"No; that's what I think it is."
"Well, I think you have underestimated the mileage. In my experience, it is usually about double that figure, but there is a rough rule that I have found useful for estimating likely mileage in cases where the operator has no figures upon which to work. Can you tell me what is the farthest distance you are likely to travel in the ordinary way when doing this work? What I am trying to get at is a figure for the radius of the circle within which the ordinary hire work is to be carried out," "I should say five miles is about right."
"Then, in that case, it is a good approximation to take it that your average mileage per hour is five. I have found that, as a rule, the mileage per hour averages about the equivalent of the radius Of the area in which the work is carried on, so that I should say that your proper rate would be 2s. 9d. for the hour, plus five times 4d., which is is. 84.; total 4s. 5d., say, 4s. (Id. per hour." "I wonder whether you would mind," said the haulier, "giving me some idea of how you arrive at these figures. I am not much of a hand at decimals, and ii you would give me a sufficiently accurate figure, leaving out the decimals or difficult calculations, it would be a great help."
"I can do that quite easily," I said. "First, as regards the hourly rate, I suppose you pay 23 a week in wages? "
" Oh I no, not in this district : 22 15s. is reckoned to he a good wage."
"All right," I said, "we'll take 22 15s. You must add something to that sum for insurances : I think halfa-crown a week ought to go down. That makes it 22 17s. 64. Your tax is 230 a year : that's 12s. a week. What do you pay for insurance?"
"Twenty-five pounds a year," he said.
" That is 10s. a week. And garage rent? "
"Five shillings."
"Then," I said, "you must add half-a-crown Pat
interest on what you spent on the vehicle. The total is 24 7s. per week. Now to that figure add 50 per cent. to allow for what you spend in a business way on getting• your B licence, on telephones, stamps and other things of that kind, and an allowance for profit. That makes it 26 10s. 6d. If you divide 26 10s. 64. by 48 hours, the result is nearly 2s. 9d."
"But what about petrol and oil, and that kind of thing? " he asked.
"I am coming to that side now," I said. "I suppose you don't get a big mileage per gallon?"
"About 13, I think," he replied.
"And ;that do you pay for petrol? "
" One-and-fourpence."
How to Arrive at Charges.
"That works out at rather less than lid. per mile. If we assume 14d. per mile for petrol and oil, we shan't be far out. You can take it from me that tyres, repairs and maintenance generally cost another penny a mile. Then you want to put aside Id. a mile for depreciationid. towards the price of a new vehicle when this one is worn out. The total, you see, is 3d. per mile. If you add not less than 25 per cent. to that figure-another id., say, for profit and some proportion for your business expenses-that gives you the 4d.
"You see now why it is that you must add the two figures together. The first figure, the 2s. 94. per hour, is to cover your fixed expenses and an allowance for profit on them. The other figure, the 4d., is to meet running costs and the difference pro, ides for a little profit.
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