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MAKING PROFITS from
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Page 81
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MUNICIPAL CONTRACTS
IN a previous series of articles I have demonstrated the inadequacy of day rates paid in municipal haulage contracts. I have indicated minimum profitable rates and the basis on which they should be calculated.
Much of the haulage in connection with contracts of tins description has to be quOted for on the basis of tonnage and distance. This circumstance particularly applies to the. conveyance of roadstone and the like. The rates paid for this class of work are as uneconomic, in their Way, as those which prevail in connection with day work. • That this condition should appertain to municipal haulage is, to some extent, a refutation of the claim that, so soon as wages are stabilized, haulage rates will improve. Every municipal and county council contract embodies a stipulation that all labour employed shall be paid wages not less than the appropriate minimum standard in the locality. Theoretically, therefore, wages in connection with this class of work have been stabilized for years, yet in no department of haulage are rates so fiercely cut as in this.
Mistaken Idea of Profit Causes Rate-cutting.
A good deal of this rate-cutting is due, I am sure, to the fact that so much of the work is carried but by owner-drivers,. the haulier regarding the equivalent of wages as his profit. Indeed, in some forms of contract which I have .before me, at the moment, provision is made for that condition, a definite indication that municipalities and county councils are aware that many oftheir contractors are in the position of having to do the work themselves. There are clauses which stipulate that, in the event of the contractor himself taking an active part in the labour, he must insure himself and relieve the council or corporation of any liability under either the Workmen's Compensation Act or the provisions for National Insurance.
It is sometimes pointed out to me that the rates which I recommend are impossible of attainment. Competition is keen and often unfair. The position is usually that an employer of labour endeavouring to pay his
c26 drivers a fair wage and make a reasonable profit finds himself in competition with a number of small operators, none of whom actually employs labour and to none of whom; therefore, is the fair-wages. clause any stumbling block.in the way of cutting a rate.
Until the problem of the owner-driver and his rafes is solved, the stabilization of haulage prices at a reasonable level will-hardly be achieved.
The haulier who is preparing to quote under one of these contracts and who has not, perhaps, hitherto had much experience of them, has three matters to consider : —First, how he should calculate the rates so as to be able to quote, as he is usually asked, per cubic yd., for one mile, two miles and so on, up to, in the case of county-council contracts, as much as 50 miles. Secondly, whether, with the particular size of vehicle which he has available, he can compete, bearing in mind the fact that, in this branch ot haulage, as in most, the bigger the vehicle the lower the rate per ton, per cubic yd. and per mile. Thirdly, whether he would be well advised to employ a loader, or whether it would be more economical to allow his driver to carry out the whole job.
'The Important Factor of Speed.
It is obviously impracticable, in the scope of this article, to deal with every possible size of vehicle. There is one factor of great importance, that of speed, which makes it incumbent upon Irie to consider the adaptability of a vehicle just below the dividing line of 24. tons unladen weight. That type is, of course, -permitted to travel at 30 m.p.h., as against 20 m.p.h. for heavier machines. I am assuming that the vehicle employed will be a tipper, which means that the rated load of the 30-m.p.h. machine is not likely to exceed 3 tons.
For the other example I will take an 8-tonner. I shall show that, on the question of cost alone, the 8-tonner is the better choice, in that it enables the haulier to quote lower rates, At the same time, it is as well to bear in 'mind that, for many classes of use, the larger type of machine is not practicable.
I shall assume, as is most likely, that the 3-tonner is loaded with three cubic yds., or rather more than 3:'s tons actual load. Overloading with this type of vehicle is a factor in operation which has to be faced. The 8twiner will probably not be able to carry more than 61 cubic yds. without bringing it over the legal limit.
There are two conditions of loading to be considered, namely, from railway wagons, yards or quays, involving loading by hand, and the collection of material from quarries, where, in the majority of cases, nowadays,. vehicles are loaded by chutes. I will consider first, the more difficult condition, in which loading is effected by hand, at the approximate rate of 5 cubic yds. per hour per man.
Taking first the case of a 3-tonner and assnming that the driver is responsible for loading, then approximately 45 minutes will be necessary for loading and unloading. the latter, of course, by tipping. For a one -mile lead, five minutes must be allowed. The total clasped time from commencing to load until the vehicle arrives back for a second consignment will be 50 minutes and the distance will be two miles.
Each additional mile of lead adds five minutes to the time and two miles to the distance. For a twomile haul, therefore, the time will be 55 minutes and the distance four miles.
Fair rates for this work, calculated according to The Commercial Motor Tables of Operating Costs, which, it should be noted, give minimum prices at which a reasonable profit can be earned, should be calculated on a basis of 4s. 6d. per hour, plus 4d. per mile. Taking the one-mile lead, the charge for time ought to be 3s. 9d. and for mileage 8d., totalling 4s. 5d. The quotation recommended is is. 6d. per cubic yd. over a distance of a mile.
Charges for Additional Mileage.
For the next mile a further five minutes has to be charged for, that is 4d., and two miles at 4d. per mile, which is 8d., giving a total of 1s,, or an extra 4d. per cubic yd. That calculation gives a fair basis of charge for haulage, using a 3-ton lorry having no mate and carrying 3 cubic yds. per load, on the asumption that loading is by hand. The rate is is. 6d. per cubic yd. for the first mile and 4d. extra per cubic yd. for each additional mile. At that rate the operator will make a reasonable, but not by any means exorbitant, profit, after he has allowed for fair wages, for his ordinary business _expenses and for the fact that, in taking work of this description, he has to face certain risks. There are the risks of there being many hours when no load is available and, what may be more serious, there may be occasions when, for accidental reasons, the haulier may not be able to collect the material from the railway stations and have to pay demurrage.
Rates when Two Men are Employed.
if two men be employed, it is possible to diminish the rate for the first mile, but a slight addition to the amount per subsequent mile will be involved. For short distances, it is profitable to employ two men, but for long runs one man ia cheaper. Loading and _unloading now take only five minutes, and half an hour is sufficient to deliver a load and return over al mile lead. Each additional mile still involves a further five
minutes. The hourly rate, however, is now increased by at least the amount paid to the second man and 5s. $cl. per hour has to be charged, instead of 4s. 6d.
If this be worked out by the method described above, it will be found that the rates should be 1s., 2d. for the first mile and 4d. each additional mile. Actually, the critical mileage is seven, below which it is preferable to employ two men and above which one man suffices.
With chute loading, one man is, of course, always sufficient. Loading and unloading takes 25 minutes and a suitable basis of rates is is. for the first mile and 4d. for each mile afterwards. Some modification of this calculation may be necessary where it is found that there is a good deal of delay in waiting for loads, There may, however, be difficulty in connection with tarred stone, because many quarry owners are averse to preparing it until the vehicles are in sight. That is one reason why it is preferable to add 3d. or 4d. per cubic yd. to the initial mile-lead price, when quoting for the collection of tarred stone.
With an 8-tonner which is loaded by hand, two men should be employed. Again using the method described above, it will be found possible to operate profitably at is. 3d. for the first mile and 3d. per additional mile, on the assumption that 61cubic yds, are carried per laad. S.T.R.