Ton-mile Statistics Not Worth While
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TN this discussion of the calculation of cost per ton-mile. 1 come to the case of the inquiry which prompted these two articles. I should recall that the inquirer is operating 2-ton and 2i-ton vehicles, making 70 to 100 deliveries per day, and that the journeys sometimes involve the driver and mate in being away for one night.
In Table IV I have set out an imaginary schedule of deliveries by one of the 2-ton vehicles, covering two journeys which take three days to run. The first journey is on the Monday, when the vehicle gets back the same day: the second journey covers Tuesday and Wednesday.
I have not tried to prepare a schedule involving 70 different stops. I have assumed that the driver makes several deliveries at each stop, so that there are only 10 stops. Here, again, it does not matter whether I give a true picture. The underlying principle is the same and if there be more stops than 10 in a day, the work involved in making the essential calculations is much greater.
Taking Monday's trip, it will be seen that the vehicle starts out from A and runs 15 miles to B before it makes its first delivery of 4 cwt., reducing the load carried from 2 tons to 1.8 tons. It then runs from B to C, carrying a toad of 1.8 tons and at C makes a delivery of 6 cwt., reducing the load to 1.5 tons, and so on. The last delivery of 4 cwt. is made at L, and after that the vehicle returns empty for a distance of 22 miles from L to A.
The method of working out the figures in columns 4. 5 and 6 of the Table is as follows:-Take the first run from A to B. The vehicle is hilly loaded with 2 tons and runs 15 miles, so that the ton-mileage is 30. The cast of 15 miles at 10d. per mile is 12s. 6d., and if we divide 12s. 6d. by 30 ton-miles, we get the cost per' ton-mile, which is 5d. Similarly, taking as another example the sun from H to J. by this time the load on the vehicle has been reduced to 10 cwt. The distance covered with that load on the vehicle is two miles, so that the ton-mileage is one. The cost of running two miles at 10d. per mile is Is. 8d.. and the cost per ton-mile is now 20d.
Now study the figures from the broad aspect. The thing to note is that the load on the vehicle is gradually diminishing and that the ton-mileage is correspondingly less. The cost per mile, nevertheless, remains standard at about 10d. It follows that as the ton-mileage per mile run becomes less and the cost per mile remains the same, the cost per tonmile must increase, and this is borne out by the figures for cost per ton-mile in the last column. Starting at the minimum of 5d. per ton-mile, the cost when the vehicle is fully loaded, it increases, first slowly and then quickly, until on the last portion of the journey, the mile from K to L, when the vehicle is carrying only 4 cwt. the cost per ton-mile is 50d. For the final run from L to A, when the vehicle is empty, the cost per ton-mite is infinity.
A similar state of affairs prevails in connection with the second journey from A to Y and back to A. I have not taken into consideration the fact that for this journey the driver and mate have to he paid subsistence allowances; to include that figure would complicate the calculation and not affect the argument.
The total mileage covered during the three days is 162k. the total ton-mileage is 142.1, and the total cost is £6 15s. 741. Utilizing these figures, we get an average cost per ton-mile of nearly 110., which may, or may not, interest the inquirer. It should not if he realizes that every journey with every vehicle, every day, has to be worked out, that statistics have to be set down as in Table I, published last week, and if he appreciates the amount of work in the necessary calculations. If he has to do that work for 70 to 100 deliveries per day, for 5i days per week. I do not envy him.
Moreover, suppose that, because of the need for some urgent deliveries to be made at L on the Monday or at X or Y on the Tuesday, it be decided that the route, as I have set it out in Table V. must be reversed. It is then seen that, whereas the mileage and the cost remain unaltered, the ton. mileage has risen from 142.1 to 183.5. There are some differences, too, in the individual figures for -cost per tonmile. That of the last delivery onthe Wednesday at N costs
as much as 8s. 4d. per ton-mile, and the average cost per ton-mile, curiously enough, instead of being nearly 111d., is reduced to 8.8d.
It should be obvious that if the cost per ton-mile can vary so widely merely by a slight alteration in the routeing, and, notwithstanding that the number of deliveries, tonnage, mileage and cost remain unaffected, the figure for cost per ton-mile cannot be of any service.
We can look at the matter in another way, simplifying the calculation. Take, for example, Monday's delivery in Table IV, and forget the detail figures in the table and assess the ton-mileage cost in this inaccurate but useful way. From the start at A, up to the first delivery, the vehicle runs 15 miles with a load of 2 tons, which is equivalent to 30 tonmiles. In the run from B to L the distance covered is eight miles, and it may be sufficiently accurate for the inquirer to assume that the average load is half that at the beginning, which it would be if the packets were all of the same weight and delivered at equal distances.
The average is thus one ton and the distance is eight miles, so that the ton-mileage Is eight. If we accept that method of calculation, the total ton-mileage for Monday's journey is 38. The total mileage run by the vehicle is 45, so that the cost is 450d., and if that be divided by 38, we get a figure of 11.8d. per ton-mile.
Here, again, we are up against the same contradiciion in cost if we assume that the vehicle makes the journey in the reverse direction, as in Table V. If that be the case, the first part of the journey, carrying the full load of 2 tons, is 22 miles long and the ton-mileage up to that point is 44. From that point the load diminishes, and if we take the
mean again, we get an average load of one ton for a distance of eight miles; that is, eight ton-miles. The total ton-mileage is 52, but the cost is still the same as before, namely 450d., and the cost per ton-mile, according to this way of reckon-ing, is only 8.7d., instead of 11.8d.
Apply the same method to the Tuesday-and-Wednesday journey. If we proceed according to the schedule laid &twit in Table IV and the vehicle runs 45 miles straight off to the first delivery point, carrying two tons, the ton-mileage is 90. The remainder of the deliveries involve travelling 171 miles, and if I take the average load tette one ton, the ton-mileage is thus 17.75 for that part of the journey. Add in the original 90 and we get 107.75. The mileage covered is 117.75, so that the cost is I,177.5d. That is just short of 11d, per ton-mile.
Now turn the route around, reversing the order of deliveries as set out in Table V. Then the first part of the journey involves travelling 55 miles with a full load of two tons, which is 110 ton-miles. The detail deliveries still occupy 171 miles, with an average load of one ton, giving us once again 17i ton-miles. Now, the total ton-mileage is 127.75. The total distance, and, therefore, total cost, is the same as before, but the cost per ton-mile is 9.2d.
Again J ask the question, what can be the use of figures for cost per ton-mile which can so easily be upset by a slight difference in sauteing, bearing in mind that the actual cost of deliveries does not matter and that the mileage does not alter?
It seems to me that, in a case of this kind, the operator really wants to know the cost per unit delivered, the cost of each of these 70 to 100 deliveries. I should have thought it would have been sufficiently accurate to have totalled the cost of transport per year, divided that by the total number of units, and thus arrived at a flat rate for cost of transport per unit, which, presumably, would be included, in the cost price and would correspondingly affect the selling price of the goods concerned.
It may, however, be that that is not sufficiently accurate. The merchant or manufacturer may feel that it is only fair to let those customers who are near to him have the benefit of lower cost of transport. Let me assume that that is so. In such a case, surely the common-sense procedure is to adopt some sort of zoning, taking the journey on Monday, for example, as representing one zone and the journey on Tuesday and Wednesday as another, and other journeys similar to these, but differing as to mileage and cost, as different zones. Suppose we apply this method to these two assumed journeys.
Monday's delivery involves the vehicle in running 45 miles, which costs 37s. 6d. Suppose that a unit is 14 lb., then altogether 320 units are delivered for 450d. The cost of transporting those units to that zone is thus, approximately, 1.4d.
For the zone which is served by the Tuesday-and-Wednesday delivery, the mileage covered is 117f and the cost is £4 18s. I Id. The same number of units, namely 320, is delivered, and the cost per unit for that particular zone is seen to be 3.7d.
A System That Works The foregoing seems to me to be a much more useful method of dealing with the cost of transport, and this particular kind of merchandise. It has the advantage of involving little in the way of calculation and gives results which are reasonably accurate and are not affected by reversing the route, as in the case when we tried to get accurate figures for cost per ton-mile.
If the operator decides to assess his transport costs in that way, he can then turn his attention to that figure of 10d. per mile run to discover if, by any means, by the fitting of an oil engine, or the employment of a different type of vehicle, or by using larger vehicles, he can reduce the cost of each unit in any particular zone.
That, it seems to me, is the practical way of dealing with the problem put forward by the inquirer. I should certainly deprecate any attempt to obtain figures for cost per ton-mile. Not only are such figures useless, but their calculation necessarily involves a considerable amount of clerical labour.
Turning to the original inquiry, the details of which were given in Table 1 in the previous article, it is comparatively easy to obtain something like a useful figure for pay-load ton-mileage from the operator's books.
This is the procedure and the details are set down in Table VI. The consignments carried by that vehicle during the week were clearly as follow:—For customer A, 10 tons from Bradford to Birmingham, a distance of 110 miles, so that the pay-load ton-mileage is 1,100. Now, according to Table I, this vehicle on that journey to Birmingham carried five tons consigned to Coventry, because the table states that the vehicle started out with 15 tons, of which 10 were dropped at Birmingham and the remaining five carried to Coventry.
Essential Information for Accounting The operator has in his accounts all the information given in Table VI. He has in his lorry record the information that the vehicle had done 560 miles per week, costing (at Is. 6d. per mile) £42. Assuming that his overheads total £8 per week and he requires to make a profit of £12, his revenue for that week's work must be £62. His pay-load ton-mileage is 6,200, so that, obviously, he can carry and charge at_the rate of £1 for 100 ton-miles, or 2.4d. per tonmile.
On that basis he can make out his accounts to various customers from that ton-mileage chart. Customer A, £11: customer B, £6 10s.; C, £9; D, £2; E, £22 16s.; F, £6 6s.; and G, £4 8s.
There is not a lot of extra work involved in treating tonmileage in that way, and that is a practical way to deal with the assessing of charges, provided, of course, that the traffic be much of the same kind and that there are no special charges to be made. At the least, it does serve as a check upon charges and ensures that sight of dead mileage is not lost. In this case, although the vehicle has travelled 560 miles, the useful mileage is only 495. S.T.R.