Attracting Traffic
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from the C.-Licensee When Denationalization Has Been Effected, Hauliers Will Have to Persuade Ancillary Users to Give Them More Work : Because a Haulier Can Employ His Vehicles More Intensively Than a C-Licensee, He Shouldl be Able to Carry the Goods More Cheaply
Than the Trader Himself
ONE.'of the-probierns which are likely to arise when denationalization has been .effected is persuading operators of C-licensed vehicles that they would be well advised to hand over their transport to.A-licensees who formerly carried for them. Many manufacturers, merchants, traders and so on have bought vehicles and built up their own fleets during the past four years because they were dissatisfied with the service they received from the Road Haulage Executive. Practically all of them are potential customers Of :a haulier who acquires a unit from the
Disposals Board. .
In a fewmonths, there will be a reversion to the status quo. The haulier, will be back in business again, ready to pick up the threads and weave them into something closely resembling his old . job. 'Among the operators who will find themselves in a new position will be many who are working under C-hiring 'margins. They will have less trouble than others in getting back to the old conditions, but will have some special problems of their own to -solve, for example, how to dispose of the vehicles they are at present operating. It is hardly likelythat they will be able easily to obtain A ;licences to operate .these machines in addition to those which they will acquire when denationalization comes into force. It is not simple to convert from a C-hiring margin to A licences.
Two Considerations
The attitude of the C-licensee is likely to be affected and determined by tWo considerations: the degree of satisfaction he is getting as the result of operating his own fleet, and the cost compared with what he will have to pay a haulier.
So far as the. first of these considerations is concerned, the haulier who wants the business will have to deal with the matter by exercising salesmanship. He will have to show that he can give better service than can possibly be obtained from the C-licensee's own fleet. He will point out that if A36
he, the haulier, does the job, the trader will be relieved of a good Many tasks. The trader will not have the responsibility of licensing the vehicles, selecting suitable drivers, checking their log sheets, arranging for fuel supplies; legal formalities, and so on.
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The question of comparative costs involves careful assessment of the probable expense to the haulier of rendering the service required. Although the C-licensee may be willing to pay a little more to be relieved Of the responsibilities mentioned above, he will, nevertheless, have to be careful lest he involves himself in too great a financial addition.
Knowing Costs
I should give warning here that one of the factors which the haulier will have to take into consideration is that the C-licensee may not know what his costs are, although he may think that he does. Usually, he thinks his transport costs less than it actually does.
Take as an example, a cabinet maker who uses a 2-ton van to deliver furniture to his wholesalers or distributors. The cost of operating a vehicle of this size, according to The Commercial Motor" Tables of Operating' Costs, comprises standing charges amounting to £.8 Ss. 7d. per week and running costs approximately 9d. per mile. If I add £2 per week for establishment charges, I get £10 Ss. 7d. as the total fixed costs per week, which is equivalent on the basis of a 44-hour week to 4s. 9d. per hour.
In assessing the costs of a job, the cabinet maker must first decide how long the vehicle will be engaged upon it. I shall assume that it takes 1-hour to load the furniture into the van, and an hour to unload and deliver it. Furniture makers and furniture removers will, I am sure, agree with me if I say that it is the delivery that presents the unknown factor in respect of time. The period covered in travelling will be 21 hours, so that the total time is 4 hours. At 4s. 9d. per hour, the cost for time is thus I9s., and 60 miles
at 9d. per mile comes to £2 5s., making a total cost of £3 4s.
It is necessary at this point to make reference to the fact that in all probability the cabinet maker may have no further use for the vehicle during that day of 9 hours (assuming a five-day week). Actually, therefore, the cost of that job really involves a debit of 9 hours instead of four, and 9 hours at 4s. 9d. is £2 2s. 9d. for time, which, added to £2 5s, for mileage, gives a total of £4 7s. 9d.
I might put it this way. The number of hours per week during which the vehicle is gainfully employed is 36 out of the 44. In that case, the average cost per hour is £10 8s. 7d. divided by 36 instead of by 44. That is approximately 6s. per hour instead of 4s. 9d. If I base the calculation of cost upon those figures, then I have to charge for 4 hours at 6s. per hour. which is £1 4s., and for 60 miles at 9d., which is £2 5s., the total thus being £3 9s.
Now to consider the haulier's figures and his probable costs. In the first place, his establishment costs are likely to be greater than tipse of the C-licensee and I shall assume that they amount to £3 per week. The standing charges in relation to the operation of the vehicle remain unaffected, £8 8s. 7d., so that the total of the haulier's fixed charges becomes £11 8s. 7d. per week, or 5s. 3d. per hour. The running costs are unaffected and stay at 9d. per mile. The haulier's costs for this job are, therefore, 4 hours at 5s. 3d., which is £1 Is., plus £2 5s. for mileage, a total of £3 6s. To that he must add profit at the rate of 20 per cent., which is approximately 12s., making the charge £3 18s., which is 22-24 per cent. greater than the C-licensee's costs.
Carrying Timber Now to take another example, the case of a timber merchant. Again 1 propose to take a typical load, and in this case I shall assume that the merchant wishes to deliver a couple of standards of softwood to a point 100 miles away, using a 5-ton lorry.
I am going to assume that he uses an oil-engined vehicle, in which case the standing charges will total £8 19s. Id. per week, and if I adcf-£2 5s. for establishment costs I get a total of fixed costs of £11 4s. Id. per week, which is equivalent to 5s. 2d. per hour for a 44-hour week. The running costs are 8d. per mile.
The merchant knows that in his own yard he can load the two standards in fhour, but he estimates that it will take l hour to unload at the other end of the journey. The travelling time will be 71 hours in all, so that the total time needed for the job is 9 hours.
On the• understanding that the vehicle works 44 hours per week, the cost of this particular job is 9 hours at 5s. 2d. per hour: which is £2 6s. 6d., plus 200 miles at 8d. per mile, which is £6 13s. 4d.; the totli cost is £8 19s. 10d.
Here again it is probable that the vehicle is not fully employed for 44 hours per week, hut really does only 36 hours. In that ease the cost per hour is not 5s. 2d. but 6s. 3d., and the total cost of the job, calculated in the same way as before, is £9 9s. 7d.
Greater Overheads
Let us now turn to the haulier's estimated cost. His standing charges will still be £7 19s. Id. His establishment costs will undoubtedly be greater than those of the C-licensee and will probably amount to £3 10s. per week, which makes his total fixed charges £12 9s. ld., equivalent to 5s. 8d, per hour over a 44-hour week. The running costs remain unaffected at 8d. per mile.
The cost to the haulier of moving this couple of standards is 9 hours at 5s. 8d., which is £2 1 Is., plus £6 13s. 4d. for 200 miles at 8d. per mile, .giving a grand total of £9 4s. 4d. If the haulier adds 20 per cent. for profit, he must charge £10 16s. 7d. The haulier's charges are, in this case, also greater than the C licensee's costs.
I will take another case before giving consideration to this difference in cost. This time I will assume that the load is bricks. I will consider the case of a brick maker who has to deliver 4,000 bricks to a point 30 miles from his kilns. The vehicle used is an articulated 10-tonner, capable of carrying 4,000 ordinary bricks, assuming that the weight is at the rate of 2,1tons per 1,000 bricks.
It takes 2 hours to load the bricks and the same time to unload. The articulated vehicle is not a fast machine and I shall assume that the journey takes 21 hours each way. The time necessary for the complete job will thus be 9 hours.
The standard charges of a vehicle of this type amount to £12 16s. 3d. per, week, and if I add £3 3s. 9d. as the approximate establishment costs I get a total of £16, which is equivalent to 7s. 4d. per hour, calculating that on the basis of a 44-hour week. The running costs are Is. 2d. per mile.
The cost of doing this job is thus 9 hours at 7s. 4d., which is £3 6s., plus 60 miles at Is. 2d. per mile, which is £3 10s., the total being £6 16s., or £1 14s. per 1,000 bricks. If the C-licensee can find only 36 hours work per week for his vehicle, the time charge becomes 8s. 9d. per hour, and for 9 hours that is £3 18's. 9d. Add the mileage cost as before, £3 10s.. and we get a total of £7 8s. 9d., which is £1 17s. 3d. per 1,000 bricks., Haulier's Costs
If the haulier is to tackle this job, his costs will work out as follows. The standing charges will be the same, 112 16s. 3d. per week, but his establishment costs will be greater, say, £4 3s. 9d. per week, giving a total of £17 per week for fixed charges, which is equivalent to 7s. 9d. per hour. As the job takes 9 hours, that means that the fixed cost of delivering that load of 4,000 bricks amounts to £3 9s. 9d. The running costs are the same, namely £3 10s., and the total cost is £6,19s. 9d. Adding £1 8s. to that for profit at the rate of 20 per cent, on cost, I get the haulier's charge to be £8 7s. 9d., which is about £2 2s. per 1,000 bricks.
Up to now, the haulier seems to be at a disadvantage as regards charges. What I have not taken into consideration is the difference between the conditions under which the C-licensee is bound to operate and those which are open to the haulier. The first of these is the possibility of obtaining return loads. If I can assume that the haulier obtains return loads on 60 per cent, of his journeys, his charges need be only one-third greater than if he obtained return loads in every case. Let me apply this principle to the three examples. First the cabinet maker. Instead of £3 18s., the charge should be half of that, £1 19s., plus one-third, 13s., which gives a total of £2 12s. This is much less than the C-licensee's expenditure.
Revised Charge
In the case of the timber merchant, concerning which I arrived at the figure of £10 16s. 7d., the charge under the new conditions becomes half of that, £5 8s. 4d., plus onethird £1 16s., giving a total of £7 4s. 4d. So far as the haulage of bricks is concerned, the haulier's charge can now be half of a 7s. 9d., £4 4s., plus one-third, £1 7s., making £.5 I ls.
, Another point in favour of the haulier is that whereas the C-licensee will seldom use a vehicle more than 44 hours per week-and I assume it likely to be 36 hours per weekthe haulier more often than not will be using his vehicle for 56 hours per week.
I shall not check all the three examples, but demonstrate what difference arises from 'this greater use in regard to the third example. Fixed charges are increased by the amount of the wages of the driver. For the first 8 hours, •• the extra wages will be at time and a quarter, approximately . 3s. 8d. per hour, which is £1 9s. 443., and for the next 4 hours at time and a half, approximately 4s. 5d.; the total is £2 7s. The fixed charges in connection with the use of this vehicle therefore add up to £14 16s: Id., and for a 56-hour week that is approximately 5s. 3d. per hour.
At that rate the haulier's cost for time on this particular job is nine times 5s. 3d., which is £2 7s. 3d., and adding for mileage at £3 10s., as before, the total is £5 17s. 3d. Profit at the rate of £1 3s. 3d. brings the charge up to £7 Os. 6d., compared with the C-licensee's cost of £7 8s. 941. S:T R.