Make Return Loads Pay
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"There Must Be a Point on the Scale of Charges Below Which the Haulier is More Likely to Lose than Gain by Picking up a Return Load," States "The Commercial Motor" Costs Expert
IN my article in the December 4 issue, I showed that the rate for a load of 12 tons from London to Leeds was £1 10s. That was a mistake: the appropriate minimum is at least double and £3 5s. usually appears to be the proper charge. I am informed that British Road Services used to charge and obtain that figure.
In arriving at the wrong conclusion I referred to the suggestion that the weekly mileage of the 12-tonner which was to be used for the work was 1,000. I took the figure of Is. 81d. per mile from " The Commercial Motor Tables of Operating Costs" as the charge to make in the case of such a vehicle running that mileage. Where did I go wrong? First of all, in the mileage: it is practicably impossible to run 1,000 miles, per week without breaking the law as to speeds and hours of work, and it is a rule which is almost invariably applied in these articles to assume •that the vehicles which are dealt with are operated strictly in accordance with the law.
If the matter of weekly mileage is considered in that light, there are two points which come up for consideration. First the speed and second the hours worked per day. On that basis, if the vehicle is driven at no more than 20 m.p.h., its legal maximum, the average speed will in all probability be about 16i m.p.h. If it runs for six days of 10 hours each day, the distance covered will be 990 miles. Moreover, in that time there must be no stops other than the appropriate breaks after running n hours and for traffic. And, of all things, there is no provision for taking on or setting down a load.
There are so many points to be covered that perhaps the best way to go about the job is to start at the beginning and add them up, making proper provision for them in Our coatings and then see what the rate really ought to be.
Loses a Day
The first point is the one just made. The vehicle cannot do the mileage in the time stated. The second is that the operator cannot reckon on getting a return load every time he completes an outward journey and must spend some time looking for such traffic. Meantime he loses a day when he could otherwise have been on the road.
Here is a typical journey. Start out on the first day and run 165 miles, which is about what may be expected with the speed limit of 20 m.p.h., averaging 161 m.p.k and actually travelling for 10 hours.
On the morning of the second day, the operator completes the journey, running 35 miles and arriving at his destination with the load. Assume that uploading takes 2* hours, by which time he had been working for 41 hours. He then, perhaps hopefully, begins to search for a return load. He is not successful on that day but on the next, the third day of the week, he does find 10 tons of material to take back to London with him.
Discovering that load has taken a couple of hours of the third day. Taking on the load accounts for a couple of hours and brings the time up to n hours of that day. The return journey thus begins at approximately 11.30 a.m. It is impossible to get home that night so at 7.30 p.m. the driver, having reached a convenient stopping place, puts up for the night having covered 150 miles, leaving 50 for the fourth day.
B20 It takes him 3 hours to travel (he is passing through the dense London traffic) and he unloads, taking a couple of hours again for that operation. He goes then to pick up his regular outward load and finishes the day by getting out of London ready for. his journey to the north. He puts up for the night round about Dunstable and on the fifth day is able to get to his delivery point in the north country. He has been instructed not to try for a return load but to. get back home during Saturday, the sixth day.
During that week the driver has worked for 60 hours; he has driven the vehicle for 800 miles and has in all earned 34 tons.of traffic, 24 outwardly from London and 10 back from Leeds.
His costs are as follows. First the standing charges per week, according to the Tables. The amount is £13 to the nearest pound. (Next come the establishment costs, which in a case of this sort are limited (I am considering the owner-driver). Say £3 per week, and the overtime pay for 16 hours, six hours at time-and-a-quarter, making £1 2s_ 6d., then 10 hours at time-and-a-half, £2 5s., making £3 7s. 6d. altogether.
E3 for Subsistence
The driver has been out, away from homit four nights and his subsistence allowances for those four nights must beat least £3. Altogether, therefore, so far as fixed charges are concerned, we have £13 for vehicle standing charges, £3 per week on account of establishment costs, £3 7s. 6d. for overtime and £3 for subsistence. Total: £22 7s. 6d.
The running costs, which of course are additional to the above, are, according to the Tables, is. Id. per mile and for 800 miles that is approximatelY £43 per week. The total cost per week is thus £65, to the nearest pound. If profit is reckoned at 15 per cent, of the cost, it shouldbe very nearly £10, so that the total charge must be £75 per week. If no account on the return load earnings is to be taken, the rate is £3 2s. 6d. per ton.
There is still something about this problem which must be dealt with. I refer to the 10 tons of traffic which were picked up in Leeds and brought to London. We must arrive at a charge for that.
There is no easy way of deciding what to do about return loads. The first thing to realize is that circumstances alter cases. The acceptance of, even the search for, a return load is in a sense the duty of the operator: the measure of the efficiency of transport in any of its forms is the ratio of loaded miles to the total run.
The Road Haulage Association battled bravely with the problem when, in pre-war days, they issued an interim rates schedule. It was suggested that there should be a balancing factor of 75 per cent, but only in respect of lead distances in excess of 20 miles. Lots of water have flowed under the bridges since then, and among the many restrictions which have been placed on the industry, that of the limitation of radius to 25 miles has made the application of the Association's plan nugatory.
Generally speaking, I am in agreement with the 20-mile limit inside which it does not pay to ply for return loads, or even to accept them, at least under ordinary conditions of operation. The underlying principle which leads me to the conclusion that return loads are impracticable when the leads are short is that the time spent on the search for a
back load could be better used in getting quickly back to base for a second outward load. That argument is strengthened in the case of 30 m.p.h. vehicles by the recent legal decision that such vehicles, when empty, are not subject to a speed limit when outside built-up areas.
I do not agree, however, that the balancing load factor should be 75 per cent. I am of the opinion that 60 per cent. is more in accordance with the facts.
It may be that some of those who read this article are not acquainted with the term "balance load." It applies in this way. The 61culated fair rate for the outward journey on the basis of one-way loading and a charge which covers the empty running is diminished so that the total payment, is for the mileage outwards plus this balance load factor. Suppose, for example, the rate for a lead of 200 miles were to be £3 10s. per ton, that rate being calculated on the basis of one-way traffic only, that is, for a Mileage of 400. The actual rate should be quoted as £4•12s: 6d.; or 75 per cent, of the gross figure. " To put it another way (taking my figure of 60 per cent. balance load): in order to calculate the rate to be paid for a specific traffic, we must first: take out figures for the rate to be charged on the assumption that the vehicle is fully loaded in both directions and then add something to allow for our .assumption that the vehicle will, in the ordinary ,way of business, return loaded for only 60 per cent. of the journeys it makes.
• That means that in the case of a 6-tonner, the average loading will be assumed to be 8 tons instead of .12, so that the basic rate shall be increased accordingly to the extent that will enable the-revenue from 8 tons to be the same. as mould have been• earned had the vehicle carried 12 tons. If the rate for one-way traffic, 6 tons in each direction, is 10s. per ton, the revenue would be 16. However, as we are assuming that only 8 tons are being carried, the revenue will still be £6 arid the rate per ton will thus be 15s.
It would be interesting, and probably most useful, if some experienced operator were to get out• figures which would demonstrate the minimum lead mileage at which it becomes practicable to make an allowance in the rate for the possibility of there being a return load. In considering the matter, the investigators must, of course, not overlook the necessity of making a profit.
' One thing can be taken-for granted, and that is that there must be a point in the scale of charges below which the haulier is more likely to lose than gain by picking up a return load. I am afraid that theoretical calculations are not likely to be of much use. Trial and error is the only way or, perhaps, the close and careful study of the books of an operator to show how his return-load business makes a profit, at what lead mileage it ceases to show a profit, and at what range it becomes a loss.
. Actually, it is the terminals, the times spent at the collections and delivery ends of the journey, which are the governing factors. Put it this way. The decision, in any ease, as to whether it is likely to be profitable to try for a return load depends upon the sum of the times needed to proceed to the point of collection for the return load after delivering the outward one, and the time taken in proceeding to the original collection point for the next outward load.
There is also this point to be considered: the dead mileage involved in the operations just described, also the time involved in making those journeys. It should be fairly obvious that the class of traffic, particularly in respect of the time needed to load and unload it, is of consequence.
Take, as an example, a journey at the .limiting lead mileage of 20. The traffic is of a nature to be capable of being loaded and unloaded at the rate of five minutes per ton plus five minutes per load. In de ease of a 6-ton load, that means that there must be 35 minutes delay at each end of a journey or 1 hour 10 minutes altogether for terminal delays. Assuming that the average speed of travelling is 16 m.p.h. so that the travelling time for the complete journey, out and home, making provision for the above-mentioned terminal delays but not for return loads, is 3 hours 40 minutes. Providing that there are no other" obstacles, and if everything runs according to schedule, it will be possible to complete three journeys in an 11-hour day.
Suppose that the charges due for hire of this vehicle work out at 7s. 6d. per hour plus Is. 3d. per mile run. That is a fair average figure.today. The minimum revenue for a one-way load should therefore be that for 3 hours 40 minutes at 7s. 6d. per hour, which is £1 7s. 6d. plus 40 miles at Is. 3d. per mile, which is £2 10s. That gives a total of £3 17s. 6d. and, as 6 tons have been carried the rate per ton is 12s. lid., say 13s. If the operator can steadily maintain an average of three journeys per day, his total revenue will be £11 12s. 6d. per day.
Now suppose that on this journey he finds he can pick up a return load. Assume that the terminal delays in connection with this return-load traffic are the same as those relating to the outward-bound goods: That is 1 hour. 10 minutes per trip. Also assume that hour is spent in travelling, say, four miles from the point where the first load is delivered and the second is picked up. The delivery point for the return load is next door to the place where the outward load is collected so that no time is lost there.
The times for the complete round trip, including the handling of the return load, are: 2 hours 50 minutes for terminals, say 3 hours; travelling time, for 44, miles at 16 m.p.h., 2.4 hours, total 51 hours. Aissume that, with a bit of squeezing, either by speeding up the handling or by a little extra speed, or perhaps a little of both, it is just possible to do two journeys per 11-hour day.
The charges are; for hours at 7s. 6d, per hour, £2 Is. 3d., and for mileage, 44 miles at is. 3d., 22 15s., making a total of £4 16s. 3d. per journey. The revenue per day is thus £9 125. 6c1., as compared with £11 12s. 6d. when no return loads are sought or carried.
The reader studying these two examples cannot avoid the conclusion that some slight variation of the terminal conditions, especially the loading and unloading times, " might well upset the results drawn in the previous paragraph, possibly to the extent of' making it practicable to make a bigger profit per day when a return load is carried. There is little chance of that occurring over the distance quoted, but a longer or shorter lead-might make all. the difference. S.T.R.