Solving the Problems of the Carrier
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Prepare Your Post-war Costs and Rates Figures Now !
BLACK-OUT restrictions have been modified, fire-watching has been eased, and the Home Guard is standing easy. But it did not need, or, at least, should not have needed, any of those signs of approaching peace to make hauliers generally consider the question of what is going to happen to them when the war is over. They have been thinking about that for a long time, but now it is obvious that they will soon have to translate thought into action.
Most of the discussions in the Press concerning this subject have been political, related, as they have mainly been, to the formation of a united representative body and matters akin to that. That is all very well, and it is necessary in its way, but what I am concerned with now, and always, in these articles, is the practical side of the haulier's business.
I have to deal with the bread-and-butter aspect of haulage in helping to ensure that the work that the haulier does earns him a reasonable profit. I want to ensure that he, does not make any of the mistakes that can so readily be made in his costing, mistakes which are expensive, inasmuch as they rob him of the profit that, in haulage, is so hardly earned.
Customers. Will Seek Price Quotations
What seems to me to be quite certain, notwithstanding all that has been said and written about rates stabilization, is that the haulier will find his customers are asking him to quote prices. Maybe it will transpire that they will attempt to revert to their pre-war custom of telling him what they will pay him foi a -job. Such occasions will emphasize the necessity for the haulier to know what his costs are.
It is quite obvious that the vast majority of operators has, of late, lost track of costs. Most hauliers have been carrying Government traffic, for which the rate 'is fixed; they have had to "chance their arm " as to whether they would make a piofit. If they have, well And good, but they will not, of necessity, obtain the same rates from their ordinary commercial clients when peace-time conditions return.
One thing is certain. It will not be a scrap of use to rely on pre-war figures of costs which the operator may have, as these have completely gone by the board.
The original purpose of these articles and of " The Commercial Motor" Tables of Operating Costs was that of guiding operators in this mattes of costs and rates. One of the reasons why the 34th edition of the Tables has just been published is that it is realized that the time is coming when hauliers will, more than ever before, need the assistance which these statistics give. The Tables give up-todate costs, and they indicate what rates should be to show a profit.
To further the object for which these Tables are published, and, in a way to enlarge the scope of their use, I propose in this article, and in a subsequent one, to show how to employ them to deal with some of the less simple problems which operators experience when they are asked to quote a rate.
The examples which I Ana about to give are actual cases, selected from my files of answers to inquiries from operators, and I accompany my story with the suggestion that those operators who have not as yet got a copy of the current issue should immediately repair the omission. If they wish they can formulate a problem of their own, put it to me, and I will deal with it on the basis of referring the reader to his newly acquired copy, showing him how he can best• use the Tables on future occasions so as to deal with problems first-hand.
Please do not infer from this suggestion that I am trying. to persuade operators not to write to me zr.o frequently. That is not so, for the reason that the more inquiries I get the better I like it. It is through them that I ilaiTe made so many friends in the industry. It is my boast that I have many thousands of such friends and that there is hardly a village or town in this country into which I cannot go and find some local haulier whom I have met or with whom I have been in correspondence at some time or other.
Delivering Prom Maker to Branch Depots
The first inquiry witn which I shall deal is an unusual on& The operator had been asked to quote for delivery from a manufacturer to various branch depots. He picked up his supplies in 3-ton loads in London and made deliveries in Aldershot, Alton, Winchester, Southampton and Portsmouth, returning to Alton, where he had his headquarters. and starting again from Alton the next day on a second tour over precisely the same route. At each place he picked up empties to the extent of about 1 ton on each journey. ' The trip was to be'completed in a day, and four journeys were run each week, so that his total tonnage was 16-12 outwards and 4 return. The material was such, that the time spent at each point of delivery was 16 minutes. He asked me how much he should quote per ton.
Now, in dealing with this problem, the first thing to do is to assess the total mileage .nd the time taken. The distance for the round trip is actdally 175 miles. The vehicle came in the 30 m.p.h class, so that an average speed of 25 m.p.h. could reasonably be assumed, thus giving seven hours' travelling time. There are five stops for deliveries, and, taking 15 minutes for each, that makes lj hours, a total of 81 hours. Allowing some margin for, occasional delays en route, it is reasonable to assume that
the complete journey could be accomplished in nine hours every day. The total time per week is thus 36 hours and the total distance 700 miles.
Referring to Table in the last paragraph of all, headed " Time and Mileage Charges," appear these figures under the heading of 3-tons: " The charge to be 4s. per hour, plus 70, per mile." For 36 hours at 4s, the charge must be 27 4s., and for 700 miles at 7d. 220 8s. 4d., giving a total of 227 12s. 4d. For 16 tons that is 34s, Bd. per ton. , The same table can be used in another way, for in the paragraph next to the last, figures are given for the charge per mile to be made for various mileages per week.
It. is fair to assume that, if the operator does 700 miles per week on this one job, he probably worksin another 100 miles during the fifth day of the week, giving him Saturday morning to clean up his vehicle. For 800 miles per week he is recommended to charge at the rate of Nit per mile. Multiplying 700 (the mileage on the job) by 90. gives 227 I4s. as being the charge, which, again, as near as makes no matter, is 34s. 6d, per ton.
In view of what I hav.? said concerning the futility of any operator thinking in terms of pre-war costs, it is particularly interesting to note that 1 dealt with this inquiry in 1936, and I recommended him to make a charge of 21 Is. per ton.
Running Costs for a 2-ton Van
The nest inquiry, although it actually came from an ancillary user, is equally interesting, although more simple and straightforward than the first. It related to the all-in cost per mile of running a 2-ton van, (aj assuming a weekly mileage of 200, and (b) ,a weekly mileage of 400. This calls for a reference to Table I.
First of all, look up the standitig charges per week for a 2-tonner. The figure is 25 17s. 9d. Add to that something on account of establishment costs and, for an ancillary user, I should say it might be about 2011s. to 25s. per week. I take 21 2s, 3d., which makes my total of fixed costs £7. For a mileage of 200 per week that is equal to 8.4d. per mile, and for a mileage of 400 per week 4.2d. per mile.
Reference should now be made to the running costs at 200 miles per week. The figure quoted in the Tables is 5.98d. Add that to the 8.4d. already given, and we get 14.38d. as being the total cost per mile for a 2-ton van running 200 miles per week.
Again referring to the running costs per mile at 400 miles per week, we find that the amount is 5,12d., which, added to 4.2(1.; gives us 9.32d. per mile as being the cost per mile of a 2-ton van running 400 miles per week. It is a lot quicker to make that simple calculation from the Tables than it is for me to write it down.
The next inquiry deals with coaches. An operator wrote to me and said that he had been asked to quote for a contract involving the employment of two 30-seater coaches, each running five days per week for 50 weeks a year. He was asked to quote a price per day. One of the coaches would cover four journeys of 34 miles per day-a total of 136-and the other four runs of 42 miles, making 168 miles per day, Now, the Table which deals with petrol-engined coaches is No. 17. There is no column for a 30-seater, but the figures applying to a 32-seater are quite accurate enough. There, the standing charge per week is given at £10 Is, 9d., which we may take to he £10.
Allowing for the fact that this operator, judging by his notepaper, is working in a small way and not likely to have any considerable establishment costs, .1 take 22 per week for that item, making a total of £12 per week as being the, fixed expenditure for each vehicle.
The first coach will cover 680 miles per week; there is no figure for 700 miles per week in the Tables and the thing to do is to split the difference between 7.98d. for 600 miles per week and 7.41d. for 800 miles per week. That gives us 7.75d,.permile, and for 680miles that is 2.21 19s. 2d., or, say, 222. The total cost for that is, therefore, £34 per week, and I recommend that he adds upwards of 15 per cent. to that for profit, making £40, or £6 per day.
There is an alternative method of working, and I apply that to the other coach, which covers 840 miles per week.
In another part of the Tables he is recommended to charge is. 2,14. per mile for such a vehicle running 800 miles per week, and it will be quite fair to apply that figure to the 840 miles. That means he should obtain just over 250 per week for that coach, Or £10 per day.
The spice of variety still persists. Another inquiry is from an operator who has been asked to contract for a refuse-collection job in a small village, and he proposes to use a mechanical-horse type of vehicle with a load capacity of 3 tons. He tells me that the daily mileage will be 45 for five days and 21 on Saturdays. That includes dead mileage from the garage to and from wherever he starts work each day.
Margin Between Cost and Revenue
He asks me, first, what the cost of the job will be, and, secondly, what he ought to charge. He is to give a rate per hour. The particular interest of this inquiry lies in the fact that I am going to be able to show the margin which is allowed in the Tables between cost and revenue; that is to say, the margin for gross profit, which is net profit and establishment expenses.
For his cost I would refer him to Table IX, which gives operating costs of petrol-engined articulated vehicles having five wheels: that is, of course, the mechanical-horse type. For the 3-tonner the net figure for standing charges is £6 4s, 9d. His total mileage is 246 miles per week, and, in the Tables, it is stated that the average cost, at 200 miles per week, is 6.35d. and, at 300 miles per week, 5.66d. Splitting the difference gives 6d, per mile, and 246 miles at 6d. per mile is 26 3s. His total cost is, therefore. £12 7s. 9d. per week. Now, in order to arrive at his proper charges, I should recommend him to look at the last paragraph in this Table, the one headed "Time and Mileage Charges." There he will find that he is recommended to charge 4s. per hour, plus 7d., per mile; 48 hours at 4s. is 29 12s., and 246 miles at 7d. is 27 3s. Bd., so that the total charge should be £16 15s. 6d.
The margin between this amount 'and the total cost of £12 7s. 9d, if 24 7s, 9d. That is his gross profit, hut out of that he will have to pay his establishment expenses, which may be 30s. per week. S.T.R.