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Demurrage speeds up turnaround times

22nd August 2002
Page 5
Page 5, 22nd August 2002 — Demurrage speeds up turnaround times
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Which of the following most accurately describes the problem?

• Charging £120 an hour demurrage works, and is helping to improve business efficiency, says Peter Lithe, managing director of Meeks of Luton.

His comments follow ellgs investigation into ADC delays, after operators told us they were fed up losing time, money—and drivers—because of waiting so long to tip { CM1521 August).

Little stresses his company doesn't want to charge demurrage, "but we do want to be efficient, so if anyone does delay a delivery, we expect to be paid.

"When we quote, we always make our customers aware that demurrage will be charged for any delays with our vehicles being turned around. We normally allow an hour for this."

But hiking demurrage rates has helped the company achieve more rapid turnaround, says Little, who quotes two examples to back up his case. On one occasion, when it became apparent that there was a lengthy delay, he contacted his customer and told him he would be charged for delaying the vehicle. The charge of £35/hour was enough to help keep the delay "as short as possible"—two hours.

However, the next time a delay occurred, with a different customer, he told them demurrage would be charged at £120/hour. The phone went very quiet and you could almost hear the little grey cells whizzing around his head, making quick mental calculations, and the response was 'Ili get straight onto it and get your driver tipped right away'. What a difference!"

Little stresses that charging for delays is not what he wants, but adds: "We do have to be efficient and try to make a profit. Educating customers and working with them is the ideal situation, but if all else fails then someone has to pay."

Tags

Organisations: US Federal Reserve
People: Little, Peter Lithe

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