• Problems of the
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HAULIER and CARRIER THE standing charges in connection with the operation of a motor vehicle are usually calculated on the assumption that it works 50 weeks of the year. On that basis, and continuing to take as an example the various operating-cost figures for a 30-cwt. vehicle, the following details will be found to apply :—
The licence, 125 per annum, is equivalent to a standing charge of 10s. per week.
To arrive at the correct figure for wages involves, strictly speaking, a little calculation. If the nominal figure be 13 per week, the total for 52 weeks in the year is 1156. A fortnight's holiday at full wages (£6) should be allowed for, making £162 the total expenditure on wages for the year. As the actual use of the vehicle covers only 50 weeks, that is equivalent to 13 4s. 10d. per week.
To that must be added the employer's contribution to national unemployment insurance, 9d. in respect of national health insurance and about 9d. per week for insurance against risks under the Employers' Liability Act. The grand total is £3 7s. 2d. per week.
The reader must not be confused by the fact that, according to the foregoing calculation, he pays 54 weeks' wages for only 50 weeks' use of the vehicle. It is a reasonable assumption that out of a year the vehicle will, for one cause or another be out of commission for two weeks.
The user will not be able, to dispense with the services of the driver—on the contrary, it may be essential that he shall be in attendance on the vehicle while it is temporarily idle. It is also usual in well-conducted concerns to give the driver a fortnight's holiday with pay and that, in the majority of instances, will necessitate the engagement of a temporary driver to take his place.
The next item is garage rent and that may be anything from 2s. 6d. to 10s. per week. It must be something, or, at 'least, some amount must be allowed on account of garage rent, even if the vehicle be housed in a shed belonging to the owner.
He should realize that if the shed be suitable for
garaging his vehicle, he could let it to someone else for the same purpose and, accordingly, he should debit his accounts with the rental value. In The Commercial Motor Tables of Operating Costs 6s. 6d. is allowed on account of this item and after careful consideration
Gs. Gd. is what I propose to take as the figure in these calculations.
Insurance is a little more expensive for a haulier than for an ordinary user. The insurance companies are firmly of the opinion that a man who carries the goods of other people and who uses his vehicle with which to earn a living is likely to take more risks than the ordinary trader, and their premiums are graded accordingly. The actual figure will depend upon the make of vehicle and upon the district in which it normally operates.
The least premium for an " all-in" comprehensive policy is £13 per annum, but twice that amount may have to be paid if the make of vehicle be one of those which is penalized by the imposition of high premiums and if it be working in a big city, such as London or Glasgow. The amount calculated for a period of a week may, therefore, he from 5s. 2d. to 10s. 4d. I shall take 8s. 4d., which, again, is the figure set down in the tables.
Now I come to the interest on first cost. Earlier in this series of articles we agreed to assume that the price paid for the complete vehicle was 1300 and that its tyre equipment should be valued at £30. On that basis the net value of the chassis is £270 and interest on that sum at 5 per cent, per annum Is 113 5s., or 5s. 6d. per week.
If the reader adds together these five items of standing charges, he will find that they total 14 17s. 6d. If the vehicle be in use for 48 hours each week and a 48hour week be the usual basis of calculation, the standing charges amount to 2s. 44d. per hour.
There is food for thought in that figure. The haulier who is thinking of operating a vehicle of this size should have in mind the fact that whenever it is idle it is actually costing him 2s. 4fd. per hour. That is put forward as an added inducement for him first to exercise due thought before he embarks upon this business of haulage contracting and, secondly, to take all possible steps to keep it occupied on revenue-bringing employment.
The total cost of operation may now easily be calculated for any ` kind of job, whether it is one which involves a good deal of waiting about or is a Tongdistance run with little standing time and a considerable proportion of running time.
Only two factors have to be considered: the total number of hours the vehicle is at work (that, in the case of a job which is complete in itself, should cover the entire period from leaving the garage to returning to it) and the total mileage run, again from garage to garage. For every hour of that total the net cost to the owner is 2s. 4id.; for every mile it is 2.78d.
Suppose, to take a simple example, a particular job of haulage involved the vehicle in leaving home at 8 a.m, and return at 5 p.m. Then, allowing the driver an hour for lunch, that means the total time was eight hours. If in that eight hours 100 miles were run the total net cost of operating the vehicle-1 must repeat my emphasis that it is net cost of operation, because we have not yet reached the stage of knowing what to charge-is eight times 2s. 41d., or 19s., for the eight hours, and 100 times 2.78d., or 23s. 2d., for the mileage : total £2 2s. 2d. (There are hauliers hiring 30-cwt. lorries and charging only 4d. per mile.)
Two Important Factors.
There are still two other matters to &insider before we can state what the charges ought to be. Both of them are extremely important. One involves consideration of the expense to which the haulier is put in carrying on his business, whilst the other is profit. Most beginners run away with the idea that the first of these is insignificant. Some novices manage to do with very little of the latter, too, but that is an attitude with which 1 am sure readers will have no sympathy.
First of all, even the veriest beginner will admit that he must have a telephone. That will cost him at least £12 per annum. It may cost as much as £20 if he has a large number of calls. A figure convenient for our calculations is £13 per annum, because that is roughly 5s. per week.
He must have notepaper and envelopes, as well as billheads. Some circulars also are necessary for publicity purposes. Suppose he spends only £2 10s. per annum on that account, that is equivalent to 1s. per week, which is not much, it is true. Nevertheless, every little helps or does not help, and it must be taken into consideration.
Next comes postage, and if much circularizing be done, as may well be, as a means for advertisement, then that might amount to at least several shillings per week, and even when circularizing is not quite so necessary, there will be the dispatch of invoices and accounts-anyway, we hope so.
Small Charges that Mount Up.
A certain amount is spent each week in telephone calls outside and occasionally there will be telegrams. Suppose we put down 2s. per week for that. Allow another 2s. per week for occasional gratuities and a like amount for parking fees and tolls.
These quite ordinary expenses amount to 15s. per week, and I have not yet considered the matter of dead mileage, that is to say, mileage covered by the vehicle, which is not in connection with any contract and for which no payment is received. What it may mean, especially in the beginning, can be realized if it be assumed that the new owner spends half a day in touring the district with his vehicle, seeking orders.
Suppose he spends four hours on the job and covers 50 miles, the bare cost to him, according to the method of calculation that I have just indicated, is 11s. 7d. As half a day is not likely to be sufficient for some time to come, it is reasonable to allow 15s. as expenditure on dead mileage involved in that and in other ways. Thus the total of establishment expenses is brought to 30s. per week. There remains only profit, and suppose we allow £2 10s. per week for it. The gross profit, which is the net profit phis establishment expenses, totals £4 per week and that is equivalent to Is. 8d. for each of the week's 48 hours. That amount must be added to the 2s. 4id. per hour operating costs and fixes the minimum charge at 4s. per hour plus 2.78d. per mile, the price of any job being worked out in the way described in connection with calculation of operating costs, but using the 4s. per hour instead of the 2s. 4id. S.T.R.