RETURN-LOAD CONCESSION
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What is the Critical Distance ?
Solving the Problems of the Carrier
TN my article, m the issue dated August 8, I mentioned 'some of the difficulties of building up schedules of rates for road transport. In particular, I drew attention to complication3. which arise when attempts are made, in
▪ assessing rates, to allow for the availability of return loads. The problem of return loads has many facets. I pointed out that it would be almost impossible to agree schedules of rates on a radial basis, without reference to places of origin of traffic and routes.
It means that, to a considerable extent, rates will have to be scheduled on a point-to-point basis, instead of on a route-mileage basis, which is a pity, because the former is the more complicated method. The alternative, that of fixing rates according to distance irrespective of route, involves some process of averaging, so as to allow for the expectation of back loads.
Calculating Charges for Traffic Over a Given Route I have accepted that, in principle, for the majority of traffic rates, and proposed that the average allowed should be 66 per cent. That is, in arranging a rate for traffic over a given route, the total charge should be calculated on • the basis of the cost of the round journey plus profit less 33k per cent. The result of that calculation is the rate fox one-way traffic in either direction.
Such a ,procedure would be permissible in relation only to routes over which the operator could be certain oi obtaining not less than 60 per cent, of return loads and subject to the condition -that there should be no undue delay in obtaining those loads. Indeed, in applying such a principle, charges for demurrage would have to be strictly • applied, otherwise there would be risk of loss because of delays in obtaining return loads. No doubt another complication which would arise would he in deciding who should bear the cost of demurrage in respect of any journey. If, however, traffics are all rated on a mileage basis in this manner, complications will undoubtedly arise because operator's, in general, will be reluctant to accept loads at the scheduled rates to destinations whence they know, from experience, the prospect of obtaining return loads is remote. One way to surmount this difficulty would be to schedule the rates on the above basis as minima.
That seems to be a complication, but it does appear that the method would be simpler than getting out rate books giving paint-to-point charges between towns, which is what would be involved if the schedule were based on a point-to-point, rather than on a mileage, basis.
Suggested Critical Mileages In Scheme of Rates Another aspect of this problem was put quite clearly in a letter I received the other day. The writer set out three propositions. He suggested that there should, in any scheme of rates, be three critical mileages (1) A distance up to and including which there should be no allowance, on the rate for the outward traffic', for any remuneration received for a return load.
(2) In respect of distances beyond the above, a proportion of the revenue for a return journey should, normally. be credited when calculating the rate for the main or outgoing traffic. Having in mind the conditions of the first proposition, it would seem that this proportion should be at a maximum for a distance a little greater than the critical mileage specified in (1) and should gradually -diminish,
(3) A critical mileage beyond -which the whole of the responsibility for the return journey would be the haulier's. This means that above this particular distance the consignor should be charged for the outward journey and terminal delays in relation to it, but no more.
On broad principles, the logic of these proposals seems sound. The first is a.ppliCable to almost every class of traffic. The second will need modifying according to the goods being carried. I am not so sure that the third proposition is practical. It seems to me that occasions when it will be possible—in a published schedule of rates—to assume that there is going to be 100 per cent, back loading, is remote.
The first proposition provides an interesting study. I have been trying to arrive at a figure for the mileage up to and including which the prospect of earning something by obtaining return loads may be ignored. With no data to go upon, a hit-or-miss method of calculation is all that
is possible. In. order that the reader himself may appreciate the difficulties of the problem, I propose to describe my own process of reasoning.
At first it seemed to me that the governing factor was the sum of the times needed (a) to proceed to the point of collection for the return load after discharging the outward one and (b) the time taken in proceeding to the original collecting point for the next outward load after discharging the first one. It also occurred to me that the class of traffic, particularly in respect of the time needed to load and unload, would be of consequence.
Terminal-delay Allowances in Respect of 5-ton Loads For short-distance haulage, with which we are concerned in discussing this proposition, the 5-ton lorry it mainly employed, but not, of course, exclusively. A fair allowance for terminal delays, in connection with a 5-ton load, is 40 minutes at each end of the journey. That is on the basis of 6 minutes per ton for loading or unloading, plus 10 minutes at each end for finding the responsible individual, obtaining signatures to documents, sheeting down; turning the vehicle round, and so on.
Travelling speeds will be in the region of 12 to 15 m.p.h. with a tendency towards the lower figure, because most of this short-distance haulage will be in congested areas.
Considering first a round journey, without taking any steps to obtain a return load. Terminal delays will account for 1 hour 20 minutes, and travelling time 2 hours, a total of 3 hours 20 minutes. Minimum basis figures, to-day, for assessing rates in connection with the operation of a 5-tonner are 3s. 6d. per hour plus 8d. per mile run. The total charge must, therefore, be us. 8d. for time and £1 for distance. The total is £1 Us. 8d. which is equivalent to 6s. 4d. per ton. That must be the charge if no credit is to be given for the prospect of a return load.
It is interesting to note that if collection and delivery times be favourable, it is possible to complete three loads a day and earn a revenue of £4 15s.
Now, suppose that a return load is picked up. Assume that the terminal delays in connection with this are the same as those for the outward load, namely, 1 hour 20 minutes, and also assume that an hour is lost in going from point to point picking up the return load and getting back from the place of delivery of that load to the collecting point for the next outward load. That involves an addition of 2 hours 20 minutes to the total time of 3 hours 20 minutes necessary for the round journey.
The operator must thus earn enough to recoup him for 5 hours 40 minutes, plus 30 miles of mining. That, on the above basis, means that he must obtain £1 19s. 10d., which would he equivalent practically to 4s. per ton. Since, however, it is never safe to assume that there is going to be a full 5-ton return load on every occasion, provision must foe made, in assessing the rate, for deficiencies in that respect and I do that by adding 33/ per cent., making a rate of 5s. 4d. in all. His expectation of average revenue per day is less than £4, Moreover, it is impossible, with only one driver, to complete two such journeys in a day without exceeding the specified 11 working hours laid down by law as being the maximum which a driver must normally work.
Another Way in Which to Approach the Problem Look at this problem another way. Suppose that the outward traffic is of the kind which is quickly loaded and unloaded, so that the terminal delays are short, say half an hour in all. The time for the round journey, excluding provision for a return load, is now only 2/ hours and the charge comprises 2/ hours at .3s. 6d., which is 8s. 9d., plus £1 for the 30 miles at 8d.—a total of £1 8s. 9d„ which is equivalent to 55. 9d. per ton.
Assume, on the other hand, that the only return loads available take an unusually long time to load and unload and there is still that hour Jost in picking up and getting back to the original collecting point. With a return load, the round journey will now take 5 hours. The total cost will be £1 17s. 6d., which would be 3s. 9d. per ton, but subject to the 33/ per ceiit. addition to cover the risk of missing loads, it must be 5s. per ton.
But here is the aspect which concerns the haulier. If he confines himself solely to the outward traffic it is possible for him to complete four journeys in a day and earn a revenue of £5 15s., that is at 5s, 9d. per ton. On the other hand, if he attempts to collect this return traffic then his average earnings at 3s. 9d. per ton (which is all thht he obtains over a period, notwithstanding the fact that he charges 5s. per ton) total only £3 15s. per day, because he can complete only two journeys.
It seems clear that 15 miles is not that critical distance which I am trying to discover. I have, however, been trying to emphasize that a good deal depends upon the class of traffic.
Consideration of other distances must be deferred to a subsequent article. S.T.R.