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National Scal(
f Haulage Charges for Sugar Beet
Full Explanation of the Methods of Calculation and Detailed Figures of the Basic Costs
IHAVE been asked to describe the manner in which we arrived at the national scale of rates for the haulage of sugar beet, which was published in last week's issue of The Commercial Motor. The scale is reproduced, with this article, as Table I; it should be most carefully noted and, what is more important, adhered to by every haulier who carries sugar beet during this year's campaign.
A good deal of preliminary work had been done in the various areas interested in this traffic by local hauliers and by Mr. R. W. Sewill, as well as by me, before the critical meeting, held at the headquarters of A.R.O., with Mr. Sewill as chairman. The meeting comprised representatives from various areas, all of them personally experienced, over a period of years, in this particular and important traffic.
I had prepared figures for costs and a preliminary schedule of rates, which were put up at this meeting for criticism and amendment, according to the actual personal experiences of those present.
The first thing we set ourselves to do was to agree positively on the actual cost of operating vehicles engaged in sugar-beet haulage. As a basis we chose a vehicle of 2i tons unladen weight, carrying 5 tons of beet. It was agreed that this is the preponderating type and size of vehicle used.
It is practically impossible, eicept in the case of particularly long-bodied vehicles, to carry more than 5 tons of beet. Set of against the few which could carry a somewhat • heavier load, there was the fact that a much greater number consists of tipping wagons, which cannot be loaded even to 5 tons.
• No Modifications for Large Vehicles • It was further agreed that, when large vehicles are used, the extra time needed for loading and unloading, with the lower speed at which such vehicles could be run, reduces the number of journeys per day. That fact, taken in conjunction with the extra cost of operating these larger units, makes it impossible to reduce the rates to be charged in respect of loads of beet so carried. It was agreed that the economy of large vehicles in this particular traffic, taking into consideration all the peculiar conditions, was not such as to justify any modification of the rates in respect of beet carried in large vehicles.
The accompanying figures are representative of actual costs incurred by the operators engaged in the haulage of sugar beet. They are, in effect, figures produced by those present at the meeting. They embody provision for current costs of materials and of wages. It should be emphasized that, in the event of any further increases in these items of cost, the rates proposed would be subject to modification accordingly. •
The figures for running costs appear in Table II, those for fixed costs in Table III. The following explanatory notes should he read in conjunction with the figures in those tabulations.
Concerning the cost of petrol, oil and tyres, cognizance was taken of the fact that some operators were able to obtain their supplies at wholesale prices; others have to pay the retail prices—hence the two sets of figures. Tyre life, according to the experience of those present, does not exceed an average of 20,000 miles per set on this class of work.
As regards maintenance, the figure given represents the average expenditure, at current costs of materials and labour, on vehicles engaged in this traffic. It was pointed out that of all items of operating costs this is the one which, as the result of war conditions, has suffered the maximum increase. It is also the one most likely to be effected by further increases.
It was the opinion of those present that the general practice of assessing depreciation on a mileage basis was not fairly applicable to a traffic which was seasonal. That item was, therefore, removed from the schedule of running costs and placed in that of fixed costs.
It will be noted that the total costs per mile range from a minimum of 4.47d. to &Old., the mean being 4fcl. per mile. An addition of 20 per cent, is made to the running costs for profit, bringing the total rate per mile run, apart from fixed costs, to 5id.
• The Fixed Costs Discussed •
Turning now to the items in Table III—the fixed costs per week—the amount of .13s. 3d., quoted as the weekly proportion of the tax on the vehicle, is calculated by taking the full amount of the tax paid quarterly (£33 per annum) and dividing it by 50 on the usual basis of 50 weeks to the year.
The amount quoted for wages is the total paid per week to a driver and mate, assessed in a Grade I area as prescribed under R.H.4 of the Road Haulage Wages Act. It is calculated on the basis of a 98-hour week, without overtime or Sunday work, and includes provision for National Health Insurance, National Unemployment Insurance under the Workmen's Compensation Act, and provision for holidays witlo•pay. The total of these four items approximates to 4s. per week per man, or 8s. per week for the two men. The weekly wage for a driver of a vehicle carrying 'a normal load of 3 tons is £3 13s., whilst that of the mate is £3 4s. The total of £7 5s. comprises those three amounts.
Some discussion arose as to the fairness of adopting this scale, that is wages on a Grade I basis, seeing that so much sugar beet is actually hauled in areas where the Grade III scale would apply. Under present-day conditions of operation it is a fact that the grading has become almost a dead letter.
The men employed on beet haulage are either (a) themselves occasionaly employed on work involving the payment of wages on the Grade I scale, and cannot be persuaded to accept less than that scale during the time they are hauling the sugar beet, or (b) they work side by side with drivers, employees probably of the same concern, who are entitled to that .grade of wages; they will not work for less than those quoted.
In many cases of drivers of vehicles hauling sugar beet in the Eastern Counties, the wage paid is actually on the London scale. In the vast majority of cases the men demand and are receiving wages on the Grade I scale, or even in excess of that. Provision was, however, made for allowances to he made in cases where the wages paid are less than those quoted.
In respect of garage rent, the figure quoted is an average, for the cost of housing the vehicle. It is agreed that, in some cases, the cost may not he so much. It is equally true that, in other instances, it may be considerably in excess of the amount named. The premium for comprehensive insurance of the type of vehicle under consideration, operated by a haulage contractor, is £42 per annum, if it carries a load of not more than 3 tons. This premium is subject to an addition of £4 per ton of pay-load over and above that maximum of 3 tons. If the vehicle is to carry 5 tons, then the premium is £50 per annum.
In this connection the attention of the National Farmers' Union was drawn to a point which had already arisen in previous discussions, wherein criticism had been made that the insurance figure quoted on behalf of hauliers was high. It '11,;as suggested that insurance could be obtained at less cost and the experience of .farmers insuring their own vehicles was cited in support of the claim that was put forward.
It was, therefore, deemed necessary to point out that comparison is impossible between rates of insurance for farmers' vehicles and those owned and operated by haulage contractors. Vehicles insured by farmers under the rates quoted by the National Farmers' Union are, as a rule, restricted to the conveyance of the farmers' own goods and limited as to the extent of the radius within which they can be operated.
• How Depreciation Was Assessed • In assessing depreciation, the assumption is made that the total value of the vehicle is written off completely in four years. The suggestion that when hauliers ,dispose of their vehicles they generally obtain some allowance in a partexchange deal is met by the reply that vehicles of the type used are disposed of in the majority of cases in two and a half or three years from the date of purchase. Only occasionally do they last for four years. An addition of 10 per cent, was made to the depreciation figure, in order to provide for the increasing cost of carrying out replacements.
Interest is charged at 4 per cent, on the progressively depreciating amount of the actual outlay on vehicles, averaging over the four years which are taken as the basis for such depreciation.
In considering the amount set apart on account of overheads, it is again essential to emphasize that no comparison is possible between the amount of this item, in so far as it affects the farmer and the operation of his own vehicle, and the corresponding expenditure in the case of a haulage contractor.
The latter has to make provision for most, if not all, of the following items:—Office rent and rates, lighting, water, telephone, audit fees, law costs, fines, travelling expenses, clerks' wages, director's salary, depreciation of garage fixtures, income-tax and N.D.C., subscriptions to associations, bank charges, ferries, weighbridges and parking, interest on hire purchase, printing and stationery, insurance of buildings, maintenance of buildings, had debts, claims, interest on capital invested in the business, postages, the cost of A and B licences, heating, advertising, and sundries.
It is correct, in the case of hauliers' vehicles operating
in the provinces, to assess overheads on the basis of 12s. 6d. per ton of pay-load. There is, therefore, in this figure of £2 5s. considerable allowance for the fact that most hauliers of sugar beet operate from rural centres where, in some cases, their establishment expenses may be below the average.
It is appreciated that, in some cases, exceptional circumstances may prevail which would justify some modification of these rates. Favourable loading conditions at the factory, or the existence of wage scales lower-than those embodied in the schedule of costs, are amongst those that may be cited as concrete examples.
It was agreed, therefore, that where such special conditions prevailed, some modification of the rates might be mutually agreed. At the same time, it was to be understood that, where unfavourable conditions were presett, such as when the unloading conditions at the factory were difficult or the farmer did not put his beet where it could conveniently be loaded, there was justification for some modification, in an upward direction, of the figures incorporated in the schedule.
In cases where the farmer provides satisfactory help in the loading of the vehicle, an allowance of 2d. per ton should be made as a rebate for these agreed rates. The general view of hauliers is that they prefer to handle the job themselves without assistance from the farmer. In any case, when that assistance is offered it is seldom available as and when it is required, and rarely is it of the kind to compete with the rate of working of the haulier's own employees.
• No Concession for Return Loads • The rate for return loads of pulp, whether wet or dry, is to be the same as the corresponding scale of payment for the haulage of the beet. It is not possible to make any concession in respect of such loads for the following reasons.
• In the case of short hauls, the extra waiting, loading, weighing and unloading time is such that one load of beet is lost. There is thus no economy or extra revenue for the haulier in this work. In the case of medium and long-distance hauls, there is, to-day, ample opportunity for the haulier to obtain traffic at rates approximately the same as those quoted for beet, with the practical certainty of a return load at similar rates. There is indeed a feeling amongst operators that the rates for these hauls of sugar beet are, by comparison, inadequate and unremunerative. Only the prospect of return loads of pulp, in not less than • the usual ratio, makes it possible to offer to do the work at the rates quoted in this schedule.
The schedule of rates is intended to apply in respect of loads to .railhead, as well as to factories. The fact that the average period of delays at railhead is, at most goods yards, less than at the factory, is more than offset by the difficulty and extra time for unloading into railway wagons