Problems of the
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HAULIER
and CARRIER /N the previous article of this series I discussed the vexed problem of whether an owner-driver can properly exclude from his schedule of operating costs the item of " driver's wages." I showed that he could not logically do so and that if a man is going to make a business of roarT•haula.ge cOntra.cting this item and the other, "garage rent," which appear in Table II (published in last week's issue) under the heading of "standing charges (a) expenditure," are essential in any schedule of vehicle operating costs.
The other three items of standing charges, those which appear under the sub-heading "(b) sinking fund," are
not so controversial. The annual tax has to be paid, every vehicle has to be insured and, notwithstanding all
that is sometimes said to the contrary, it is essential to debit the haulier's vehicle with an amount in respect of interest on the capital involved in its purchase.
It is not worth while to spend a great deal of time in discussing the last-earned item. I should just explain that it is the amount that would be earned by that capital outlay if it were to be invested in some safe security.
In the case of a vehicle costing 21,000, that sum, securely invested, might be, expected to Ibring a revenue • of, say, 250 per annum, or about 21 per week. There would be no need for the owner to work, to take the risk
of buying a vehicle, or of his losing that vehicle and the 21,000. It is, therefore, not right to assume that the
vehicle is earning a profit until it has first brought back some, at least, of that sum which would have accrued in the shape of interest. • It is always difficult to impress hauliers not experi enced in any sort of accountancy with the need for this provision. Part of that difficulty is due to the fact that, far from being actual expenditure, it is really something which goes intd his pocket. For the schedule of operating cost to be complete, it must, however, he included.
There is a point concerning insurance which is worth considering just now, for it is a fact that, although have stated that there is not much subject for argument a42 in connection with these three items of standing charges, there is sometimes a difference of opinion concerning insurance. There are two extremes in this matter: on one hand there is the premium involved in a full comprehensive policy and, on the other, there is the bare minimum, just sufficient to cover third-party risks.
The second' has, never appealed to me as a practical proposition, especially hi the case of a man whose capital is limited. In his case, a bad accident, resulting in the wrecking of his vehicle, may, in the absence of proper insurance, result in putting him out of business altogether.
I have often been asked if there be not wisdom in accepting the rebate of premium which the insurance companies offer when the insuree will agree to pay the first 25, 210, or more of the loss resulting from any accident. My objection to such a course is this there may be an economy if the haulier has only one small accident a year, far his expenditure on repairs may be less than the reduction in premium. If, however, he has several accidents his expenditure on that account will be considerably greater than the saving in the premium.
Experienced haulage contractors do, however, tell me that, with reasonable care and ordinary risks, they can show an economy in accepting this condition from the insurance companies and bearing a certain amount of excess. It seems that the matter L one for the consideration of the individual, according to his experience and prospects of accident
The actual amounts quoted in Table II are not, in themselves, of great importance. They ca.nnot .be wide of the mark. It is the principle that 'matters so far as this series of articles is concerned. The total, according to those figures, is £4 13s. 10d. per week. I have spread these over, a week of 48 hours, that now being the standard according to the report of the Conciliation Board. On that basis, the equivalent standing charges per hour total is. 3.11d., or, say, 2s.
With that figure of 2s. per hour and the one given in a previous article for the sum total of running cost, namely, 2.9d., the haulier can, with a minimum of calculation, assess his actual operating costs for any kind of job.
The method of making that calculation is simply to take the total time, including waiting time, and assess that on the basis of 2s. per hour. To the result must be added the figure for mileage at, the rate of 2.9d. per mile. (Perhaps I should emphasize that these figures relate only to the type -of vehicle under consideration, namely, a 2-ton sided lorry.)
As an example, take a job of a kind familiar to
owners of this type of vehicle, namely, the conveyance of market-garden produce to the market in a big town or city. Let me assiime that the distance from the 'garden to the market is 39 miles and that only half an hour is necessary to
load, but that three hours are lost in waiting. at the market, plus a further half an hour for unloading after that delay.
I will take it that the time occupied on the jour ney is 11 hour eaeh,way.
The total time is then half a-n hour at the commencement, 3ihours in the market and 2i hours travelling, a total of G1 hours, costing the operator 13s. for time alone. In addition, he has travelled 60 miles at a cost of 2.9d. per mile ; that is, 14s. (3d.
The total cost of operating the vehicle—that and no more—is 27s. 6c1. Although this is not the be-all and end-all of this series of articles, I would like those who
habitually operate 2-ton lorries for 4d. per mile, and would, therefore, make a revenue of £1 from this job, to
consider that figure and to calculate how long they are going to keep in business at their present rate.