Problems of the
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HAULIER and CARRIER IHAVE shown, in the previous article, that a haulier commencing in business and buying a 2-ton van— lone of the less expensive type—is involved in an initial outlay of about £112. This is disbursed in the initial payment on the vehicle (£82), insurance for a year (20), licence for a quarter (£6 17s. 6d.), the cost of a 10-gallon drum of oil and sundries.
If he himself is going to drive the vehicle, as is usually the case with a beginner, his expenses for some weeks will be confined to garage rent and the cost of petrol, with one or two minor incidentals. I should, perhaps, make it clear that, in this calculation, I am confining myself entirely to operating costs of the
vehicle. Establishment charges that is to say., expenses involved in the organizing and running of the business itself—must be considered subsequently. Before I go farther I must discuss, in some detail, the probable cost of operating this vehicle. I will assume that it runs 12 miles to the gallon of petrol. With fuel costing is. 6d. per gallon, that is equivalent to 1.50d. per mile. Taking oil to be consumed at the rate of 800 m.p.g. and that the price is 3s, per gallon, the cost of the oil is approximately 0.05d. per mile. I will assume that a set of tyres will cover 20,000 miles. The cost of a set is £33, so that the cost per mile for tyres is 0.40d. The next item in the regular schedule is maintenance, but that I want to distuss at some length ; will therefore leave it over for the moment and come to depreciation. This item is calculated on the net cost of the vehicle without tyres, which, in round 'figures, is £270. A vehicle of this type cannot beassessed at more than 120,000 miles' life, so that the depreciation per mile is £270 divided by 120,000, which is 0,54d.
Standing Charges on an Annual Basis.
For the sake of simplicity, and having in mind the fact that I have already started in that way, I will set out the standing charges on an annual basis. The licence, paid quarterly, will amount to £27 10s., insurance £20, ground rent, say, £26, and interest on first cost (3 per cent. on 1270) is £8. There is still wages to be considered, and, although the owner will drive the vehicle, he should properly include in his statement of cost a regular driver's wage, and that I am going to set out at .£3 per week, or £156 per year. The total is £237 10s. Now, as to maintenance, there is a point that, for a time, is favourable to the owner-driver novice. The average cost of maintenance of a vehicle of this type is 0.88d. per mile, but that figure is derived from the examination of cases in which the total expenditure on maintenance is debited as a separate item.
In the case of an owner-driver beginner, some of this expense will be avoided, because he himself will do the work in his own time and at no extra cost. I should emphasize that this view of the matter is practicable only in the case of sucn an example as I am now discussing-namely, a man who is starting and who, for a time, will probably have enough leisure to be able to attend to his vehicle instead of driving it on remunerative contracts.
A full scheme of maintenance, the cost of which is implied in the above figure of 0.88d. per mile, provides for all the work of washing, polishing, greasing, adjustments, as well as overhauls and service operations, being debited against the vehicle. This is assumed to be maintained either by a separate staff or by some outside contractor, such as the local motor agent from whom the vehicle was bought.
The System of a Large Concern.
In a substantial concern, well managed and organized, this would be the case, because the drivers would be fully engaged in driving. The vehicles themselves would be fully employed throughout the working day and the maintenance operations would have to be performed independently.
The beginner is not in that position. Ile himself will wash and polish his vehicle, grease it, make adjustments and perform many of the' maintenance opera tons, such as decarbonizing, valve grinding, possibly even brake refacing and so on. If he has not sufficient work to keep him on the road all the week, he would be wise to proceed in that manner and thus economise in his operating costs. I am, at least, going to assume that such is the case, and to that end will take a figure of 0.44d. per mile for maintenance instead of the figure 0.88d.
Small Expenditure at First.
Now, as I demonstrated in the previous article, only the expenditure on fuel and garage rent is needed for the first few weeks of vehicle operation. Sufficient oil has already been purchased to last for some time, nothing need be spent on tyres for some 20,000 miles or so, there should be no need for anything to be debited to maintenance for quite a long time, this being a new vehicle, and therefore presumably under a guarantee from the makers. Indeed, the first occasion for any expenditure other than on account of those two items will become due at the end of three months, when the second quarter's licence will have to be purchased at a 'cost of £6 17s. 6d. This is one of the items that must be budgeted for in advance.
To continue with my story and keep it, shall I say, moderately intelligible, J must assume a weekly mile-age. I will take 300. Twenty-five gallons of petrol
will be necessary for that mileage, at a cost of 37s. Bd. The garage rent is 10s., so that the total outgoing is 12 7s. 6d. per week. The haulier will require some money to keep himself (and family, if any). ,Just how much he will need I am not, of course, in a position to state, but it may be as well to assume that he takes the full amount that I have debited as driver's wagenamely, £3 per week.
I will assume that he receives an average of 10d. per mile for the :300 miles that he is running. His total revenue per Week is, therefore, €12 10s. Out of that he takes £5 7s. 6d., leaving £7 2s. 6d.
Items to be Encountered Later.
It is most important, however, that these other items of expense, postponed although they may be, should not be forgotten. The haulier should take the greatest care to make provision against the time when he will be called upon to spend money on tyres, maintenance, depreciation (that means the purchase of a new vehicle when this one is worn out), the quarterly licence and the annual insurance premium. It is for this purpose that I have, in the previous costs article, referred to the reserve fund, and before going any farther I must
indicate the extent of the reserve fund necessary in this particular case.
It is comprised in savings towards the purchase of oil, tyres, new vehicle and the expense on maintenance at the above rates. At 300 miles per week, therefore, the haulier must save 300 times 0.05d. for oil, which is is. 3d.; tyres, to the same proportion, 10s.; maintenance, 300 times 0.44d., 11s.; and, for depreciation, 13s. 6d. The total is £1 15s. 9d. per week for those items alone.
The Balance for Establishment Charges.
Then there is provision for taxation, 10s. 6d. per week in round figures, for insurance premium at the rate of 8s. per week, a further 18s. 6d., making the grand total £2 14s. 3d.
Take away the £2 14s. 3d. from the £7 2s. 6d. weekly balance and there is left £4 8s. 3d. We have not yet, however, made provision for the instalments, on the hire-purchase contract. These are £13 12s. per month, which is 13 2s. 9d. per week to the nearest penny. Deduct that from the £.4 8s. 3d. and there is a balance of £1 5s. 6d., which may or may not be enough for establishment charges. This the haulier must con sider according to his own circumstances. S.T.R.