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Planning for Profit

28th April 1961, Page 74
28th April 1961
Page 74
Page 77
Page 74, 28th April 1961 — Planning for Profit
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Which of the following most accurately describes the problem?

"On Tow" Legally

Readers' Inquiries Concern the Operation of Breakdown Recovery Vehicles: Also Costs for 12-ton " Artics," 6-tonners and 1-ton Vans

AREADER states that he is contemplating entering the breakdown recovery business and asks for guidance on the legal position when towing a disabled vehicle with a two-wheeled solid-tyred ambulance.

Unfortunately the legal position of the towing ambulance is one which is perhaps not entirely free from doubt. There have been two relevant High Court decisions. The use of a two-wheeled solid-tyred ambulance .alone was said, in the case of Wilkinson v. Barrett, to require that the ambulance

met the regulations applicable to trailers. In the case of Brown v. Dando it was decided that a " Vandolly " device attached to a two-wheeled caravan turned it into a single fourwheeled caravan trailer and that it did not form two trailers.

On the basis of these to decisions the Minister of Transport, wishing to facilitate the use of tliese devices, made the Motor Vehicles (Construction and Use) (Amendment) (No. 2) Regulations, 1959 (S.I. 1959/2231), obtainable from Her Majesty's Stationery Office. price 3d. These regulations provide that when a towing implement is being drawn alone, other than between half an hour after sunset and half an hour before'sunrise, it is exempt from most of the regulations applicable to trailers such as those relating to springs, mudguards and brakes, provided its speed does not exceed 20 m.p.h. This exemption also applies when vehicles are being removed in the exercise of a statutory power of removal, i.e., cars causing obstruction being removed by the police. This includes any towing implement being used for the drawing of such a vehicle.

In addition, the exemptions appropriate to broken-down vehicles were extended to include an exemption from the requirements that certain trailers should have pneumatic tyres, and from the requirements as to the diameter of wheels and those relating to wings on trailers. Vehicles being removed in exercise of a statutory power, broken-down vehicles (if moved in such a way that their steering cannot be used), and towing implements being drawn alone are exempted also from the requirements that goods vehicles drawing trailers should carry an attendant.

It would therefore seem that these provisions make legal the towing in daylight hours of an unladen solid-tyred twowheeled ambulance. (subject to the 20 m.p.h. speed limit), even though it does not meet the normal regulations for trailers. In the absence of a High Court decision it would also seem that such an ambulance may he used to remove broken-down vehicles, or those being moved under a statutory power of removal, .provided that the ambulance and towed vehicle together meet the Construction and Use Regulations and the lighting requirements for trailers, with any exemption applicable to broken-down vehicles.

AHAULIER asks for advice on quoting for a contract with the possible duration of two years. An estimated loading time for the materials concerned is 11 hours per vehicle with a corresponding time for unloading at the destination. The trip mileage would be around 115 and the return would be made empty. The contractor would provide a well-known make of 12-ton tractor unit to haul the customer's own platform articulated trailers.

Assuming the unladen weight of the combined tractor and trailer is 4 tons 15 cwt., the annual licence duty would be £65. This would give an equivalent standing cost per week of £1 6s., which allows for two weeks a year when the vehicle may be off the road because of driver's holidays or major overhaul of the vehicle.

e38 The weekly cost of the driver's wages is reckoned at £10 9s This is based on the current rates as set out in the Rom Haulage Wages Regulations R.H. (70) for drivers of vehicle!

based in Grade I areas. This amount also includes allowance! for National Insurance and employers' voluntary liabilit3 insurance contributions, as well as an allowance for holiday! with pay. Rent and rates in respect of garaging the vehich are assessed at 13s. 4d. a week. Vehicle insurance for this typt of operation is estimated to cost £156 a year, the equivalcn of £3 2s. 5d. a week.

As the contractor is supplying the tractor only, interest wil he charged on the initial outlay for this prime mover, sa3 i,1,750 The weekly cost of this item is therefore £1 Is., givint a total for the five items of standing costs of £16 1 Is. 9d When a 44-hour week applied, the corresponding. standing cos per hour would be 7s, 6d.

When fuel oil was purchased in bulk at 3s. 100, per gallon and an average rate of consumption of 11 m.p.g. was main tamed, the fuel cost per mile would be 4.25d. Lubricants adh 0.27d. and tyres 2.08d. per mile. Maintenance is reckoned tc cost 2.60d. and depreciation 2.04d. per mile. Here, again thi: item is calculated solely on the cost of the tractor unit. TM total running cost per mile is thus 11.24d.

As with many inquiries submitted by .readers, due to fin absence of relevant detailed information, several assumption! have had to be made in arriving at this estimate of probablt operating costs. Moreover, no allowance has been made fo overhead or establishment costs of the particular operator, no. For any profit margin. Both of these would, of course, havt to be added to the operating costs to form the basis for t charge to be tendered to a customer.

As it would appear that loading and unloading time woult probably constitute a fair proportion of a normal working day it would be prudent to make the tender irt the form of a chargt per hour plus a charge for mileage run. Due consideratiot would also have to be given to the length of the contrac relative to the allowance for depreciation, overhead costs am the rate of profit margin.

'NvHAT are thc currency periods and amount of fees o carriers' licences?" asks another reader. As stipulated in the Goods Vehicles (Licences and Prohibi tions) Regulations, 1960, the currency for an A licence is fivt years, a B licence two years and a C licence five years. Licence for shorter periods are granted to suit the administrative con venience of Licensing Authorities, whilst for seasonal or othe work of limited duration short-term licences may be grantet for periods not exceeding three months.

The fee for an A licence is £10 per vehicle, 15 for a I licence and £1 10s. for a C licence. Adjusted fees apply fo licences with reduced currency periods.

ANOTHER reader is considering the supply of vehicles ot contract hire for a period of up to seven years. Annua mileage would be around 20,000 and the hiring compan; would be responsible for engaging and paying drivers, fue and lubricating oil, and the washing and greasing of vehicles The vehicles concerned are 6-tonners which the reader state will cost around £1,700 each. He also adds that the annua licence duty would be £46 5s. and annual insurance premium £62 10s.

On this basis the four weekly standing costs payable by th haulier would be licences, 18s. 641.; insurance, II 4s. 10d.: interest, £1 Os. 5d.; depreciation, £4 Os. Od.-total £7 3s. 9d. Alternatively the corresponding standing costs per year would be licences, 146 5s.; insurance, 162 10s.; interest, £51; depreciation £200-total, £359 15s.

The haulier would he responsible for two items of running costs only, namely tyres and maintenance. Tyres are estimated to cost 1.35d. per mile and maintenance 1.73d., total 3.08d. per mile. Incidentally, the estimate for maintenance makes allowance for the fact that the customer will be responsible for washing and greasing.

As it is expected that 400 miles per week would be averaged, the running costs each week would then be £5 2s. 8d., with a resulting operating cost each week of 112 6s. 5d. Correspondingly, the running cost each year would be £256 13s, and the operating cost £616 8s. As in the previous example. an appropriate allowance has to be added to this estimate in respect of overhead costs and profit margin.

LA A N engineer in the North West states that he has loaned a tractor unit, without trailers, to a customer who is responsible for the cost Of licences, insurance, driver's wages and running the vehicle. He asks for. suggestions as to what would .be a suitable hire charge.

• ASsitining -the outlay. on the tractor unit was £2,500, the corresponding weekly cost of interest charged at a nominal rate 'of 3 Per cent, would be •EJ 10s, The only other item for which the supplier of the vehicle would be responsible woad be depreciation. When 500 miles a week were averaged depreeiation would be reckoned to cost £3 6s. 8d.' This gives a total of £4 16s. 8d: for these two items. 11 only 10 per cent.' is allOwed on this occasion for any overhead costs which may be incurred. and a further 20 per cent: for profit margin, the estimated charge to the custorner wOuld be £6 5s. 8(1.

CCOMPARISON of the operating costs of a 1-ton van, fitted 11/4..ialternatively with petrol or oil engine, is the substance of another inquiry.

Dealing first with the petrol-engined version, the unladen weight would he around I ton 9 cwt. with a resulting annual licence duty of £20. This gives an• equivalent standing cost each week of 8s. Driver's wages are reckoned at £9 14s. 8d. and rent and rates at 8s, 2d. a week. Vehicle insurance, with allowance for recent _increases, is estimated to cost 125 16s. a year, the equivalent of 10s. 4d. a week. Interest charged on the initial outlay of £725 adds 8s. 8d., giving a total of £11 9s. 10th a week for the five items of standing costs. When 200 miles a week were averaged, the corresponding standing cost per mile would be 13.79d.

With petrol purchased in bulk at 3s. 10th a gallon, the fuel cost per mile would be 2.56d. when a rate of consumption of 18 m.p.g. was maintained. As, however, it is assumed that only 200 miles a week would be averaged, this fuel cost would be adjusted to 2.82(1. because of the likelihood of stop-and-start work. Lubricants add 0.28d. and tyres 0.51d. This latter figure is based on a cost per set of £53 and an estimated mileage life of 25,000. Maintenance is estimated to cost 1.57d. and depreciation 1.56d. per mile. This gives a total running cost per mile 6.66d. and a total operating cost per mile of 20.45d. The corresponding running cost each week is £5 1 ls. and the total operating cost £17 Os. 10d., still assuming 200 miles a week are operated.

The unladen weight of the oil engine version would be a little greater, namely 1 ton 12 cwt., with a resulting annual licence duty of £22 10s., the equivalent of 9s. a week, Wages remain the same at £9 14s. 8d., as do rent and rates at 8s. 2d. and insurance at 10s. 4th a week. However, because of higher initial outlay (£866) interest charges each week are a. little higher at 10s. 4d.. giving a total standing cost each week of £11 12s. 6d., or 13.95(1. per mile, .

A 50 per cent, improvement in fuel consumption can he expected from this oil engine version, with a, resulting fuel cost per mile of 1.73d. This is based on a cost Per gallon of 3s, 10d., but it is not necessary to rnaks an adjustment for short journey work on this occasion dUe to the employment of the oil engine. Lubricants are reckoned to cost 0.22d. whilst the cost of tyres remains the same at 0.51d. Maintenance is reckoned at 1.36d. and depreciation at I.88d. This gives a total running cost of 5.70d, with a total operating cost per mile of 19.65d. The running cost each week would be £4 Us. and the total operating cost each week £16 7s. 6d. Compared with the petrol-engined van, this gives a saving of 13s. 4th a week. S.B.


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