OPERATING COSTS FOR ALL TYPES.
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Complete Tables Covering Running Costs and Standing Charges and the Minimum Charges Per Mile or Per Week That Will Show a Profit.
IN the pages which follow we present an entirely revised set of tables of operating costs, a feature which was established many years ago by The Commercial Motor, and which is unique in the industry. All types of vehicle are covered and every figure has been carefully worked out and as carefully checked. The figures are based upon the actual experiences of owners of each type of vehicle operating under all sorts of conditions, in all kinds of circumstances and In all parts of the country. The information in most eases has been given to us in strict confidence, in so far that the identity or the field of operations of each of our informants may not be disclosed. The reason for this is, of course, obvious, for no haulage contractor, no motor coach proprietor or bus operator, is willing to reveal his costs to his competitors,. and for the game reason the merchant and trader does not often tell his competitors in his line of business how he fares in the matter of transport costs. We do find, however, that if the interests of the individual users are properly safeguarded they will give us the information we require in order that a set of average costs for the whole country can be prepared and issued as a fairly general guide.
It is this point which we desire strongly to emphasize in connection with the use of our tables. Any user whose vehicles operate under strictly average conditions of loading and employment, over average roads, with all circumstances of staff, prices of supplies, etc., at a reasonable level, should find at the end of a year during which accounts have been carefully kept that his costs are very close to those set out in our tables. But it is not often that the user can say that, in every circumstance, he has been able to conduct his operations upon such a perfectly happy level. It is, therefore, necessary for him, when he is first confronted with our sets of figures, to take each item under the heads of "Running Costs," " Standing Charges" and "Establishment Expenses and Profits," and to make a definite comparison with the results he himself has been able to attain.
It will be observed that under the head of "Running Costs" are grouped these items:—
Fuel. Maintenance.
Lubricants, Depreciation. • Tyres.
Each one of these is an item of expense incurred in, and by reason of, the actual running of a vehicle. Let the vehicle stand idle and there can be no cost incurred through the consumption of fuel or lubricants, through wear of tyres or of moving parts, or through depreciation (except, naturally, by obsolescence)..
Under the head of "Standing Charges" are grouped these other items:— Licences. Insurance.
Wages. Interest on capital.
Rent and rates.
Whether a vehicle be running or idle, these expenses run on, and they exert their influence tremendously when the weekly mileage covered by a vehicle is low.
The assumed "Establishment Expenses and Profits" are shown separately in our tables, after the total costs of operation per mile and per week have been set out, because circumstances differ here to a very great extent. The small man owning one vehicle may conduct all his administration from his home and may do his own correspondence. At the other end of the scale a concern will employ quite a large staff to do the work.
The amount of profit required is very much a queso24
tion for the user, and here we have had to adopt an arbitrary figure of so much per vehicle per week without making any medification in respect of the mileage covered, although we suggest that a much larger profit should be expected from a vehicle which covers, say, 400 miles per week than from one which covers a much shorter distance, for obviously the greater the volume of work performed in a week the greater must be the mental strain thrown upon the person responsible for the administration, and the greater must be the risk generally. However, having staled the case, we must leave each user to specify the profit he will require per vehicle.
In these • tables we have taken as our bases :—Fuel at Is. 3d. per gallon; lubricants at 5s. per gallon; tyres at current prices, with a life for solids at 16,000 miles, for cushions at 12,000 miles, and for pneumatics at 8,000 for covers and 12,000 miles for tubes. Depreciation is worked out on a basis of about a seven years' life of the vehicle, or 160,000 miles.
The first thing which the user should do is obviously to compare his own costs for supplies and his oWn experiences in tyre wear and vehicle _life with these bases, and where he finds a difference to make inodie fications accordingly. He should then do the same thing with his standing charges, not overlooking the fact that he is fully justified in regarding as a charge the interest at 5 per cent, to which his capital entitles him, for lie could earn this interest in first-class securities without having the labour of operating a transport concern.
When the modifications suggested above have been made, the user will be able to observe where his own results are as good as or better than—or even, worse than—those which are the average for the whole country. Heavier fuel costs and higher maintenance charges may be expected where the area of operations is hilly with rough roads and hard working eonditions; conversely, on smooth roads with no severe gradients and with easy conditions of loading, with good drivers and skilled maintenance, costs will be found to be better than the average.
We welcome comments upon our tables and would ask that where comparative figures are sent to us the size and nature of a fleet, the district of operation and the class of service upon which the vehicles are engaged should all be mentioned.