The Rising Costs of Road Haulage
Page 19
Page 20
If you've noticed an error in this article please click here to report it so we can fix it.
The Cost of Living, According to Official Statistics, Has Been Almost Static for Some Months; the Cost of Road Transport, Nevertheless, is Still Increasing
Solving the Problen-is
of the Carrier THERE is a regulation in force which restricts hauliers with 'regard to the rates they may charge for the work they do. It stipulates, in effect, that they may not ask more than 7i per cent, in excess of what they charged in October, 1940, unless they can justify increases beyond that percentage by proof that the increase in their costs of operation, plus establishment expenses. is more than that proportion.
That regulation, to my mind, has one advantage: it is making hauliers cost-conscious, which is something I have licen trying to do for years, sometimes with success, sometimes without.
I am, being asked to-day, on all sides, what is the present position : are costs still rising, or are they static? The answer, broadly, is that they are still on the up-grade.
The problem of sugar-beef rates has cropped up again— earlier this year—thanks, I imagine, to the foresight of Mr. G. W. Irwin, secretary of the Eastern Area, A.R.O., who, profiting by his experience in previous years, is taking 'time by the forelock.
• Knowing that the subject was likely to come up for discussion I went over, in my mind, the events of the past year which are likely to have affected costs, so that I could be ready to answer questions on the subject of rates for the haulage of this commodity. It is a traffic which interests many thousands of hauliers, involving, at least, a quarter of a million sterling per annum in gross revenue. .
The Effect of the Most Recent Increases in Wages The first matter of importance in this connection is, of course; the increase in the wages which must now be paid. The Road Haulage Wages Act, R.H.12, which became effective on November 23, 1942, increased the wages of workers in Grade I areas by 2s. 6d. per week, in Grade H areas by 3s. per week, and in Grade III areas by 3s. 6d. per week. The average is 3s. per week and, having in mind that the bulk of beet haulage takes place in rural areas; that might fairly be taken as an average.
Another item in which there has been an appreciable increase in costs is that of expenditure on tyres. Naturally enough, the amount varies—that is a characteristic of vehicle operating costs at all times and under all conditions, in peace as well as in war. Some of my friends tell me that their tyre costs have doubled, because of the expense of retreads and the short life of present-day retreaded tyres.
Others are not quite so. extravagant in their claims. All of them are probably speaking the truth ; it is the conditions which govern the cost. It does, at least, seem to me that an increase of about 50 per cent.—more rather than less—is a reasonable assessmcnt. Other costs have risen, too, but not to the same extent, and upon due consideration it seemed to me that if I took those two items (wages and tyres) into account and made some small provision for the others by way of contingencies, I should be able to answer, with an easy conscience. questions as to fair increases in rates.
Now, my figures for costs of sugar-beet haulage are probably the best of the many I have. I have been dealing with that particular subject in a special way, as most of my readers know. -Last year, a little later than this, efrey were very carefully. revised, in preparation for what was hoped to be, at long last, the conclusion of an agreement between hauliers and the National Farmers Union. The agreement did not, in fact, materialize, but the failure was nbt due directly to disagreements -on rates or costs.
Adjustments to Cover Higher
Costs of Wages and Tyres
Nevertheless, having the figures available, it is, comparatively, a simple matter to correct them so that allowance is made for the above increases in wages and tyre costs, not forgetting the incidentals.
First of all, it is necessary to deal with the wages item, that being, in effect, a standing charge. The incidence of the increase in tyre costs, depending, as it does, on the mileage run, must be calculated separately and independently for each lead mileage.
Taking a 60-hours week as an average, the wages prior to the last sugar-beat campaign were, for the driver, E4 17s. 60., for the mate, £4 as. 11d., a total of £9 3s.. 6d. (ignoring halfpence). To-day's figures are; driver, £5 Is. 5d. ; mate, £4 9s. 10d. The total is 29 11s. 3d., an increase of 7s. 94. per week, say, Ss., thus, in part, allowing for the contingencies I have mentioned.
Now, on a seven-miles haul it will be practicable to reckon on delivering 18 loads per week. During some weeks that total will be exceeded, but during others, owing to shortage of beet (the farmer has been getting his potatoes up), or because the factory has a glut, or the machinery has stopped, the journeys completed will fall below 18.
On the basis of 18 journeys per week the mileage covered is 252.
The vehicle most commonly used for sugar-beet haulage is tin .3-ton unladen-weight type, carrying a load of 6 tons. The tyre costs of such a vehicle, according to " The Commercial Motor" Tables of Operating Costs, are 0.85d. per mile. Adding 50 per cent to that, more or less, as calculated above, mar,. be taken to mean that the additional cost is id. per mile. (There is included in that the balance of the allowance for contingencies previously specified.)
In a week of 252 miles that is 10s. 6d. The total addition to the costs per week arc thus : Wages, 7s. 9d. ; tyres, 10s. 6d.-18s. ad.
• Assessing the addition to the rate, which is -necessary in order to cover this extra outlay, involves consideration of the profit on that cost, that is, if we adhere, as in my
opinion we must, to the " cost plus profit basis of calculating these rates. Adding 20 per 'cent. to 18s. 3d.
brings that figure up to £1 2s.
The tonnage carried on 18 journeys, conveying 6 tons per journey,. is 108. The rate must, therefore, be increased by 2d. per ton.
Applying the same reasoning to lead mileages of 10, the following results accrue ;-The number of journeys per week is-practically thessame. If I take 17, instead of 18,, I shall be making dueand' sufficient allowance for the three mires addition to the lead, especially if I reckon the
wages increase to be 8s. per week instead of 7s. 9d. ' . The mileage coverid is 340, so that the extra tyre costs are 14s. 2d. and the total, addition to the haulier's weekly expenditure is 21 2s. 2d. Add 20 per cent. to that for proht and the resulting"amount, as. 6d. approximately, is what should be added to the weekly earnings during the previous campaign.
The tonnage carried per week is 102, so that the rate per ton must be increased by 3d.
Changed Conditions that Apply • to the 20-miles Lead
Coming to a 20-miles lead, some provision has to be made for a slight alteration in the conditions. By extending the week. to 64 hours, instead of 60 hours, it is possible to Make 14 journeys, covering a mileage of 560 in the week.
The procedure necessary to make, this possible is to deliver two loads on the Monday, picking up a third load on that day but returning' to the garage with the load still on the vehicle. On Tuesday that load is delivered and
two others as well, making five for-the two days. On Wednesday and Thursday the 'same procedure is followed and a further five loads put into the factory. Provisirsp is made for two loads each on Friday and Saturday, thus bringing the total for the week up to 14 loads, or 84 tons.
I fully appreciate, of Course, that sugar-beet haulage is not always carried out according to this simple and straightforward plan. Quite often a short haul is4worked in with a long haul. Again, as mentioned above, difficulties and delays occur at both collection and 'delivery ends. The weather, too, upsets schedules, as do breakdowns at the factory.
For a 20-miles lead, hoseever, the figures given do repre
sent what is reasonably pra -tieable. They are near enough to serye as a basis for calculation of the increases in rates which are -justifiable this season. At least, it is true -to state that theycare figures taken from operational data ; they show what has been done and is likely to be accomplished again. The wages figures for a 64-hours' week, during last season's , campaign, were Driver, £5 5s. 5d.; mate, 44 12s. '10d.; total, £9 18s-. 3d. During the next campaign, assuming that there is no further alteration to
wages schedules, the .amounts will be : Driver, Os. 7d. ;
mate, £4 17s. id. ; total, £10 as. ed. The difference is
8s, ri,d, per week.
; As the total mileage covered during the week is 560, the extra cost of tyres, at "id. per mile, is £1 3s. 4d. The additional cost is, thus, £1 11s1 9d. Adding 20 per cent. so as to arrive at the increased revenue, a total of £1 18s. results. As. the tonnage carried in • the week is 84 the addition to thit rate, to cover the extra. cOst and allow for the same percentage margin of•profit, is 5id. per ton.
Over the 30-miles lead it is practicable to complete 11 journeys per week in 60 hours. The original figure for the additiOn to the, wages bill, namely, is, 9d., can be taken to apply.
The Mileage run during the week is 660, so that the extra tyre costs are £1 7s. 6d., and the total extra expenditure•41 15s. 3d • The addition t'o the weekly revenue must ie 42 2s. 3d. and, as the tonnage carried is now no more than 66 per week, .the rate per ton must he raised by nearly 8d.
Percentage Increases for Leads of Different Lengths
It is of interest to note the percentage increases on the rates prevailing during last season's campaign.
For the seven-miles lead, last season's rate was 5s. 9d.; it must now be 5s. 11-1(1., more probably Os., an increase of 3i to 4 per cent. (All the percentage figures are approximates) Over a 10-miles lead, the previous rate was as. Sd. ; next season it must be 63. 11.11. or 7s. That is equivalent to an increase of 4 to 5 per cent.
For a 20-miles lead the previous rate was 9s. 5d.; it must
be increased. Isy 51d. to 9s. 101d. or 10s. That is an increase of 4 to 6 per cent. Similarly, for the 30-miles lead. The previous rate was 12s. and should in future tk 12s. SO., an increase of 5i per cent: Iedoes seem as though a general all-round increase of 5 per cent. would meet the case. S.T.R.