The More You Work The More You Lose
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The Hirine Rates Offered by the M.O.W.T. Ensure a Quicker Road to the Bankruptcy Court Than Ewen the Rates to Controlled Undertakings
WELL might Mr. Sewill say that the industry, in signing the agreement with the Ministry to operate the new Government Scheme, was signing its own death warrant. Or, again, that the only difference between the prospects of the controlled undertakings and those who merely hired' their vehicles was that the one died more rapidly than the other
Id a recent article I dealt with the terms offered to the controlled undertakings and demonstrated that they meant slow strangulation of those concerns which were fortunate enough to be appointed to those privileged positions. I have now had an opportunity of studying the rates which are to be paid to those who hire their vehicles to the Ministry. Those haulers who are to have their vehicles hired by the Ministry and be paid these rates will, as Mr. Sewill said, be fortunate in that • they will experience a quicker "death." As I see it, the only Way in which an operator can make any profit from these rates is for him to have his • vehicles hired at an early date atd then, as soon as possible after that, to have the whole fleet " laid up." He mast then close down his establishment altogether and take some other employment, such as that of a labourer in a munition factory. In that way, and in that way only, will he be able to ensure that his business will still be in existence when the war is over.
The Case of the 8-ton Oil-engineci Vehicle
The figures were published in their entirety in last week's issue of " The Commercial Motor." I propose to examine them, this week,' by taking 44,s an example the rates paid for the hire of an 8-ton lorry, assuming it to be oilMgined, which gives the Ministry the benefit of the lower cost of that type ef vehicle. An operator who i3 running petrol vehicles will, of course, be worse off than is shown by the follow:rig figures:—
The hire terms for a vehicle of 'this size are: £7 I Is. 9d. per week (while it is working), plus 3.20d. per mile. If, therefore, the mileage covered in one week be 200, the full payment will be 8711s. 9d., plus 200 times 3.20d., which is £2 13s. 4d. The total is 210 5s. Id.
It is fair to compare this revenue with some acknowledged figures of average operating costs, and for that purpose I propose to take my data • from " The Commercial Motor " Tables of Operating Costs, which are known to everyone in the industry and are acknowledged to be fair and accurate.
In making the comparison, it is necessary to take note of the fact that, in the case of hired vehicles, the Ministry pays the wages of the driver, plus the usual insurances ; the Road Fund and operating taxes; insurances, both against accident and risks of goods in transit, and fuel Costs. The amounts which figure in the Tables for those items must, therefore, be deducted. After that-has been done the Cost are as follow:— The standing charges comprise gar
age rent at 10s, and interest at £1 Os. 6(1., total El 10s. 6d.
The running costs, in pence per mile. are: Lubricants, 0.18d.; tyres, 0.95d.; maintenance (d), 0.95d.; maintenance (e), 1.32d. and depreciation, 3.38d. The total is 6.78d., and for 200 miles. that is 25 13s. The 'total operating cost of this vehicle to the haulier, that is, having in mind the amounts paid by the Ministry, is thus £7 3s. 6d., leaving a balance for gross profit of £3 Is. 7d, per week. Mark carefully the word " gross."
Now take the other extreme of weekly mileage, 1,000 miles per week. The payment the haulier will receive, according to the Ministty scale, is £20 ills. 5d. His operating cost, calculated as above, will be ;820 Os. ed.. leaving a margin for profit, again gross, of 17s. lid, per week. • Figures for the intermediate mileages are given in one of the two tables Which accompany this article. It will be noted that, practically, the operator's gross profit per week gradually diminishes as the weekly mileage increases.
There is no allowance for establishment costs in the above. The incidence of this item varies considerably. For long-distance haulage, however, I have found that a fair average figure, to-day, is 15s. per ton of pay-load; 18s. is not uncommon as, for example, when the operator has several depots. The lowest of which I have record, and they are of pre-war vintage, relate to the business of an operator who was particularly thrifty in his way of conducting his business; moreover, he was, as regatds the bulk of his traffic, carrying the products of only one firm, thus considerably diminishing the need for expenditure on the administration of his business. Even so, his figure fell a few pence only short of 10s. per ton of pay-load, Making Cuts In Establishment Colts Establishment costs, as I showed in a. recent article, are not easily to be diminished, but in order to be fair I will assume that certain cuts can be mad, as the result of some of the work of discovering loads being taken over from the operator by the Ministry, If, on that account. I assume the amount to be 12s, 6d. per ton of pay-load, the total per week per vehicle for an 8-tonner is £5 per week. In the case of a lorry covering 200 miles per week,
therefore, earning a gross profit of £3 Is. 7d., the operator is actually losing £1 18s. 5d. per week, and at 1,000 miles per week his loss is £4 Es. Id. Hence the title of this article.
To put a better face on the figures, on behalf of the Ministry, but certainly not because I agree that it is fair, let us assume that depreciation has been reckoned as a standing charge. Further, I propose to take a ridiculously low amount for that item, namely, £2 I0s. per week. In that case the standing charges become £4 Os. 6d. per week, and the running costs are reduced by the amount included for depreciation. Then, the operator's costs become; for a 200-mile week, £6 17s. 2d., and his gross profit is £3 7s. 11d., leaving a loss, after providing for establishment costs, of El 12s. Id. For 1,000 miles per week there is a gross profit of £5 17s. lid., and a net profit of 17s. lid. Figures for the intermediate mileages are given also in one of the tables.
The other table shows the data relating to a 14-15-tonner. Readers will readily understand, from the above, why I recommend them to have their vehicles " laid up " so soon as possible after they have been hired, bearing in mind, however, that they will reap the full benefit only if the whole fleet be thus treated.
S.T.R.