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Futility the Ton-mile as a Costs Basis

31st March 1944, Page 24
31st March 1944
Page 24
Page 25
Page 24, 31st March 1944 — Futility the Ton-mile as a Costs Basis
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Which of the following most accurately describes the problem?

IN my article in last week's issue of " The Commercial Motor" I tried to explain to a young friend of mine, new to the industry, the Meaning of the term ton-mile. He came to me, in the first place, and said that he had been , asked by his chief to get out figures for cost per ton-mile.

As most regular readers of these articles know, I have not • much time for the ton-mile, and less for the cost per tonmile, viewing these as a practical way of assessing costs or rates. Nevertheless, as this young man had 136en given the job of working out the cost per ton-mile, I have been giving him what help I can, taking, as a basis for argument, some of his own data as to the operation of one of several 15-ton lorries which the concern owns. .

We had arrived at a figure of 1.63d. per mile, and, on the single example taken, it did not appear to my friend that there was any difficulty in making the calculation. I have had to point out lo him, however, that, Whilst it is quite simple to make out the cost per ton-mile for an individual journey, the trouble is that the cost per ton-mile is seldom the same for two journeys Unless those journeys and the work done, the tonnage carried, and the drops and pick-ups be precisely the same in both cases. Asthe outcome of this explanation he has begun to think thatthe work involved might be a little too much, having in mind the liability to inaccuracy in the results. In what follows, therefore, I describe how he searched for some method of diminishing the clerical work, and, at the same time, being able to arrive :at a figure which would indicate, roughly, the actual cost per ton-mile for the 15-ton vehicle.

The Need for Careful Checking " Would it be suffitient if I took an occasional check," he asked, " to "confirm or deny that 1.63d. per pay-load ton-Mile was a reasonably accurate figure?

" It might be so," I said, " bdt what do you think of , the figure of 1.63d. yourself? Take an easy journey, say London to Leeds-200 miles. Would you like to assess your rates on that basis? Multiplying 200 by 1.63d., we get 326d., which is 27s. 2d, per ton for the journey." " If you mean to suggest," he retorted, " that 27s. 2d. per ton would be an acceptable rate for our:traffic between

Leeds and. London, I am afraid my answer is no." .

" Now," I replied, "you really must be careful'. All that we have done is to obtain a figure of cost of the Vehicle per pay-load per ton-mile. That 18d. per mile is the bare operating cost of the vehicle. You must add something to that for your establishment charges and for profit.

" I won't ask you what your establishment charges amount to, but I suggest that they will probably mean an addition of another 4d. per mile to your cost. That means that the cost of your 560 miles is not £42, but •£51 6s, 8d. Your cost per ton-mile is, thus, not 1.63d., but, as.near as makes no matter, 2d. Your total cost for the Leeds trip is thus 33s. 4d. per ton, and, if you add 15 per cent, to that for profit, your rate will come to, roughly, 39s. per ton. , " That is not far out," he eplied.

" You have, then," I went on, "a rough and ready way of obtaining the cost per ton-mile, but you will have to he very careful how you apply it, and you will have to check it fairly frequently, not necessarily to cover'fluctuating costs, but fluctuating intensity of loading. Before we make up _. .

Our minds, let us make one or two checks right away. Pick out a fairly simple route this time—not so much of the tramp steamer about it."

" Here is one," he said, " that is simple enough. Another of our 15-tonners, working regular journeys from Leeds to London and back, making two trips in a week. For quite a period last year, before we were controlled, this vehicle was doing work of which this is a good example. It left for London on a Monday morning with 15 tons; unloaded in London and picked up 12 tons, and brought that back to Leeds by Wednesday afternoon. On Thursday morning it took 14 tons from Leeds to London, and returned with a 15-ton load, finishing the week by Saturday noon,"

" Now, the ton-mileage done there," I said, " is on the outward journey on the Monday---15 times 200, which is 3,000 ton-miles, going back with 12 tons, 2,400 ton-miles; going out again, on Thursday, with 14 tons, 2,800 -tonmiles, and coming back with 15 tons, another 3,000 tonmiles. That makes 11,200 ton-miles in all. Now, the cost we are assuming, still, to be Is. 6d. per mile run, and, as the vehicle has covered' 800 miles, the cost for the week is £60, or 14,400d. Divide 14,400 d. by 11,200 ton-miles

and we get the cost per .ton-mile, to be very nearly 1.3d." " That is considerably less than the figure we got before, was his comment. " What am I to do about that? "

"As a matter of fact, you can't do very much," I replied. "This is just a case of a vehicle running on a good route and getting plenty of traffic in both directions, so that it is nearly always loaded to capacity. It doesn't need any. abstruse calculations into ton-mileage to be able to appreciate that, under those conditions, you can carry at a lees ,rate, but the figure of 1.3d. per ton-mile on that service, as compared with '1.63d, per ton-mile on the other, does indicate the proportional difference in the rate: ," Let us take another example; this time over a route where return loads are not so regular or so plentiful."

"I think if I were to give you some figures from London to Bristol, showing experience prior to the war, we should get what you want," he said. "Here is an example," he continued; "another 15-tonner running regularly between London and Bristol, which is, approximately, 120 miles. Here is a week in which it completed three journeys. On each outward journey, from London to Bristol, it carried 14 tons. On one journey it returned light; on another it carried 6 tons, and on the third only 5 tons."

" Working the ton-mileage out for that," I said, " shows that the total is 6,360 ton-miles in the weak, at a cost of £54, so that your cost per ton-mile js in excess of 2d."

"It looks," he said, "as though I shall have to-take out ton-mileage figures for each principal route and keep a fairly frequent check on each of them."

" You will," I answered, " if you are going to proceed with this idea of trying to make practical use of a figure of cost per ton-mile. You will have to go even farther than that, because, over some routes, I think you will agree, traffic varies in density from season to season."

"There is no doubt about that," he answered. , "In which case," I continued, " you will have to take out a series of cost-per-ton-mile figures for every route and for every month in the year. You are going to be very busy. While we are talking about ton-miles I will demonstrate to you a rather curious feature. You are, I gather, mainly concerned with long-distance traffic."

" Oh, no 1 " he interrupted. "We do quite a fair amount of local deliveries as well."

"Have you got any figures for loading on such work? " I asked.

" Here," he said, " is one example which relates to the use of an 8-tanner over a 40-mile circular route. It starts out with a full load and makes, altogether, 12 drops in the 40 miles The first place is two miles away, where it drops 8 cwt., then it goes another three miles and drops 12 cwt., and so on."

Same Work but Different Mileage

The complete schedule of the work of this vehicle is shown in Table II. It starts from o, calls on places a to 1 inclusive, dropping some portion of the original load at each, leaving 1 empty and returning again 'to o.

In the Table the ton-mileage figures are worked out in detail, The total, it should be noted, is 173.4 ton-miles. The distance travelled is 40 miles and the cost per mile, fcr a vehicle operating on such a low mileage—not more than 240 per week—is the same as for the 15-tanner; that is to say, Is. 6d The total cost, for a journey, is thus 60s., so that the cost per ton-mile is well over 4d.

"Now, here is the curious feature that I have in mind,"

I said. "Suppose, for some reason. or other, you decide to change the order of dropping the loads and, instead of going from o to a and to b and then to c, and so on, you were to send the vehicle from o to 1, then from 1 to k, k to j, and so on, back to a, and then to o again. Let me make out a schedule of ton-mileage carried out in that way."

I did so and the result is,shown in Table III.

"You see." I said, "although you have done the same work, that is to say, the vehicle has started out with 8 tons and has dropped precisely the same portions of that load at the various delivery points, going one way around the tonmileage is 173.4 and, going the Alterbative way around, -the ton-mileage is reduced to 147.8. As your, cost, preSurnably, is still the same, it means that the cost per ton-mile, instead of being just over id., is 5d. What are you 'going to' do about that? "

"I am rapidly coming to the conclusion," he rephea. "that I shall have to accept your original advice, after all, and try to persuade the boss not to have anything to do with this ton-mileage racket, which, it seems, would seldom be of any practical use." S. T.R.


Locations: Bristol, Leeds, London

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