Solving the Problems of the Carrier
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Justifying Apparent High Charges for Furniture Removals
Consideration of a Costs and Charges Problem in Connection with a Special Furniture Removals Job. Other Calculations Relating to a Case Brought Under the Road Haulage and Hire (Charges) Order
IT is essential to the economic stability of the road-haulage 'industry after the war that hauliers should become costs
conscious. That is something for which " The Conimercial Motor " and myself have, for many years, been working. Besides producing " The Commercial Motor " Tables of Operating Costs, of which, by the way, a new edition is now available, and the publication of weekly articles on the subject of costs and rates, I toured the country regularly before the war, as most readers kribw, addressing meetings ot operators on the same subject. The basic principles of the costing of road transport were indicated and, given some realistic figure for costs, it has been shown how reasonably profitable rates can quite easily
be assessed. I hope to resume that work so soon as possible after the war.
Except in one direction; the.stress of events during the war bus tended to. impress upon Operators the importance of having some really reliable figures of costs to produce, from time to time, as the need arises.
The exception has arisen out of the operation of the M.O.W:T.'s Road Haulage Organization, under which operators are paid according to fixed schedules and, as knowledge of costs di4 not appear likely to enable them to compel modification of the rates in those schedules, many operators have ceased to keep adequate costs records. There has been some excuse for them inasmuch as they have, like neatly everyone else, suffered from shortage of labour; moreover, the revenue from work done for the R.H.O. has been so meagre that they have been glad to seize every opportunity of cutting down overheads and establishment costs. If by diminishing the clerical work they were able to dispense with the services of at least one clerk, many were only too .glad to do so.
Actual Running Costs Figures Should Always be Available In all other directions. however, the need for costing has !Seen impressed upon them. Discussions and disputes about rates, both with the Services and Government Departments, have invariably turned on the question of actual and not estimated costs, and operators, feeling aggrieved, have been asked to produce evidence that the rates which are offered to them are insufficient to show a reasonable profit
Another development which, to my mind, seemed likely to make hauliers keen on showing that their costs figures were correct and up to date, was the bringing into operation of the Road Haulage and Hire (Charges) Order. under which, if an operator's charges exceed those of October, 1940, by more than n per cent., he is called upon to justify that so-called excessive increase.
Actually, however, the effect of this regulation in making operators more costs-conscious may not have been so great as I anticipated: few disputes have arisen to which the Order has applied'. It may have been, of course, that operators have cut their charges whenever, they have been disputed rather than go to Court, and this is the more likely to be the case if they have not had available any accurate statistics of costs' to support them in resisting any claim for reduction. It is significant, however, that of the cases which have been fought, practically every one has gone in favour of the operator. In every one of them the value of having some authentic figures for cost of operation has been amply demonstraaed. The most recent of these cases was reported on page 23 of " The Commercial Motor " dated August 11. It related to the removal or some furniture from Blackpool to Crediton and, once again, the haulier was successful in resisting a claim for :eduction of his charges.
I regard this case with particular interest for a variety of reasons, of which I propose to quote two. In the first place, the problems of assessing costs and rates for the removal of furniture have peculiarities of their own which put them in a case apart. That this is so. has been fully recognized by the Furniture, Warehousemenaand Removers Association. This Association, more than any other similar: body, has dealt thoroughly with this important matter of costings and economic rates and has been active not only in persuading its members to be costs-conscious, but in insisting on a high standard of service being renderedby its members to their customers,
Mr. Edwin A. Harris, the secretary of the Association, is very much alive to the necessity of stressing these matters, and it is not so long since the Association produced a booklet ot costs and rates which was almost a model of its kind.
Similar Case Analysis Proves Justification for Charge
The second reason why I was particularly interested in this case was that only quite recently I had a similar problem put before me for solution. It dealt with the road transport at a large load of furniture—a special job— and one which, in its nature, was similar in some aspects to the one which was the subject of this dispute. I propose to deal with this problem in order to indicate the pal-allel between the two cases and perhaps, with certain assumptions, to demonstrate the fairness of the charge which was made.
My problem was to estimate a charge for the conveyance of an out-size load of furniture for a distance of 400 miles, commencing in London. A return load was to be available so that it was necessary to consider a charge for' only the outward journey. I was advised that a 6-ton vehicle with a..1,500-eubic-ft. van body was necessary. Work was commenced at 8 a.m. on a Saturday, when three packers, in company with the two drivers, loaded the furniture into the van. The time needed for the loading was four hours and the total time taken on the journey was 36 hours— from 8 a.m. on the Saturday to 8 p.m. on the Sunday. The job was urgent and the journey had to be made nonstop, so that two drivers were sent. The operator told me that, as both drivers had already completed more than their 48-hour guaranteed week before they started, and as he wished to avoid any dispute as to wages which, of course, for the Sunday work would have to be at double time, he decided to pay them for 48 hours, that is 24 hours' double time each.
The direct charge for drivers' wages was, therefore, £9 14s., to which must be added £2 for subsistence and sundry expenses, making £11 14s. for that item alone. The wages of the three packers, each of whom worked for four hours, at ls. Sid, per hour, was £1 Os. 6d., to which a gratuity was added, making £1 6s.. in all. Before proceeding to deal with the rest of the costings I should emphasize that furniture removing has certain particular characteristics which tend to make it more expensive than ordinary road haulage. The vehicle itself costs sometimes as n.uch as 50 per cent, more than the average lorry, because a furniture van is fairly expensive to build and is, more or less, usually elaborately painted and sign written. Not only does this add to the cost, but to the expense of maintenance.
Anyone 'with experience of this class of work will be able to confirm that the costs of maintaining the bodywork of furniture vans is by no means insignificant, and every furniture van should be kept smart in appearance if the operator be desirous of retaining the custom of a good
class clientele. Moreover, owing to its weight, such a vehicle is liable to be more expensive as regards its consumption of fuel, oil, and tyres, although, to some extent, this is offset by the fact that the load, whilst being bulky. is not, as a rule, as heavy as would be carried by a vehicle of similar capacity engaged on other work.
Higher Costs of Operating a Furniture Removals Vehicle It will be appreciated, therefore, that every one of the items of running costs—fuel, oil, tyres, maintenance and depreciation—is greater in the case of a furniture van, than it is in respect of the average goods vehicle, and it wastherefore necessary to take this into account when trying to solve the problem of what this operator should charge for this particular job.
Taking, first of all, the standing charges, exclusive, of course, of wages, as those have been dealt with separately. The road-fund licence—the vehicle weighed over 3 tons unladen—amounted to £50 per annum, say, Al per week. The garage rent was I0s., insurance, including goods in transit policy, 25s., and interest 15s., making a total of E3 10s. per week_
Establishment costs, in connection with the business of furniture removing, are also high, and it is no exaggeration to assess these as averaging £1 per week per ton of pay-load, which means that, in this case, we must allow £6. The total of these two major items is thfs £9 Os. per week, or approximately 35s. per day, which is 70s. for the two days which were necessary to complete this job.
In considering running costs, I will take, first of all, to-day's averages for an ordinal, 6-ton lorry, engaged in general haulage work. Costs per mile are: Petrol. 2.79d.; oil, 0.16d.; tyres, 1.60d.; maintenance (d). 0.40d.; maintenance (e), 1.23d.; depreciation, 1.32d. The total is 7.49d., or practically 7id. per mile.
Estimated Running Costs of
8-ton Furniture Van
For a furniture van of the type specified in this particular problem I should estimate the running costs per mile as follow: Petrol, 3.00d.; oil, 0.16d.; tyres, 1.754.; maintenance (d), 0.60d.; maintenance (e). 1.40; depreciation, 2.00d. The total is 8.91d., and itwill probably be quite near enough to take that as being 94. per mile. As the distance covered was 400 miles, the amount of the running costs was, therefore, £15.
I should have mentioned that the unloading of the furniture was carried out by the two drivers at the outer end of the journey, no other assistance being provided.
The total cost, therefore, comprised:— • I advised the operator that, as this was a special job, he was justified in expecting to make a profit of 25 per cent. on his costs and that he should charge £40 for carrying out the work.
Now, to return to the case which was brought before the Acting Transport Commissioner for the North-western Region. It related, as I have already stated, to the removal of furniture from Blackpool to Crediton, Devon. The total charge was £62. The carrier stated that the furniture moved weighed 5 tons and that it was necessary to withdraw the largest vehicle from other work in order
to accommodate it. The furniture had to be collected from two* stores, and six men were .duly employed for a day loading the furniture. The day of loading was Easter Monday, for which special wage-rates were payable (actually, of course, double time). There were one or two additional items which were held over for crating and subsequent delivery to Crediton, and these were covered by the total charge of £62.
It is further stated that, in order to convey this furniture, a large-capacity van of over 1,200 cubic ft. was required. It would seem, therefore, that it was on all fours with the problem I have quoted and Ihat a 6-tonner with a capacity of 1,500 cubic ft. would be the type of vehicle required.
The distance from Blackpool to Crediton appears to be about 300 miles. The operator, presumably, made every effort to find a return load, but all that he could get was a small consignment -if 3 tons from Innesworth, near Gloucester, and this he conveyed to Kirkham for a charge of £4 19s. We are told, also, that two men made this journey with the vehicle
Labour Costs Represent Big Percentage of Total
It may reasonably be assumed that the costs were approximately as follow:—First of all, the six men operat• ing for nine hours each—a total of 54 man-hours. at 3s. 4d. (double time)—giving a total of £9. The time occupied on the journey would have been not less than three days travelling, plus one day at the delivery ,end, making four days in all, say, 40 hours. Two men had to be paid at Is. 104. per hour. and as there was probably a little overtime worked as well, the wage bill would not be less than £8. These two men were away from borne for four days and would, therefore, be entitled to subsistence allowance totalling-£3 12s., say, £3 15s. altogether.
Nothing is said about the way in which the fu.niture was unloaded at Crediton, but if it took six men a whole day to load, it is only reasonable to assume that there would have to be six men unloading. That would. be, say, four men in addition to the two drivers. Their wages can be estimated at £3. Taking ov,erheacts and establishment costs as being the same as in the other case, that is 35s. per day, we have five days, altogether, at 35s.. which is £8 15s..
Finally, there is 600 miles' running at 94. per mile, making £22 10s., and the total cost is £55. Even if I add not less than 20 per cent, to the costs in order to ascertain a fair and reasonable charge, I get £66.
From that must be deducted the £4 19s. earned on account of the return load from Innesworth to Kirkham, but something must be added for the special packages which were .crated ready for subsequent dispatch to Crediton.
Assume that the value ol the latter service is £1 19s., and deducting the balance of £3 from the total of £66, we get £63 as being a minimum fair charge, which is 21
more than the amount disputed. S.T.R.