EARNING A LIVING BY MOTOR HAULAGE.
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Further Discussion of the Problem of Differing Charges by Different Hauliers in the Same District.
NOR the benefit of new readers (and there are -L. always a great many of them at about this time of the year, when the Motor Shows are on), I should like to begin by pointing out that this is the second of a mew series of articles in which I am hoping to show how the reader, who is trying to earn his living by motor haulage, can make his business pay, notwithstanding the fact that the conditions under which he is working may seem to be different from and more difficult than those of others in the same line of business. Most of the time I shall be telling the haulier how to alter those conditions himself, so that he can compete on level terms with his neighbour, but, at the moment, by way of introduction, I am considering a specific case where two men in the same town, quoting for the same contract, do EO at different prices, and I am explaining how it is possible that one of them who is offering to do the job for 75 per cent, of the rate which the other quotes, is not so foolish as may appear at first glance. I am demonstrating that, provided certain conditions exist, the man who is offering the lower price is quite able to make a living at it.
Considering a Contract at is. Per Mile.
The contract I had in mind was one which involved the use of a four-ton lorry running three hundred miles a week. According to the orthodox method of reckoning, and supposing that his lorry cost him about the average figure to operate, if his establishment charges were about the same as those which are usual in the case of a man carrying on art ordinary haulage business, and if he was content with a net profit of not more than £4 a week, then the charge for the hire of the lorry should be is. 4d. a mile. I showed last week, however, that it might be quite possible for a man who was careful of his machine, whose establishment expenses were low, and who was content with a profit of not more than £3 10s. a week, to make that profit, and be quite happy, with a contract at a shilling a mile. Last week I showed how it might very well be possible to reduce the operating cost of the lorry from 11.1d, a mile to 9d., thus effecting a saving of
more than twopence towards the -fourpence which represents the difference between the two quotations. There are still the items of establishment costs and profit to consider. Now the establishment costs, or the overhead charges as they are often called, are the bane of every business man's organization. They involve the maker of a hundred lorries a vreek in many hours of anxious thought, so that no apology is needed for directing the attention of the haulier to them.
The Cost of a Modest Office.
The ordinary man, in the ordinary way of business, will have to have somewhere from which to direct his operations. It may be a room in his own house, or, congestion there may make it necessary for him to have a little office elsewhere. In any case, however, it need not be very expensive. Often enough, it will be found possible to make use of the premises of a newsagent, or some similar place, for the purpose. The necessity for this convenience arises chiefly because most of the orders which come to the general jobbing haulier come by way of the telephone. It is, therefore, necessary to have a telephone, and, as the owner-driver cannot be in two places at once—he cannot be driving his lorry and taking telephone messages at the same time—he must employ a boy to perform that duty for him. Now, a telephone costs about £10 a year, and a boy about £30, depending upon the boy and upon the locality, of course. Light and warmth will have to be provided during the winter, at a cost of perhaps a fiver a year, and there will be expenditure on stationery and postage, say, £2 10s., on telegrams 5s. and on sundries for the year, £5. It will most Ss., be found advisable too, to have a small running advertisement in the local newspaper, and this will involve about 5s. a week, more or less, according to the standing of that paper. The total of these items is £53, and that is without any allowance for rent of the little office, which may not be more than about 5s, a week, or £13 a year, thus bringing the annual total up to £66.
Now £66 a year is just over 21 5s. a week, which
is the figure which is given in The Commercial Motor tables as the probable average of establishment charges for a business of this kind. Butsuppose, now, that the haulier is fortunate in fixing up a regular contract, such as the one which we have in mind, for three hundred miles a week, over a long period, then he needs no office, no telephone, no office boy, and, indeed, may have hardly any establishment expenditure at all. Such a one becomes, as a matter of fact, no more than the -paid driver of the man with whom he makes the contract, except that he has, in addition, to provide the lorry, for the expense of which he is duly paid, and that he gets a little more than the ordinary wage of the driver of any other lorry of the same type engaged upon the same work. He may put down a nominal figure for establishment charges, say (as I gave in the last article) 5s. a week, and that sum will amply cover all the overhead charges which he is likely to incur so long as he can keep this contract, or, when it terminates, obtain another in the place of it. That—the question of the retention of a steady continuous contract—is, of course, the crucial point. On that the whole question of establishment expenses largely turns. In the present case we have ossumed a steady contract, and a man, quoting for such a contract, is quite justified in having at the back of his mind the fact that, for the duration of the contract at any rate, he will be relieved of the expense of maintaining an office with its appur tenances and the necessary staff. He must also bear in mind, of course, that when the contract terminates he will be out of a job, just as much as any other man who is dismissed when work is slack, and if he be wise he will set that risk, that liability, as I might term it, against the advantage gained by having a single contract. Where a haulier runs several small contracts as against one large one, and where he is always on the qui vive—with his office and his office boy and his telephone—to get other small contracts as he goes along, he has bigger overhead charges to face, but, at the same time, if be loses one contract he is not necessarily on the rocks altogether.
I think I have at least made it clear that there is the opportunity to make such charges in establishment as will enable the haulier to cut his costs, if he wishes, in order to be able to quote a low figure for a long contract. I hope that I have also made it quite evident that, since he is running a risk in thus dispensing with , his establishment, in that he is losing the freedom of action .which it confers, he should make quite sure that the terms of the contract are such as to guarantee him employment for some time to come, and a reasonable chance of preparing for reversion to his former methods when the contract is nearing its end. In the next article I hope to deal with the question of the amount of profit which may reasonably be expected in connec
tion with such a contract. TEE SKOTCH.