Substantial Increases in Haulal
Page 20
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The Story of a Talk which S.T.R. Had with a Haulier Who Thought That They Were Not
IT is still substantially true that most of the rank and isle of the haulage industry lack appreciation of the true . measure of their operating costs. I have encountered evidence that this is so in many localities and the following story, which is true in substance and in fact, could be related, with but slight alteration to the wording, of a dozen conversations I have had of late.
Actually, the scene of the incident was in the Home Counties. The energetic honorary secretary and sub area committee of A.R.O. had recommended to their members that, in tendering for municipal haulage, they ,should increase their rates by some is per cent, as towered with those which they submitted at this time last year.
It was shortly 'after this recommendation had been put forward that I met a haulier, a man operating a small fleet of vehicles who, one would have thought, was likely to be aware, within a reasonable degree, how his expenses were mounting.
He set the ball rolling.
"You know," he said, "I think our Association is
going a bit too far with these everlasting increases. I cannot see any justification whatever for increasing my rates, as compared with what I charged last year."
" I am afraid I must disagree with you,' I replied. "What is more I would go farther than your Association, for, in my opinion, a 15 per cent. increase is barely sufficient."
"But there have not been any additional expenses," he objected, " except two increases in wages, which amount to 7s. 6d. per week—barely 2d. an hour—and-I can hardly add that small item to my rates."
" What sizes of vehicle do you operate?
"I have a. 2-tonner, a 3-tonner, four 5-tonners and an 8-tonner."
5-tonners Used as the Basis S.T.R.'s Arguments Very well, then, I will take the 5-tonners as you have more of them than any other size, and will prove to you, in connection with those machines, that you need more than 15 per cent. on your last year's rates if you are to maintain your profits on the same percentage basis." "Well, go on then, get on with your figures."
"In the first place," I began, "you have forgotten that, since last year. the price of giant pneumatic tyres has increased by 5 per cent. Now the cost of tyres a year ago for a 5-tonner was .80d. per mile: 6 per cent. on that is s .04d, so, even if you run only an average of 6 m.p.h., that is equivalent to id. per hour increase on your cost of running these vehicles oh municipal contracts." "Well; what is a farthing? "
"Wait a minute. That is' only the first of seven items and, moreover, it is the smallest of them.
"The direct cost of spares and labour for repairs and maintenance has increased by at least *d. per mile and the additional expense of obtaining spares and of getting the worle'clone and the cost of having the vehicle idle has still further increased in the past year. It is an underestimate to assess the total increase of -id. per pile, so that, again on the basis of 8 m.p.h.,:you can add at least id. per hour to your costs.
"Next comes depreciation . . "Now, there cannot possibly be any alteration to depreciation," he interrupted. "I still have the same vehicles and, if anything, the amount I shall be able to enter for depreciation will be less this year than before."
" If that be the line you are taking," I replied, "you are making a big mistake. You should be setting aside money for depreciation, to replace your rapidly depreciating vehicles, and regarding the item in that light you must, if you have made any study of the rising prices of used and new vehicles, realize that you must put aside much more this year than ever before, on that account.
" Used vehicles are fetching twice and thrice the prices that they did. I am not, however, going to try to make provision for those extraordinary jumps in prices. I am going to take an increase of 25 per cent., which is what I know to have been the rise in the price of such new vehicles as are to be had since this time a year ago.
" Now, the price of your 5-tonners a year ago was about £480. To-day, that price is in the neighbourhood of £600, so that you have to provide for an increase of £110, 4,nd, orf the basis of a four years' life, that is £30 per annum. If you calculate what that sum means per hour. taking a 50-week year and a 48-hour week, you will find that it is equivalent to no less than 3d. per hour..
Your figure for increasing costs is mounting, isn't it?"
"I must admit I had never looked at depreciation in that light before and had certainly never realized that I would be likely to have to make provision for an extra 3d. for every hour."
" Ah, but we have not finished yet, by a long way. The next item is wages, and we have alreadY agreed that because of inereases they are now equivalent to an extra 2d. per hour.
" Your vehicle insurance premiums have increased, haven't they? "
." Yes. On this particular size of vehicle the premium has gone up by £7 10s."
" That sis id. per hour. Now we-come to an entirely new item, something which you have 'never had to pay before."
"'I know," he said, "and I must admit I had forgotten all about that. You mean the war damage insurance."
"Precisely. Now, that is 30s. per annum per £100 value, so that the net increase, in connection with this vehicle, which you must assess at its present-day value of £600, is £9 per annum, very nearly id. per hour. But your war damage' hourance expenditure has to cover all your business assets and that may be taken to add another 25 per cent. to the amount due on the vehicle alone, so that you must put down lid. per hour on account of war damage insurance. That is the sixth item, the seventh is your establishment costs."
Higher Costs That Are Apt
Bu there has not been any increase in my expenditure there, so far as I can recall."
" I-think I can soon persuade you that you have dyer looked quite a lot in that connection. Your gas and electricity bills are up, eh?"
" Well, now you mention it, I do seem to recollect an addition of 124 per cent., or thereabouts, on one of them, and there is probably a similar addition on the other." Quite, and other things as well; your water rate, for example? "
" Oh yes; I remember I got the account for that only yesterday, atal it is up by as much as 50 per cent." , "We are getting on with these establishment costs which you thought had not increased.
"What about your telephone bills; there has been an increase, hasn't there—another 124 per cent.?"
" No, that was put on before this time last year and there has been no further addition."
"Perhaps you are right; at least. I am not sare. about that myself, so we will let it pass."
"But you are certainly paying more for your coal and your coke; any repairs whIch you have to have carried out to the building are more expensives'plumbing costs you more, and so on. Your stationery, your log sheets, your PrC01111t books, they have gone up by hundreds per cent. I know that the actual amount is not a great deal in itself, but taken in conjunction with all the other matters which I.have enumerated, the total, believe me, is quite considerable.