He and Why Costs Vary
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I . FREQUE.NTLY. have occasion to !;tiesS. "that' Hgurea ' given inr".The Coninnercial Motor" Tables of Operating Costs 'are averages. They. are not theoretical, buv are basse.d.on..data .collected 'froth all types of ,uSer:, It may Well be that (here is no operatOr whose actual lleilis 4711; Cost arc the. sarne-ai 'those in the Tables, although it often happens that the total cost is the same. or nearly the Kline, as the corresponding. figure in those...Tables, .
I am often told by an operator that his total .running costs are the same as those in the Tables, but that he finds his petrol costs rather more than the Tables suggest. On the other hand, he saves a little on tyres; his garage rent is less than in the Tables, but he pays a little more for insurance, and so on.
Again, another operator will tell me that he cannot reduce his costs to so low a figure as those given in the Tables. It may be that he operates in a hilly country; his fuel and oil consumption are above the average and so are his maintenance costs, because of more frequent use of brakes and gears. Yet again, another operator, voicing the same general opinion, discloses the fact that the type of vehicle which he uses is more expensive in the first place and more costly to maintain than the average.
Take, for example, the case of a haulier operating vehicles for a laundry. His customers require vans of a particular type—perhaps those streamlined vehicles which have become so popular among launderers. The lettering embodies a considerable proportion of gold leaf, which necessitates revarnishing at periods of six to twelve months. The vehicles have to be washed and polished daily. The exigencies of service are such that the operator must make certain that every vehicle is quite fit and ready for the road each morning of the week, six days per week, 52 weeks of the year.
Preventive Maintenance That means that so far as maintenance operations on the chassis are concerned, the haulier must arrange for preventive maintenance, which is more expensive than the normal routine.
It will be of interest to go through the 10 items of operating cost and speculate as to possible individual variations because of differences in working conditions. I will take a petrol-engined 6-boner. An average figure for fuel consumption is 10 m.p.g., and at 2s. 9d. per gallon that is equivalent to 3.3d. per mite. Now, I know of 6-tonners which do 12 m.p.g., and of others which do 7 m.p.g. The difference may be because of one of a score of reasons, among which the condition of the vehicle itself is prominent. The way in which a lorry is driven can also affect the petrol consumption by nearly 100 per cent £34 If the, driver be considerate, his achievement in respect of the fuel return will be some 12 m.p.g., or possibly enoee, especially if his journeys be mainly over comparatively long distances and on non-congested good-class high
. Might add that the petrol consumption of quite a number a vehicles also depends to some extent upon any partiality 'which the driver may have for cleaning his hands with that fuel:
So far as the consumption of lubricating oil is concerned, it can be stated in the first place that, comparing vehicles alike in construction and in state of wear, the oil consumption varies almost in direct proportion to the petrol consumption. Rapid acceleration, frequent use of the intermediate gears, and high speeds on the road involve increases in the consumption of lubricating oil in something like the same ratio as petrol consumption, with, perhaps, a bias towards greater oil consumption.
Oil Consumption A big factor in oil consumption, however, is the age of the vehicle. In this connection, I would recommend operators who keep detailed figures for the day-to-day issue of oil to individual vehicles to note how the consumption steadily rises as the vehicles age. Frequently, comparatively new 6-Lonners do 1,000, 1,200 or even 1,500 m.p.g.; 300 to 500 m.p.g. is just as common in the same type and size of vehicle when the mileage exceeds 30,000. Moreover, the rate of oil consumption continues to increase until a rebore and engine overhaul have been effected. Many large operators take the figure for oil consumption as a guide in deciding when a rebore and overhaul become desirable.
Now we come to tyres. The wear on tyres is affected by the speed at which the vehicle is run, by the frequency with which it is overloaded, by the condition of the vehicle itself, especally as regards the alignment of the wheels, wear in stub-axles, king pins and wheel bearings. It is also governed by the care taken of the tyres. If a set costs £120 and the owner's average experience of tyre life is 24,000 miles per set, the cost per mile is 1.2d.— which is the same as that in the current issue of the Tables, but considerably less than it will be when the Tables are brought up to date. That the figure in the Tables is less than that which is experienced by the operator is probably because of the fact that he has disregarded all the factors mentioned above which have so great an influence on tyre life.
An an example of what overloading may do. I might mention that I have seen figures for the wear of tyres on 6-tonners which showed a life ranging from 8,000 to I.5,000 miles, It is no exaggeration to say that the figure for tyre
costs on a 6-tanner may be anything from Id. to 3d. per mile. The figure which appears in the Tables is merely the average of all the data accumulated over a good many years.
The next item in the Tables is maintenance, but as that has peculiar difficulties I propose to leave it till later and pass on to the next one, depreciation. This is an item which most readers Might imagine would be standard for a particular size of vehicle and not subject to variations between one operator and another. As a matter of fact, it is subject to variation to a greater extent than any other item.
Consider, there is first of all the class of vehicle itself and the type of body. A low-priced •vehicle must be depreciated over a much lower mileage than an expensive one. Moreover, whilst it is reasonable to allow a first-class chassis twice or even 'more than twice the :mileage that it would be safe to allot to one of the low-priced types, an expensive vehicle does. not 'cost twice as much as the cheaper, so that, normally, one could expect the depreciation figure for a high-quality vehicle to be less' than that for a low-priced one. So far as' bodywork is concerned, the reader need only compare the initial cos' of an expensive streamlined van, 'or, say, a tanker, with the price of a plain Platform lorry. 'The higher the first cost, so far as bodywork is concerned, the greater the amount which has to be debited to depreciation. Rearing in mind this and the other considerations mentioned. the i•eider will realize that the amount which one haulier must set down for sleoreciation differs considerably from that which another must allocate.
There are other minor points which have a bearing on this matter, for example, the residual value of the veliele when it is to be replaced. To day, the position is difficult because the prices obtainable for used vehicles are out ,of all proportion to what they are really worth or what they would fetch in a buyers', market.
Even in normal times difficulties arise.For example, it is notorious that those who buy used vehicles attach little value to the bodywork, unless by some chance they happen to have in mind a likely customer. Even then, they usually keep the information to themselves and do not make any allowance for it in the price offered to the seller. It is up to the haulier to use ." The Commercial Motor" figures as a method of checking his own, and so far as depreciation is concerned, the following is the method he should adopt.
Assume that he has paid E/320 for a vehicle, complete with all equipment, painted and lettered, and ready for the road. He must first deduct from that price the cost of a set of tyres, say, £120, leaving £700. He must then assume some figure for the residual value. Here, because of the factor to which I have just referred, he may be in a difficulty. My advice is to forget these abnormal conditions and to take approximately 10 per cent, of the £700. that is to say. £70, as being what he is likely to get four or five years from to-day. He will thus have left a net figure of £630.
Life of the Vehicle
Now, what mileage is to be allowed? I work on this basis, and, as the result of the examination of, perhaps. thousands of sets of figures, I have reached the conclusion that a low-priced vehicle should be assessed on the basis of a life of 100,000 miles and a high-priced Vehicle on 240,000 miles. A moderately priced vehicle is given a life according to its cost. In this case, I think 120,000 mites is a fair estimate.
If £630 be divided over 120.000 miles. the result is approximately I.26d. That is the appropriate figure for depreciation in respect of this particular vehicle.
A point arises here which needs emphasis. It concerns the deduction of the price of a set of tyres from the first cost of the vehicle. That that should be done before calculating depreciation is sometimes disputed, and there may in certain circumstances be justification for the view that it should not. Those circumstances do not arise in connection with the subject of the present article, namely, the actual operating costs of the vehicle.
Avoiding a Double Debit In the schedule of operating costs there is a heading set . apart for tyres, that is to say, tyres are costed separateiy and depreciated separately from the vehicle. Not to deduct them when calculating the amount to be debited for depre-. ciat ion of the vehicle would therefore be to include the cost of tyres twice. thus bringing about inaccuracy in the result. On the other hand, another possible error arises in this connection, 'inasmuch as hav.ing deducted' the cost of tyres from that of the vehicle, it is most essential that' the cost should jrnmediaseiy. be set' down under the. heading -of Ayres in the cost records and debited against that vehicle: If that be not done. then the figures for tyre .cost. will be
.inaccurate.to that extent.
I must now discuss standing charges. There is plenty of 7 room for variation in the standing charges—even that almost unalterable item, tax. First of all, considering this expenditure, there is the difference in total as between annual and quarterly payments. More important than this is the rEfference brought about by variations in the weight of the vehicle. A few pounds in weight may be sufficient to cause an increase of £5 or £10 per annum. It is, therefore, unwise for an operator to take even that figure from the Tables without checking it against his own actual expenditure.
The next item is wages. When compiling the Tables, I invariably take Grade 1 wages as a basis for calculation." This is plainly stated in the introduction so that there should be no justification for misunderstanding on that score. At. the same time, it is to be appreciated that the actual amounts paid in wages may differ first according to where the operator's headquarters are situated, in London, in a Grade 1 area or a Grade II area. Again, the wage paid may vary in the case of an operator in a Grade Ii area if his vehicles have periodically to operate in a Grade I area or in London.
Over and above that, the question of overtime arises, so that it can easily be appreciated that there is plenty of room to differentiate between the average figure of wages and that actually paid.
The next item is garage rent, and upon this I need not dwell, as it must be obvious that the rental involved may vary from 2s. 6d. per week to 15s., or even £1 a week. In the case of an operator having a fair number of vehicles and large and inexpensive premises, 2s. 6d. will cover it. In another case where he has perhaps only one vehicle and must garage it in the centre of London or some big city, the maximum figure will apply.
As regards insurance, I must first reiterate that the figures in the Tables relate to the insurance of vehicles operated by ancillary users. Rates to haulage contractors are doubled. Even within the ranks of hauliers, however, wide differences . are to be found among the premiums paid by one and those paid by others in the same apparent service.—S.T.R.