HOW TO USE OUR NEW T ILES OF OPERATING COSTS
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N. 0 sooner is one edition of " The Commercial Motor" Tables of Operating Costs printed and issued than preparation for the next one commences. Each day brings new figures of costs which are 'added to the common stock and will eventually influence the direction, upwards or downwards, of the figures which will appear in the next issue. A new edition has just been published and it may be as well, especially for the benefit of new readers, to deal with some of the chief features of these Tables.
They are figures for the operating costs of every type of commercial vehicle for goods or passengers commonly, or even rarely, in use in this country. Figures are given for vehicles of 5-cwt. capacity and for others of 15 to 16 tons capacity. Data are included referring to petrol-engined vehicles, to those with oil engines, to •those propelled by producer gas and to electric vehicles.
Amongst vehicles for passenger carrying there are, besides costs data relating to coaches and buses, others which have regard to the operation of taxicabs and hire cars. Every type of vehicle put to commercial use in any way is included.
The operating costs give figures per mile for weekly mileage from 100 to, in the case of some vehicles, 1,600. The costs are. given per week as well as per mile. In addition, figures are given to indicate to hauliers and to operators of passenger vehicles what they:should charge for the use of these vehicles-the charge per mile, the charge per week and figures giving, separately, charges on account of time as well as mileage.
It is important also to record that none of these figures is in any way. theoretical. As has already been hinted, they are based on information collected from users. This process of collection is going on all the year round, and the figures in the Tables are the averages of such information relating to thousands of machines employed in all sorts of ways, in various traffic circumstances and under all sorts of condi
tions of operation. .
The only, correction which is made to the figures obtained from operators is that necessary to bring them up to date with regard to such items as cost of fuel, cost of spare parts, variations in wages and so on.
The Tables are Backed by 32 . Years of Unrivalled Experience
The Tables have been available now for 32 years and they embody a wealth of data and experience such as is unobtainable elsewhere. The publication is, in effect, a standard work of reference and is so used by Government Departments and municipalities; as well as by operators throughout the country.
Each new edition is designed to be in some way an improvement upon the previous issue, and each embodies a new feature, or features, although this may not be apparent to the reader by comparing one set of Tables with another. That is particularly the case in connection with this year's edition. The outstanding improvement this time is in the method of assessing the Hauliers' Figures.
In previous yearS the custom has been to take the vehicle operating costs as a basis and to add to them one-third, or 33i per cent., it haJing been proved that, generally speaking, this amount was sufficient to provide for establishment costs-of which more later-and a net profit.
In effect, that 33i per cent, is a gross profit out of which the operator, in the ordinary way, would be able to pay for his establishment costs and still retain a net profit for himself. As an example, referring to the previous edition, the total cost of operating a 5-tonner for 600 miles per week was shown to be £19 6s. The operatu is recommended to charge as a minimum for the hire of a vehicle of that size, Covering that mileage; £25 15s. per weekthat is 33i per cent. on £19 6s.
I have, for some time, been considering if that method could be improved. It has always had a. disadvantage, in that it showed rather a meagre profit for vehicles covering a low weekly mileage, the reason being that the establishment costs did not vary greatly whether the vehicle covered a low weekly mileage or a high one and. with a low weekly
expenditure, irrespective of what the mileage may be.
The form that the Tables assame can be gathered from the specimen page reproduced with this article, At the beginning of the page the standing charges appear, these being followed by running costs per mile for various weekly mileages, In the next section the total operating costs-a combination of standing charges and running costs-are set out for various Weekly mileages and are given as a total per
week and as a total per mile.
These operating costs apply to vehicles run by ancillary users.. That course is taken so
that the Tables can be of the greatest use to the greatest number. Hauliers have to pay rather more for insurance, and they should correct the figures accordingly, as is recommended in the introduction to . the Tables.
Finally, there is a set of statistics under the heading " Hauliers' Figures." These indicate the charges which hauliers should make per mile, or per week, according to the
mileage covered by the vehicle ina week. " Time and • Mileage Charges " complete the table; they give figures for charge per hour and per mile for the various vehicles, and they are intended to be. used in conjunction. In other words, a haulier should take the time spent on a job of work and take the charge according to the rate per hour; he should take the mileage and reckon the charge of the rate per mile. The sum of these two is the amount he should be paid for the job as a whole.
The change in the method for assessing the Hauliers' Figures, as compared with that adopted in previous issues, has a defect which, paradoxically enough, is also an advantage. It makes it impossible to utilize the two issues of the Tables in order to make any useful comparison between Hauliers Figures this year and those of last year.
For example, take the case of a 5-tonner covering 200 miles per week. Last -:,,:rear's figures for the charge were £15 7s."; this year the figures
are £18 12s., an increase, of approximately 21 per cent. On the qther hand, the same size of vehicle covering 1,000 miles per week was to be charged, according to last year's figures, at £37 5s., but according to this year's figures only £36 1Gs., actually a reduction. The figures are quite correct. The apparent discrepancy is entirely due to the revised method of assessing the charges.
The advantage of this defect—if I may continue to ,i-efer to a defect as an advantage—is that the haulier is thereby prevented from attempting to ase the two sets of Tables . in support of any claim under the Road Haulage and Hire (Charges) Order, which prohibited operators from increasing their charges by moie than 7-i per cent, as compareel with what they charged in October; 1940.
ES OF OPERATING COSTS I have, in any event, tried to discourage operators f rnm taking that course, for reasons which I explained fully in a series of articles commencing in "'The Commercial Motor " dated March 13. The point is
that. only operators'. actual costs will, be of any use in that connection. The percentage increase in vehicle costsisshown in the Tables and comparisons can be made between costs now and those at the time of the previous issue in December, ,1940. • That increase, however, does not represent the total which must include reference to establishment costs, for which there is no -prevision in the figures for vehicle operating costs. • I have, indeed, always emphasized that these Tables should not beregarded as a substitute for costs' recording. Every haulier should keep records of his own costs. These Tables may then be used as a check and as a guide to charges in respect of some new vehicle of' a capacity of which the operator has not had previous' experience and for which he cannot, for a year or so, assess the operating costs. A point which it seems important to stress is 'that the figures at the head of each column of costa, namely, " 3 tons," " 4 tons," and so on, relate to the carrying capacity of the vehicle and not to its unladen weight. There are many users of the Tables who are apt to make the mistake, especially in the lower categories, of assuming that the figure has reference to the unladen weight. That is Hat SO.
So far as hauliers are concerned, I regard the time and mileage figures as the most useful and of widest application : They are partitularly helpful in the case of a man who on one day may be doing short-distance haulage and on another long-distance work. One day, in nine hours, he may run 240 miles. If his vehicle is a 6-tonner he can assess -the charge, by reference to the time and mileage figures, in this way. For nine hours, at 5s, per hour, the charge is £2 5s. For 24,0 miles, at 80. per mile, the charge' is £.8 10s.; the total is £10 15s. The next day he may hire his vehicle out for nine hours but cover only 40 miles. In that case the charge for time is still £2 5s., and the charge for mileage must be at 9.1d. per mile; the total is £1 I ls. 8d. The gross charge must, therefore, be £3 les, 8d. These same figures for time and mileage are particularly useful in assessing. day rates in connection with municipal work.
An Important Fact that the Haulier Must Not Overlook
I must emphasize the importance of the word " minimum " which appears in reference to all the Hauliers' Charges, The rates whichappear in the Tables can be applied only directly to work which is regular and consistent throughout the year. If the work be irregular, if the 'haulier sometimes runs only a day or two per week, then .that charge will be insufficient and should be increased by not less than 5 per cent, In the case of a contact he may diminish the rate by-5 per cent., because, in that event,
he is relieved of some of his establishment charges. , I should give a word of warning to hauliers who propose to use these figures 'for the calculation of rates for really short-haul work. It is not enough to calculate the time of a single journey and assess the rate on the basis of such a calculation. The only safe procedure is to take the figures for a day's work.
For 'example, assume that the haulier is carrying stone in 6-ton loads over a three-mile lead. It might seem safe to assume that he would complete a journey in an hour, given that loading and unloading time be not excessive. In that case, .he might calculate his charge by taking Sc. per hour, plus six times Sid. per mile, a total of Os. 3d. which; for 6-ton loads, is equivalent to Is. 60. per ,ton.
For that figure to apply ahe vehicle -must, without fail, Complete nine round journeys per day. It is most unlikaly that if will do so.. It is more probable that the average will be six journeys per day. On that assumption, the .charge for the full day's work will be on the basis of nine hours at Sc., which is £2 5s., plus six journeys of six miles, which is M miles at 90.-1:le-cause of the lbw speed of travel—which gives a total of £3 14s. 3d. per day. For that charge 36 tons have been carried and the rate must, therefore be 2a. 1d. per ton and not Is. aid. ' S.T.R.