SHOULD THE LEED, SCHEDULE BE REVISED?
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Sound in Principle, Excepting the Provisions for Classification According to Bulk; Some Revision of the Figures May Be Desirable
IN previous articles I have shown that the Leeds Schedule is sound in principle and that with provision for the modification of terminal charges it can be utilized throughout the industry and save the need for any kind of goods classification. The suggestion which accompanies the Schedule, that goods might be classified on a bulk per weight basis is not, to my mind, practicable.
I concluded the preceding article by stating that, in order to be able to judge the direct utility of the Schedule, which, naturally, most be measured by the extent to which the rates -proposed line up with what they should be (calculated on a cost plus profit basis), must produce a corresponding schedule using figures for cost and profit for a basis.
Before proceeding to do so, it is essential to study this Leeds Schedule and to Make quite sure that all those who are reading this article understand it and what it means, as well as appreciating the methods of calculation adopted. To that end an abridged copy of the Schedule is reproduced herewith.
One-way Loading Basis of Calculations
The first of the six headings, "Miles Lead," is, in fact, the length of haul. It is the distance over which the load is carried from the premises of the consignor to those of the consignee. It is necessary to appreciate that the Schedule is calculated on the basis of one-way loading.
Mr. Harry Wood, chairman of the Leeds Area Committee of the Pool, has explained that the rates have been assessed to meet the conditions under which the Hauliers' National Traffic Pool utilizes the services of hauliers. The Pool is concerned with Government and urgent traffic which must go, whether there be a return load or not. It is, more or less, a condition that the haulier, having delivered his load, must not waste time in endeavouring to find chance return loads.
It is not stated that these are the conditions laid down by the Traffic Pool; it is one which is unavoidable in the circumstances. In view of the probability that return loads will not be available, it appears to have been deemed fair to assess • the rates on the basis of one-way traffic. That means, then, that for every mile of this " Miles Lead " the vehicle must travel two miles. That is something which must he borne in mind in considering 'this Schedule. The second column, " Terminal Charge," is a rate per ton which is intended to pay for the time spent in loading the vehicle, unloading it, running from garage to loading point and other sundry expenses.
The third item, " Progression at 31d. per ton Lead Mile," is, in principle, correctly calculated on the basis of time and mileage. It provides for a payment to cover the cost of the time which a vehicle spends in travelling, plus the running costs incurred in travelling, plus profit on both those items, which 7:s as it should be.
The fourth column, " Weightage of Rate," I explained
in the preceding article. It is an amount credited in reverse proportion to the distance, startinc, at a maximum of 5s. Sd, at six miles lead and diminishing at the rate of id. per mile. It is intended to compensate the operator for the fact that over short leads he is not able to make such good running as over longer distances and is, in fact, unable to earn a fair minimum per day if be be not given that extra amount. How this works out in principle will be discovered when we get down to figures.
The fifth column gives the actual rate. It is really compounded of the terminal charge, plus the progression at 31d, per ton lead mile, plus the weightage, The final column, " Actual Cost in Reaches per ton Lead Mile," is not an item with which we need greatly concern ourselves at the moment. That is not to say that it is not important, for it is, It is merely that, in the way in which I propose to consider and criticize the figures, there is no need to concern ourselves with it.
Understanding the Schedule The following example will serve to illustrate more precisely how these various amounts are Calculated. It is most important that I should emphasize that I have deliberately chosen figures which line up with those in the Schedule. My own data and any criticisms will follow. For the present I wish to simplify the problem of making the Schedule easy to understand by eliminating from consideration, at the moment, any question as to whether the figures are acceptable or not.
It is easy, in this way, to dispose of the figure in the second column, the 2s, per ton terminal charge. If I assume the vehicle to be a 10-tanner, the time charge for which is Ss. per hour, and I take it that 21 hours is the total time allowed for loading and unloading and all the other expenses mentioned above, then I have a total charge of 20s. for a 10-ton load, which is 2s. per ton. This terminal charge of 2s. per ton is unaffected by any of the other considerations which we are about to investigate. It is the same for all miles-lead distances, it being assumed, as is fair and reasonable, that the distance between terminal points should have no effect on the terminal charge. We come next to "The Progression at 31d. per ton Lead Mile." To be able to criticize this we must note the mileage charge, besides the time charge, which I have quoted at 8s. per hour. For the 10-tonner I am going to assume that charge to be 111d. per mile run.
In the notes accompanying the Schedule, Mr, Harry Wood has stated that the average travelling speed of a vehicle is assumed to be 15 m.p.h. Bearing in mind that for each mile lead the vehicle travels two miles, then the time allowance must be that for eight Minutes which, at
8s. per hour, is 12.8d. Add to that the mileage charge at WO. per mile, _which is 1s. 11d., and we get a total charge per mile lead of 1s. lid. plus 12.Scl., which is 2s. 11.,Scl, That is for a 10-ton load, so that the rate
per ton is 3.58d., which compares favourably with the 31.d. quoted in the Schedule.
If, therefore, the time and mileage rates for a 1.0-tonner be accepted as being per hour and 114d.. per mile, then the figure of 3.5d. per ton lead mile is reasonably accurate. Now, consider this in its application to the six-mile lead. To arrive at the appropriate rate we take first the 2s, per ton terminal charge and to that must be added six times 3.5d., making 1s. Od.; the net charge is thus as. 9d. So as to allow for difficulties inherent in loads over short leads, such as failure to make the average speed of 15 m.p.h. and inability, within the space of a day, to earn the minimum amount which is necessary, the amount of 5s. 8d. per ton is added as weightage, giving us the rate quoted in the fifth column of 9s. 5d. per ton.
The difficulty still remains of explaining how that 5s. 8d.
per ton has been calculated. There is no theoretical formula which can be applied. If I were to be asked to assess weightage in this way I should wish to know first of all what is to be regarded as the minimum which a vehicle must earn in a day. I should then assume that it might well be in the case of a 10-tonner, that two journeys per day would not be practicable.
How to Calculate the Weightage That is to say, the weightage should be calculated on the assumption that the vehicle completed one journey only and that the rate must be such to make it profitable for the operator to run that vehicle over a six.rmile lead once per day. That is the extreme allowance which could be expected.
It would seem to be fair, with that in mind, to take an Sishour working day as a basis, to allow, the above stipulated 2i hcuis for loading and unloading, leaving six hams, and to assume that the vehicle was travelling throughout those six hours at 15 m.p.h. In that period it would cover 90 miles. Its total earnings should, therefore, be SA hours at Ss. per hour, plus 90 miles at 114d.
per mile, which is £7 14s. 3d, From that should be deducted the net running cost of the 90 miles, say, 8d. per mile, which is £3, leaving £4 14s. 3d.
Actually, the earnings at 9s. 5d. per ton amount to £4 14s. 2d., so that if that be not a fair way of assessing the weightage it is, nevertheless, remarkably accurate.
I now turn to the problem of assessing a rates schedule on cost-plus-profit figures as I know them, to set beside this Leeds Schedule for the purpose of comparison. Immediately I find myself at variance in respect of the first real item, namely, " Terminal Charge."
I have in previous articles given reasons for and justified a formula for estimating a standard terminal in point of time. That formula is : Total time loading 10 minutes per ton plus 15 minutes for a turnromd and the same time for unloading. The total terminal time on loading and unloading plus turnround at each end and the sundry items included in the Leeds Schedule are assessed by taking 20 minutes per ton together with 30 minutes turnround.
For a 6-tonner this would mean a total of 24 hours; for a 7-8-tonner, 3 hours; for a 10-tonner, 4 hours; for a 12-tonner, 41 hours ; for a 14-tonner, 51! hours, . Now, fair rates per hour for the use of these various sizes of vehicle, according to my latest figures for cost plus profit, should be: For a 6-tonner, 5s. ad.; for a 7-8-tonner, 6s. 6d.; for a 10-tonner, , 8s. ad.; for a 12-tonner, 99. 6d.; for a 14-tanner, 10s. 6d. (There is no allowance in these figures for the wages of a second man. As to the need for that, more later.) Using the above figures for cost and for terminal times as a basis I obtain the following results :
For a 6-tormer, 23/4, hours at 5s. 6d., total 13s. 9c1., which is 2s, 4d. per ton.
For a 7-8-tonner, 3 hours at as. ad., total 19s. acl., which is 2s. 7d. per ton.
For a 10-tonner, 4 hours at 8s. 6d., total a4s., which is 3s, 5d. per ton.
'For a 12-tonner, 4i hours at 95. 6d., total 42s. 9d., which is 3s. 7d. per ton.
For a 14-tonner, 5i hours at 10s. 6d., total 57s. 9c1., which is 4s. 2d. per ton.
In the above figures for rate per ton the figure is assessed to the nearest penny.
Instead, therefore, of a terminal charge of 2s. per ton, have figures which show that it should he at least 2s. 4d. in the case of a 6-tonner, rising to 4s. 2d. in the case of a 14-tonner.
Some explanation of this discrepancy is disclosed in some notes I have from Mr. Wood. It seems clear that the time needed to load and unload vehicles has been considerably under-estimated. For a 12-tonner, for example, the total time is quoted as 1 hour 39 minutes. In only rare cases would it be possible for a 12-tormer to be unloaded in that time-let alone loaded and unloadedand provision made for sundry inevitable delays which occur independently of the loading and unloading times and cannot be avoided.
• In putting these periods forward, Mr. Wood states that • a criticism has been advanced that the time allowed appears to be inadequate. but he suggests that, in the event of the time involved in loading and/or unloading exceeding that stated, provision could be made for it by an additional charge which would have to be fully substantiated by the haulier.
Time Allowance Must Be Adequate Whilst I agree with the principle of that method of varying the rate according to the time lost at terminals, I think it is a mistake to take, as a standard time, a period 'which is obviously inadequate. I think the time allowed should be a reasonable one, a period which will rarely be exceeded.
One object I have in mind is that of reducing the necessity of argument about claims for exceeding the prescribed time. If the time allowed be short, as appears to be the case in this Leeds Schedule, the outcome will be that in 99 cases out of 100 the haulier will have to put in a claim for excessive terminal delays. The inevitable upshot will be that, in order to avoid ever-recurring trouble and friction with his customers, he will do one of two things-either drop all claims for demurrage of this kind, which will, in effect, amount to rate-cutting, or refuse to have anything to do with the Schedule at all. I can hardly decide which would be the more unfortunate of these two courses, but I am quite firm in my conviction that either would be bad.
The point which now arises is, having myself set out a schedule of terminal charges ranging from 2s, 4d. to 4s. 2c1., as to what should be taken as the standard, assuming that the principle adopted in the Leeds Schedule, of applying a flat rate to all sizes of vehicle from 6 tons upwards, be accepted.
There is, in this particular aspect of the matter, something to be said for taking an average. In actual practice it would probably be found that the standard time allowed for terminals would be more readily reducible in the case of the larger vehicles than in the ,small machines. It means that it will be mom probable that a cut in the 4s. 2d. rate will be acceptable. The average of the five figures quoted is actually, to the nearest penny, 3s. 3d. per ton. I suggest, pending the consideration of the wages of the second man, that the terminal charge should be made 3s. 6d. per ton. S.T.R.