PROBLEMS OF THE HAULIER AND CARRIER.
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Making a Start with a Four-tonner--Capital, Hire Purchase, and Charges to Customers.
THE majority of new recruits to the ranks of hauliers prefers to start with aSmall vehicle, say a one-tonner; as being cheap to buy, 'cheap to run and of a suitable capacity for lots of odd jobs. In the large number of owners of such niaehines jieg-a danger. Some districts are rather overcrowded, and the man who wants to launch out in such a way often finds himself saddled with a new business and the necessity for fighting ago inst a crowd of others who have more experience than himself and have at least the advantage that they have somewhat of a name With which to trade.
In such circumstances, a man sits down to do a bit of hard thinking. Naturally, competition is to be expected unless one proposes establishing a service in a desert, but it is of no use investing money in vehicles of a type which abound in any particular district unless there is plenty of work for all, or a special untapped market exists which is open to an energetic worker with one or more of the popular sized models. Even then the newcomer must be reasonably sure of getting a pretty firm hold before one of the old hands can turn round and try to oust him.
Two men have decided to go into partnership (so they tell me in a letter recently received) as hauliers in a
• busy town close to one of our largest industrial cities, and they find themselves in somewhat of a quandary as to their future lorry. Their. home town abounds with one-toaners, many of which are simply "eating their heads off" for want of work, and they do not want to start business in an absolutely cut-throat market. Their capital is definitely limited, about £80 to be precise, and they want to know what size of vehicle to start with, using it for long-distance jobs, working to and from large warehouses in the neighbouring city. They favour a four-tonner, as there are apparently fewer such vehicles against which to compete. In their letter• they ask for advice as to methods of purchase and rates of charge.
Extreme Care Needed in Buying When Capital is Small.
Capital is certainly a very limiting feature in this case, and I may take this, the earliest opportunity of saying: "D& not buy a four-tonner for £80 full cash price, unless it isin exceptionally good condition, is . well equipped as regards tyres and has a full spare parts supply available." Even then the buyers must be certain of having it thoroughly " vetted " to minimize the risk of trouble. On long-distance work a sound vehicle is Most essential, particularly as a big breakdown might wreck a contract, and with such a little capital there would he practically nothing to pay for the hire of a spare vehicle during repairs to the regular unit. As. much as possible of the £80 must be kept in a reserve for, emergencies and to tide the two partners over the period during which the will have to deal with the teething troubles of the concern, with possibly not
" too much work coming in.
Continued and satisfactory service without delays for hire repairs is most likely to be obtained from a more modern vehicle than one which could be bought for £80 cash. Although a second-hand machine is more expensive to run than a new one, when it is to be kept for the remainder of ita useful working life, the capital outlay must be cut down at all costs, and a used machine is indicated in this case.
It would seam that 150 is the most that should be paid as deposit, thus keeping £30 in band as a reserve. This means that the total price of the lorry which can be afforded will he aliout £250. Taking away the deposit of £50, we 'e'met £209 as tha balance, and if the interest on this he at the rate of 7i per cent. per annum, and 12 months is to be the period of hire-purchase, we have to add £15, making a total of £215. Dividing this by 12 to get the monthly instalment, we find £17 18s. 4d. as the result, or £4 2s. 8d. a week. If payments can be spread over 18 months, although the interest total will be slightly greater, the weekly payment will be less, and, of course, this is highly important where there are two partners to draw wages out of the business.
Turning to this aspect of expenses, each of them will want a living wage, say, £3 a week per head. On this account, therefore, 16 a week is required ; add the hirepurchase instalment of £4 2s. 8c1., and we get £9 2s. 8d., or, for the sake of round figures, £10 3s. per week is the required sum, and it must be remembered that this includes no profit strictly speaking, merely a return to each man of £3 per week for his personal work.
As to the operating costs, a solid-tyred four-tonner of a fairly recent type bought second-hand would cost about 3d. per mile for fuel, .35d. for oil, 1.5d. a mile for tyres, 2.1d. for maintenance and depreciation at the rate of 1.2d. per mile. This last item is calculated on the capital cost of 1265, that is to say, the purchase price plus the interest on the balance, less £30 for tyres, already allowed for at 1.5d. per mile as stated above, giving £235 upon which to work. Assuming the lorry to be good for three years' work at 15,000 miles per annum or 45,000 miles in all, the depreciation cost works out at 1.2d. per mile. Adding up the items, we get a running cost of 8.15d. per mile.
Standing charges are :—Licence: 12s. a week ; wages as previously mentioned, £6; rent and rates for garage, us. 6d. ; insurance, 8s.; interest on capital, Sc. 2d.; making a standing charge of 1,7 16s. 8d. a week.
Assuming 300 miles to be the weekly total, the running costs for this distance will be £10 3s. 9d., and the standing charges on top will give a total of £18 Os. 5d. At least another pound should be added for establishment costs ; say £19 a week without allowing for the instalment. This means that 18.2d. per mile must be charged to cover expenses. Extra for profit must be added, say, 3.2d. per mile to yield £4 a ikeek, making advisable a charge of 1s. 9.4d. per mile in order to pay one's way and gain £4 for the two partners.
Working on a time basis, about us. 8d. an hour will be right, taking 61 miles an hour average as the ground for calculation.
With regard to the desirability of charging per mile or per hour,-I must refer my correspondents to previous articles in this series which have dealt with the ques tion of charging on alternative plans. • S.T.R.