PROBLEMS OF THE HAULIER AND CARRIER.
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What it Really Costs to Run a Commercial Vehicle : The Difficulties of the Light Van Owner.
T SUPPOSE when I give in full the solution of a Ilittle problem presented to me this week by a greengrocer, in which solution I recommend the inquirer only to reckon petrol and oil costs as operating expenses, I shall be accused of going back on my own counsel, of practising one thing but preaching another. I can give as part of the reason for this apparent change of heart the fact that this really is not a haulier's problem but is an inquiry from a greengrocer who hitherto had been using a horse and cart and was thinking of buying a 10-cwt. motor. He wanted to know what it would cost to run, having been warned by several of his friends that it would be anything from 30s. to £3 a week, exclusive of wages. His mileage, he said, would be about 100 per week.
Circumstances Alter Cases.
Now, it was quite obvious from this query that. someone was trying to frighten this man and put him off buying a motor vehicle and that he was doing so by exaggerating the figures for cost of operation. If. therefore, I were merely to refer the inquirer, to our Tables of Operating Costs he would discover that ttie total cost of operating a'10-cwt. machine, running it 100 miles per week, was £4 10s. and, judging by the tone of his letter, that would just about "put the tin.'• hat on it !' -.and make him swear never to have anything to do with motor vehicles. It would ncit improve matters much, either, if I were to point out that, of that rota!, 56s. was wages because, even then, it would be aPparent to him that his vehicle was going to cost him 34,s. a week. Even that might be all right if I could be sure that he fully appreciated hoW much and how many items that 34s. included. As, however,•I can be certain that he has not that knowledge the
best thing to do is to give him the information a little at a time—to spoon-feed him with it, as it were, so. as. to avoid the risk of giving him indigestion.
I told him, therefore, that his costs would be made up as follow: Petrol, oil, tyres and repairs would amount to 1.3d. per mile, Which, for 100 miles per week, is 130d.-11s. a week as near as may be. It is
quite possible that those four items are all that he has in mind, and that if I were to leave the answer at that I should really have done all that was necessary. Obviously, however, that would not be quite fair, and I added that there would also be expenditure on licences and insurance which would be equivalent to 12s. per week together. The cost, therefore, for 100 miles per week amounts to 23s. If he does more than 100 miles, he need only add 1.3d. for each mile, as the amounts for licences and insurance will not increase with the mileage. I told him that I was assuming that he would he keeping the motor vehicle on his own premises, just as he now does his horse and cart. (That being the case, as he was not using the vehicle for profit, there was no point in his reckoning anything for rent-and rates of a garage.) I also advised him that there was no allowance in the figures
• quoted for depreciation or for interest on first cost.
The ljaulier's Weekly Expenditure.
I am referring to this problem here because it occurred Warne while I was answering this letter that there were probably' many. haulers, or potential hauliers, who were being alarmed at the figures for costs as they appeared in our Tables. Take, for instance, the case of -a man Who is thinking of setting up in business with a 5-ton solid-tyred lorry. He has made some preliminary inquiries as. to the prospects of business and can see possibilities of doing at least 300 miles per week almost so soon as he begins. He has, perhaps, quoted for the Work in proSpect on the basis of our Tables and his tender has been provisionally accepted. Getting down to brass tacks, he begins to consider ways and means. He is satisfied that he will get his money, but is also aware that in the ordinary Course of business he will not receive his first cheque on account until he has done a month's work. He takes a look at the Tables and finds that the operating cost of a 5-ton lorry doing 300 miles per week is £14 3,s. for that period, so that it looks as though he will have to spend close on £60 before he begins to see any return. That may appear to be rather a stumbling block and it may be as well therefore, if I
point out that that £60 is not necessarily actual outof-pocket expenditure during the nigrith.
A man starting in business in this way will naturally have made full allowance for the initial expenditure on his vehicle. It will not• matter whether he is buying a new one or a second-hand one, whether he is paying cash or instalments, he will still be aware that amongst the items of expenditure which he will necessarily have to meet will be those of licence and insurance, so that by the time he takes the wheel of the lorry and starts work those expenses will have been met: they will be behind him. He will have his garage rent to pay—he may have to pay that in advance or he may not have to pay at all until he has been at work for a month; all depends on circumstances—but the item itself, for a month, will be somewhere between £2 and £2 10s.: it may be less, but it will probably not be more. Over and above that he is not likely to have to spend anything for many months except what he has to pay for petrel and oil and that, at 300 miles per week, assuming our figures to be correct, will be less than £2 10s. per week.
For the first month, therefore, the cost to the haulier of running a 5-ton lorry including his garage rent should be no more than £12 or £12 10s. If at the end of the month he is paid for his month's work according to our schedule, he will then receive between £80 and £90, and will, therefore, from that time onwards be in a position easily to meet expenses and to pay his way. What I must emphasize is that the other items in the Tables of Costs will have to be met eventually, so that it la up to the haulier to lay aside each month enough to enable him to be in a position to meet the heavier items of expense, the renewal of tyres, licence, insurance, the cost of an overhaul and, 'ultimately, the renewal of his vehicle itself when those things become due. The building up of that reserve, however, need not commence at once.
How Many Hours a Week ?
Another unusual aspect of the haulage business has been brought to my mind by a letter from a man who is running a Ford van and who is in doubt as to how. much he should charge for its hire. He has apparently been in the habit of charging a fixed rate per hour plus a regular amount per mile and is up against keen competition, due in part, he says, to the fact that it is possible to buy a Ford van in his district for £20 or even less. He quotes one actual case in which a van of this type in running order was bought for £5 and cost only £5 in the first year for repairs! He adds that neighbouring men are charging 4s. an hour for the hire of a Ford van, no matter what the mileage may be.
In his locality, which is hilly, the average consump B40 • „,
tion of fuel is at the rate of a gallon per 16 to 20 miles. Tyres do not wear well—he mentions having had four punctures in 300 miles in a tyre which has only run 1,500 miles, and he has had as many as eight punctures in 1,200 miles., He does running repairs himself, but takes the bigger jobs to the local Ford service agent. The figures for cost of maintenance which we-quote in our Tables are not so high as they should be, according to,his experience. In other words, they are above our average figures.
He gives a couple of examples of the sort of work upon which he is at present engaged. One of his contracts, apparently, is with a local confectioner, for whom he does three four-mile trips a day, taking half an hour for each trip, including loading and unloading. Another job is for a newsagent, for whom he does a 24-mile run occupying two hours, but that occurs only once a week. In his letter he gave no figures for his weekly mileage, but he wanted to know what he really should charge. It may be taken for granted that, in a case of this sort, the mileage will probably vary considerably from one week to another, and, in answering his letter, I tried to give him something based on his own favourite method of charging, namely, "so-much an hour plus so-much a mile." At the wiry outset, it struck me that I should have to assume some number of working hours per week. The charge per hour would necessarily be based upon the total of standing charges together with the establishment costs and profits. These in the case of a 7-cwt. van amount to £6 14s. a week. Obviously, it is useless calculating the hourly charge on the basis of a 44-hour working week if the vehicle be not in use for every one of those 44 hours, and I therefore took 36 hours as a basis. That means that 3s. 9d. an hour must be charged for the use of the vehicle, apart-from any question of mileage. The actual running cost is 1.41d. a mile, and I "advised this inquirer to charge 2d. a mile as an addition to the hourly charge.
It is of interest to see how these figures apply to the two contracts which he mentions in his letter. First of all, there is the job of carting for a confectioner. On the time basis he would charge 5s. 8d. for an hour and a half, and 2d. each mile for 12 miles, 2s.: total 7s. 8d. The newspaper job takes up two hours with a mileage of 24, and for that the fee would he 7s. 6d. plus 4s., or 11.s. 6d.
A week's work would bring in a revenue of..36 times 3s. 9d., which is 135s., plus the mileage charge. If we assume that, on an average throughout the 36 hours, five miles an hour are covered, that means to say the total mileage would be 180, the tevenue from which would be 30s.; so that the total return for a week's work would be £8 5s., comparing with £7 17s. which is what is stated to be the minimum for a vehicle of this size doing 200 miles per week.
I had intended in this article to commence dealing with a fairly difficult and intricate problem in connection with the haulage of sugar beet. Exigencies of space, however, prevent my going into that problem,
and I must leave it for the next article. S.T.R.