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ADVICE ON TRANSPORT PROBLEMS

28th May 1965, Page 121
28th May 1965
Page 121
Page 122
Page 123
Page 121, 28th May 1965 — ADVICE ON TRANSPORT PROBLEMS
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Which of the following most accurately describes the problem?

On the Rates

WHILST the subject of nationalization—or, alternatively, denationalization—has been under continuous debate over the past 20 years, as it affects the road transport industry there is a less-publicized aspect of " nationalization ". Moreover, this other aspect is virtually accepted by both main political parties, although possibly with differing degrees of emphasis. It is the everwidening sphere of activity of local government as distinct from central government, public utilities or nationalized boards.

To some extent there is a similarity between local government and transport in that because of their respective diversification their overall size tends to be underestimated. Paradoxically, too, their nation-wide establishment and the continuing service they provide results in local government and transport being to some extent taken for granted by the user of the services provided.

To example one item of local government expenditure— that on road construction and maintenance—local government is not only directly responsible for such expenditure in its own area, but also acts as agent for the central government for many trunk roads. As a result, local government is not only a very large employer of direct Labour and purchaser of vehicles and equipment for its own use, but is also a large contractor for many services, including transport.

Closely allied to the construction and maintenance of roads is, of course, housing. Here, again, achievement of the target set by successive governments inevitably involves a considerable amount of road haulage.

Although probably not so immediately noticeable, the continuing essential services provided by every local government also require transport in many instances, whether through the medium of their own ancillary vehicles or hired vehicles. Just whether a local government operates its own vehicles or hires in part or wholly may be a matter of policy or sheer economics, as in the case of small urban district councils who may not have sufficient work to keep a vehicle fully employed for 52 weeks in the year.

Contracts and Tenders Another relevant factor is that much of the work on which municipal vehicles are engaged must necessarily be performed in the open, so such work is to some extent dependent upon the weather, with corresponding fluctuations in the demand for the vehicles. En all these instances, therefore, a good case can be made out by the local government concerned for the hiring of at least a proportion of their transport requirements on contract.

Because public money is involved,,a local authority must show—and be seen to show—complete impartiality in the spending of ratepayers' money. Nevertheless, as with any other undertaking, it must still endeavour to buy whatever haulage it requires at the most advantageous rates consistent with the provision of the standard of service the council requires.

Accordingly, it is common practice for local councils to put out to tender a large proportion of the services or goods they wish to purchase. They are obviously entitled to do this as it is open to any potential contractor to reject the councils' tenders. Nevertheless, the haulier also has his rights, which it is up to him to safeguard by carefully reading the details of any such form of tender and by considering every possible contingency which could arise in connection with the proposed work, and which could have a bearing on operating costs. Where operating costs were so affected, a corresponding adjustment would need to be made to the charges submitted in the tender.

The Haulier's Costs I3ecause of accountancy procedure peculiar to a particular council, it may well be that a haulier is asked to submit charges in a different form to what he is usually accustomed. Whilst the council's requirements in this respect necessarily must be met, this does not preclude the haulier arriving at such charges by his accustomed procedure. Normally this would, presumably, be by a breakdown of operating costs into standing costs and running costs, with a further division into five items in each of these two groups. Accordingly, the standing costs would be: licences, wages, rent• and rates, insurance and interest of capital outlay for purchase of the vehicles. The running costs consists of: fuel, lubricants, tyres, maintenance and depreciation.

In normal conditions—that is to say where the amount of waiting time is not excessive—it is possible to quote an overall charge per mile for many types of work or, alternatively, the corresponding charge divided by the capacity of the vehicle (or an agreed percentage of that capacity) so as to give a charge per ton. But where normal conditions do not apply—and this could occur in much of the work undertaken for local authorities—the waiting or standing time in relation to the mileage run may well be excessive. Where this is consistently high due account can be made for this in the total charge. But the real difliculty arises where the waiting time is not only excessive but also spasmodic, so that it is just not possible to esti mate such occurrences in advance. In that event the only prudent course for the haulier to take is to tender a charge on the basis of a rate per hour plus a rate per mile with an appropriate minimum charge relative to the type of work involved.

If, despite this advice, a council is insistent that a flat rate should be quoted then it is up to the haulier to ensure that such flat rate will remain profitable despite any excessive waiting time.

Earlier, mention was made of road construction. Where motorways or major trunk roads are being constructed then a relatively recent and welcome development in this country has been the availability of modern construction equipment designed to facilitate the work on hand to as near as possible the flow production technique of a mass production factory. Where these ideal conditions prevail problems of vehicle turn-round times for hauliers are reduced to a minimum. But despite the more spectacular examples of road construction the expenditure on road maintenance generally still constitutes a major proportion. assessed with scope for adjustment of one or more individual items.

As an example of the costs of operating a type of vehicle often used by local councils, up-to-date details are now given relative to a 3-ton platform vehicle fitted with oil engine.

Assuming the unladen weight is 2 tons 8 cwt., the annual licence duty (recently increased by 50 per cent in the April Budget) would amount to £54, or the equivalent of II 2s. 5d. per week, allowing for a proportion of the A licence fee. Incidentally, as with the other four items of standing cost, this weekly calculation is made on the basis of a 50-week year to allow for two weeks a year when the vehicle which may be off the road for major overhaul or driver's holidays.

Inclusive of the recent wage award to come into force on June 9. and also the increased national insurance contributions, the cost of wages to the employer for a basic 42-hour week is reckoned at £11 18s. Od. Rent and rates in respect of garaging a vehicle have also been increased with the April reassessment and now amount to £1 Is. a week. Vehicle insurance is reckoned to cost the equivalent

of 16s. 8d., whilst interest on the capital outlay adds Ll 10s. I Id. The total for the five items of standing costs is therefore £17 9s. a week, or 20-49d. a mile. This latter figure is obtained on the assumption that the average weekly mileage is low--namely, 200-as may well apply in municipal work.

Assuming fuel is -purchased in bulk at 4s. 8d. a gallon, and a rate of fuel consumption of 22.5 m.p.g. is maintained, the fuel cost per mile is 2.49d. With the inclusion of recent increases where these apply, the other four items on running costs are estimated as follows; lubricants 0.26d., tyres 0-81d., maintenance 2-41d. and depreciation 1.66d. This gives a total of 7.63d, a mile, or £6 7s. 2d. a week. Added to the standing cost already calculated this results in a total operating cost of 28-57d. a mile, or £23 16s. 2d. a week. It is emphasized that the relatively high operating cost per mile results substantially from the low mileage. On this same account the item of depreciation has a 25 per cent increase in recognition of the premature obsolescence which such a low mileage would normally imply.

Standing Time

At the other extreme to motorway construction there can be the almost inevitable "hole in the road ", which seems a perennial problem for many local authorities and for which little or no terminal facilities can be expected by the haulier who may be contracted to assist in such work. Here again adequate allowance has to be made for such standing time in the charge quoted for the job. When completing a tender to undertake haulage work for a local council, attention to detail is essential. Ideally, of course, the submitting of a tender by a haulier to his local council would not be in the nature of a " long shot Hauliers keen to get this type of work will make it their business to pay regular calls on their local authority for that purpose and in so doing make contact with the officials directly concerned. As local authorities get more and more diverse in their activities this latter point of identifying the particular officials concerned becomes correspondingly of increasing importance.

Whilst it is part of the democratic procedure that local authorities should publicly advertise when tenders are being submitted, it is a more business-like procedure for an intending contractor for road haulage work to have his name put on the appropriate mailing list as and when tenders are required.

Then, when notice of a tender has been received at the earliest opportunity, it is advisable for the haulier to start to prepare his estimated charges as soon as possible, bearing in mind that in the process he may find it necessary to refer back to his local council for further information.

It has been assumed so far that standard platform or tipping vehicles would be involved. There are, however, a large number of specialized vehicles in operation for local authorities, some of which arc hired from contractors. Because of the limited demand for their employment extra attention has to be given to the items of depreciation. In many instances such vehicles would be of little or no use other than for the particular jobs they were purchased. Accordingly the length of the contract would have to bear relation to the economic life of the vehicle, or alternatively the vehicle would have to be completely written off over whatever is the specified period of contract.

Still dealing with the supply of specialized vehicles and in anticipation of possible discussion and examination of the subsequent tender, it may be of advantage both to the local council and haulier to submit the tender in sectionalized form so that the cost of the several components of the vehicle—chassis, body and equipment—can be readily FROM THE POSTBAG For various reasons comparison of the operating 'costs as between specified years is often requested by readers. Recent emphasis on prices and incomes may well stimulate more inquiries of this nature. A typical example has been received from a northern operator wishing to know the operating costs in detail of a 5-ton goods vehicle fitted with oil engine in 1961 as compared with 1964.

Unfortunately no indication is given of the average weekly mileage, which had a substantial bearing on operating costs. Accordingly a weekly mileage of 600 is assumed as being typical for this size of vehicle.

In 1961 the five items of standing costs for this 5-tonner were as follows, with the 1964 figures in brackets: licences 17s. 8d. (17s. 8d.), wages £9 14s. 10d. (£11 2s. 6d.), rent and rates 11s. 10d. (21s. Od.). insurance 41s. Id. (42s. 9d.), interest 26s. 4d. (26s. 2d.). total £14 Its. 9d. (£16 10s. Id.). Running costs were: fuel 2.60d. (2-79d.), lubricants 0.24d. (0.266.), tyres 1.26d. (1.26d.). maintenance 2-10d. (2-31d.). depreciation 1-64d. (I-63d.); total 7.84d. (8.25d.), giving a total operating cost per mile of 13.68d. (14.85d.).

MONEY MATTERS

Southdown's Better Results

COR the year ended March 31 last SOUTHDOWN U MOTOR SERVICES made a net profit of £353,942 compared with £325,614 the previous year. Out of these increased earnings the directors recommend a final dividend of 34%, tax free, to make a total for the year of 54°4. This compares with the equivalent of 51:11g% in respect of the 1963-64 trading period. These £1 Ordinary shares were dealt in at 25s, 6d. on the London Stock Exchange recently.

Last August Lyon & Lyon Limited purchased the share capital of RELIANCE MOTOR TRANSPORT (LEEDS) LTD. The latest annual review by the chairman of L. & L. states: "This company operates a trunk road haulage service between Leeds and Bristol, and your directors are confident that this diversification into road transport will prove profitable and valuable to the Group."

Not many companies keep their shareholders—and investment analysts—informed of progress each quarter. Those that do are to be commended; it is a practice that should be unanimously followed. SEDDON DIESEL VEHICLES announced that unaudited accounts for the nine months to March 31 last show group pre-tax profits amounted to £94,397. The directors add that they anticipate that profits for the whole year will show an increase compared with those of a year ago. Due to a difficulty of getting bought-out components during the year's firsthalf there was some delay in commencing the production of new models. Production is now running smoothly, it is stated; orders on hand are at a record level and should ensure full production for some way ahead. These Is. Ordinary shares have been changing hands recently at around is. 11d.

Shareholders of TARTAN ARROW who were able to get to the annual meeting will have been delighted to hear the chairman—Mr. .1. C. Chester—report that the level of traffic carried by the groun's vehicles during the first four months of the current trading year was in excess of that for the same period a year ago. He added that net earnings too had risen. Provided the movement of goods in Britain was not cut-down drastically, Mr. Chester expressed his confidence that the net profit for the year would again show a " substantial " increase. These 2s. Ordinary shares are quoted on the Scottish Stock Exchange; their present price is around 19s. 6d.

IN YOUR OPINION

The editor is always pleased to receive letters on all aspocts of the road transport Industry. Contrfbutors must Include their names and addresses, though the published letter may appear under a nom de plume where specifically requested. Views expressed in letters published are not necessarily those of the editor.

More Rates Problems

HAVING read Mr. Goffy's letter on rates in The Commercial Motor of May 14, I consider he should think himself lucky being paid such rates as 12s. per ton for 50 miles, 10s. per ton for 30 miles, and so on.

In the north Lancashire area rates at some of the quarries are quite shocking. For example: 58 miles9s. 6d. per ton; 40 miles-7s. 6d.; 25 miles-6s. 6d. There are some special rates with a little assurance of roundthe-year work, such as: 50 miles-8s. 9d. per ton; 26 miles5s. 6d. per ton. Of course, all the above rates are plus 5 per cent from the start of December, 1964.

There are some hauliers with eight and more trucks whO are quite happy to work at lower rates than those stated.

At a recent meeting of hauliers, who all agreed the rates should be increased, there was a rumour that after the meeting one haulier even offered to cut the rate still further.

What is the answer to a problem like this? What chance as the small operator, working legally, to make a living? "LANCS."

Imported Improvement

WITH reference to the American exhaust brake as " published in The Commercial Motor, May 14, exhaust ,raking systems have been in existence for some years mow, but this type, unlike most conventional braking ;ystems, enjoys some advantages.

It is quite an achievement for such a system to hold I 30-ton combination for mile at 10 m.p.h. on a 1 in 6 mill. Brake-lining wear, of course, can be expected to be -nuch lower, but against this saving one must check.against he initial cost, the instalment and maintenance cost, the ;ffects on fuel consumption and the absorption power of he exhaust brake. On the whole, it seems worthwhile for ong-distance vehicles over arduous country.

It is a shame that new developments always seem to me imported to this country. When it comes to engine levelopment Britain seems to lag behind. Is America so ,uperior to England in motor-vehicle development?

T. K. DonsoN.

Stockton. Co. Durham.

Filling in Time

A S a relative newcomer to the transport world I was most 4-1 interested to see the proposals by John Darker in his article on small lots (May 21 issue), to the effect that otrpeak slack time in parcels depots could be used by employees to tackle other types of w6rk.

It has astonished me since entering transport to find that so little has been done to even-out the productive work in this, or some similar way. As a service industry, transport can hardly avoid having peaks and troughs, unlike a normal manufacturing industry, yet the variations are themselves predictable and calculable.

About a year ago a bus operator (1 believe Ile was a general manager) suggested a similar plan for the future employment of busmen. A cadre of permanent platform staff, capable of shift-working the entire normal off-peak levels of traffic, would be supplemented by men who were employed inside on production, or similar jobs, during offpeak travel hours but who donned uniforms and became platform staff for the peak services.

Yes, of course there would be difficulties in persuading trade unions (and perhaps employers, too) to accept the idea of " twin-trade " employees, but the prospect of better rewards and more stable conditions might be the carrot to satisfy the unions, while employers should see the advantages of diversification in these troublous times.

On a similar theme, may I ask when the transport industry is going to get around to long-term agreements for pay and conditions? I cannot speak for the municipalities, but I understand that the company employers, for example, have never made an official approach to the trade unions with the idea of a, say, three-year contract. Yet they show every sign of horror and affront at the annual claims and their resulting weary round of haggling.

This situation is even more clearly true of London Transport, whose labour problems seem frequently in the newsthough I don't know whether they've ever tried to get long contracts.

There must be plenty of people who, like myself, would be only too pleased to knock some heads together. F. MAY. Hampstead, London, N.W.3.

Tags

People: Goffy, Ile, John Darker
Locations: London, Bristol, Chester, Durham

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