RATES ASSESSMENT FOR ONG-DISTANCE HAULAGE
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ACTUALLY, in dealing with long-distance haulage, it is rarely possible to calculate rates so easily as was done in the previous article. There is always, in connection with any kind of traffic, the liability to loss of time because a journey, whilst it does not run to a full day, may take so much time that what is left can be put to little use.
It means, in effect, that the standing charge for the 8 or 8/ hours per day must be paid for in 7 or 7i hours' work, otherwise the operator is facing a loss. Whenever that happens the idea of charging 8s. per hour for the time actually occupied in The journey, plus 8d. per mile, becomes impracticable. The cost of a full clay must be debited against the journey, otherwise the margin of profit is appreciably diminished.
This liability to loss of time is by no means lessened when, as is so frequently the case in long-distance traffic, the journey extends into a second day. Little consideration, therefore, is necessary to show that the most reliable method of assessing costs and rates is to take the work of a week as a basis.
It is not, however, sufficient to take the bare figures for the normal expenditure over a week as a basis for assessing the rate. Provision must be made for yet another source of loss, due to the fact that it is unusual for any vehicle to go a whole year without being laid off occasionally for periods which may be long or short. Even if a year does go by without such misfortune, it is certain that subsequent years will adjust the balance. .
The Average Period Worked in a Year by a Vehicle Experience has shown that the average period c f work done by a vehicle during a year is from 260 to 270 days. If 51 days be taken to represent a week, then the average is 48 weeks per annum. As the weekly expenditure provided for in the previous calculations has to be met for 52 weeks in a year, it follows that the figure for cost per week, which must be used in the calculation of rates, must be increased in the proportion of 52 to 48.
In the calculations already given, the net figure of £15 15s. 6d. per week was taken as the total of fixed charges. If that be increased in the above proportion it becomes £17 per week. The figure of 6d. per mile for running costs is not affected.
It is now convenient to revise the calculations for the 7-8-tonner on this new basis, taking a week's work instead of a journey as the unit. In doing so the following figures accrue:—Over the 60-mile lead, which we showed would take nine hours, five journeys could comfortably be completed in a week, at a cost to the operator of £17 1-r fixed charges, plus 600 miles at 6c1., which is £15. The total is £32. Adding profit at approximately 20 per cent., that is, say. £6 10s., the revenue necessary is seen to be £38 10s. For that 371tons are carried, so that the rate must be approximately £1 Os. 6d. per ton.
When a return load is picked up, the journey time is 12 hours and only four complete round trips can be run per week. The total cost is, of course, reduced, because the vehicle runs 480 miles in that time instead of 600 miles. On the other hand the vehicle and its driver are away from their headquarters four times per week, which involves a total increase of approximately £2. The total, reached by the methods described above, is £31 per week, and adding £6 lOs. for profit, as before, we get £37 10s. per week. The nominal tonnage carried is 60, so that the net eate would be 12s. 6d. per ton. This rate must be increased by 331 per cent., in order to provide against the probability that return loads will not always be available, so that we get a figure of 16s. 8d. per ton. Proceeding in this way and dealing, as in the previous article, with traffic over a 96-miles route—that is 192 miles —we arrive at the figures set out in Table I.
It might be urged that, in some cases, as for example the 96-mile route with a return load, it would be possible to complete four round journeys per week instead of three. The total time occupied would be 60 hours, which might be considered to be within the capabilities of vehicle and driver, at least for a time and during periods like the present when it is important to move as much tonnage as possible.
Deciding How a Rate Should be Calculated The question arises: how should a rate be calculated, in view of the fact that it is possible to complete four journeys per week? Should the rate be modified in accordance with these new conditions, or should it be kept as already assessed and the operator be given the benefit of whatever increased profit may result from the more strenuous use of his vehicle? In order to arrive at some decision on this point it is necessary to assess the rate on the understanding that four journeys are completed in a week of 60 hours.
The cost is increased, first because of the extra mileage, 192 miles at 6d. per mile, which is £4 16s. In addition, the driver must he, paid overtime and the net amount of that is £1 3s. 8c1. Then there is the extra cost of yet another night away from home—a further 10s. The total of these items is £6 9s. 8d. which, added to the £32 Ps., the cost for the three journeys gives approximately £39 8s. Adding profit on the basis of 20 per cent, we get a round figure of £48 as the minimum weekly revenue. For that 60 tons has been carried, so that the net rate is 165. per ton and the actual rate, reached by adding 331 per cent. to the 165. is 21 Is. 4d, per ton, as against 21 4s. which is the rate set down in the Table and calculated on the basis of a normal week of 48 hours.
If it be decided that the rate must be fixed on the basis of 20 per cent. profit, then the 21 Is. 4d. per ton will 'stand and the operator's profit has been increased by £2 per week, Athkh seems not unreasonable.
If it be agreed that the rate must be assessed on the basis of a standard week, and must stay at £1 4s. per ton, then the revenue for the week will be 254 (do not overlook the fact that the net revenue is only three-fourths of the gross revehue, because of the provision for t'.e
absence of return loads). In those circumstances the operator will, for the weeks in which he does complete the lour round journeys, earn a net profit slightly in excess of 214 per week, which is equivalent to rather more than 30 per cent, on his expenditure.
In' trying to decide this question, it should be appreciated that to expect a driver to work 60 hours per week regularly, and to accept that as normal, is something which is undoubtedly unreasonable.
Therefore, it seems to me that the only possible way of assessing a rate which is to be made statutory is to take the normal week's working as a basis.
The next thing to do is to compare these rates with .those which could be justified in respect of larger unit loads, say 12 to 15 tons carried in the appropriate type of vehicle which, for the purposes of this discussion, may be assumed to be oil-engined. The first thing to do is to agree upon figures for operating costs and establishment charges.
For the 12-tonner the running-costs to-day, in pence per mile, are approximately as follow:—Fuel, 1.90d.; oil, 0.10d.; maintenance, 1.35d.; tyres, 1.40d.; depreciation (reckoning on 24,000 miles per annum as the average), 2.86d. The total is 7.63d. per mile, wbicb may quite reasonably be taken as 7/d. per mile. The charge per mile ran on that account must be not less than 9irl.
The fixed costs per week will be tax, £1 16s.; wages, including insurances, etc., gli; rent, 95.; insurance, £2 4s.; interest, 21 4s.; establishment charges, 27 10s. The total is 224 3s. per week, which is, as near as makes no matter, 10s. per hour. The charge per hour should not be less than 12s. 61. and demurrage must not be less than 165. per hour.
For the 15-tanner the figures are as follow:—Running costs in pence per mile—fuel, 2,22d.; oil, 0.10d.; maintenance, 1.50d.; tyres, 1.70d.; depreciation, 3,46d.; total, 8.98d., which is practically 9d. per mite. The charge per mile should he llid.
The fixed expenses per week are: tax, £2 4s.; wages, £11; rent, lie.; insurance, £2 16s.; interest, £1 8s.; establishment costs, £9 8s.; total, 227 7s. That is lie. 6d. per hour cost. The charge per hour should be not less than 14s. and for demurrage not less than g I per hour.
The rates which should be charged over various lead mileages will be discussed later. S. F.R.