COSTLY Minutes
Page 67
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How Improved Designs of Parcel Van Can Affect Costs by Speeding Up Work Planning for Profit
T[ME is always an important and expensive factor in commercial-vehicle costing and particularly so when related to the collection and delivery of parcels. in medium or long-distance work a fair estimation can usually be made of the majority of jobs for which a quotation is required, given reasonable terminal facilities. With no previous experience in parcels traffic, however, it would be almost impossible for an operator entering this field to formulate an estimated cost per package, varying according to mileage or mileage zones and weight.
This is because so much depends on the time taken to effect each delivery-usually manually-from the stationary vehicle to the premises of the consignee. In these circumstances it is often necessary for an operator to adopt existing schedules of rates applying in his area until he has sufficient cost data based on his own operational experience to make readjustments.
Whilst there is a wide range of parcel vans of varying carrying capacities, two types are particularly popular-the 3-tonners and 5-tonners. The 3-tonner has a capacity in the region of 500 cu. ft., and the 5-tonner, 700-800 cu. ft. Body size is determined largely by the time taken to effect delivery, rather than by the gross weight which the chassis can carry. Moreover, where traffic susceptible to damage is carried, the available space may become as important as the cubic dimensions of the body.
With the increasing difficulties-both physical and legal-of parking vehicles in city streets. manceuvrability becomes proportionately more important. Although not literally standing time, any effort made to obtain an alternative parking position because of the limited manoeuvrability of a van involves dead mileage for which no revenue is received. Similarly, good cab access could reduce the necessity of using the rear shutter or doors. When 100 or more collections or deliveries are involved in a day's work, this could have marked effect on the overall time taken to complete it.
This week I will examine the effect of improvements in design on the cost of operation of the vehicle. For this comparison, a 3-ton oil-engined chassis will be used in all three examples.
Costs for 500-cu.-ft. Van In the first instance it will be assumed to have a standard van body of around 500 cu. ft. and costing 11,400, with an unladen weight in the 21-21-ton category. The annual cost of the licence will be £32 10s., or 13s. per week, Wages based on R.H.(64) grade 1 for vehicles up to 5 tons will amount to E8 I9s. after allowance has been made for insurance contributions and holidays with pay. Rent and rates are assessed at 10s. 6d. A comprehensive insurance policy in a mediumrisk area for an A-licence operator Would cost approximately £77 a year or £1 10s. 10d. per week. Interest at 3 per cent. adds a further •16s. 9d., making the total standing cost for the week £12 10s. Id. Assuming a 44-hour week, this would amount to 5s. 81d. per hour.
Because of probable congested operating conditions, fuel consumption would be heavier than usual for this class of vehicle. Based on 18 m.p.g. at 3s. 1.0d. per gal.; fuel costs would be 2.56d. per mile. whilst lubricants would add a further 0.23d. With the cost of a set of tyres at around £120, tyre cost per mile would be 0.96d.. assuming a life of 30,000 miles. Maintenance is reckoned at 2.29d. per mile, having made some allowance for body repairs.
To ascertain the cost of depreciation, the price of a set of tyres is deducted from the initial cost of £1,400, leaving a balance of £1,280. It will be assumed that the vehicle operates 300 miles per week, or 15,000 miles a year, and that it is replaced after five years. If it is finally disposed of for 124 per cent, of the initial cost, depreciation cost per mile will amount to 3.54d. Total running costs would thus be 9,58d, per mile, or £11 19s. 6d. per 300-mile week.
Assuming similar circumstances in the second example, but with the difference that a further £100 was spent on the body with the object of speeding deliveries, some adjustment in the
10 items of operating costs would then be necessary. The unladen weight may, though not necessarily, be increased, but I will assume that it will remain the same.
The first three items of standing cost per week will, therefore, continue to read: licences, I3s.; wage, £8 19s4. and rent and rates, 10s. 6d. Insurance and interest would both be slightly higher at £1 I Is. 2d. and 18s., respectively, per week, because of the increased initial cost. .The total standing cost for these five items would thus be £12 Its. 8d., which is again approximately 5s. 81d. per hour.
for Profit
As regards running costs, it is assumed that the alterations to the body would not have any material effect on the first four items, which would remain as: Fuel, 2.56d, per mile: lubricants, 0.23d.; tyres, 0.96d.; and maintenance, 2.29d.. Depreciation, 'however, would now be based on the initial price of £1.500 and adopting the same procedure as before would give a cost per mile of 3.83d. Total running costs per mile would be 9.87d.. or £12 6s. 9d. per week, again for 300 miles.
As a third possibility, more extensive modifications to the vehicle are envisaged with the same object in mind, increasing the price to £1,600. On this occasion the cost of licences will be based on the next higher category-2;1-3 tons-entailing an annual licence duty of £35, or 14s. per week. Because of the higher initial price of the vehicle, insurance will now cost £1 12s. per week and interest 19s. 2d., giving a total standing cost of £12 14s. 8d., and a corresponding cost per hour of 5s. 94d.
I will again assume that the first four items of running costs remain the same, whilst depreciation is increased to 4.10d. per mile. Total running costs are now 10,14d. per mile, or £12 13s. 6d. per 300-mile week.
Saving 30 Minutes a Day
The number of packages which could be collected or delivered by the driver of such a vehicle each day would obviously vary -greatly, not only because of the average weight, but also because of the type of premises to which they were being delivered and the extent of documentation and possible handling of cash. If it is arbitrarily assumed that 100 packages per day were handled, at least 30 minutes per day might well be saved as a result of improvements designed
to facilitate the driver's work. s•
Assuming that with the £1,400 vehicle, 47 hours per week were necessary to complete the standard duties, the total cost of the week's operations would be: Standing costs, £13 7s. 2d. (44 hours plus 3 hours at 5s. 84d.) and running costs, 11 1 19s. 6d. (300 x 9.58d, per mile): total £25 6s. 8d. If half-an-hour a day could be saved by the use Of the £1,500 vehicle, the corresponding cost of operation would be: Standing costs, £12 I Is. 8d. (with no overtime), and running costs, £12 6s. 9d.; total, £24 18s. 5d.. showing a saving of 8s. 3d. per week as compared with the standard vehicle.
Even if the saving in time is still conservatively assumed to be only half-an-hour per day, with the vehicle costing £1,600, the total operating cost per week of £25 8s. 2d. is only slightly higher than that for the lowest priced vehicle. This figure is obtained by the addition of standing costs of £12 14s. 8d. and running costs of £12 13s. 6d. (300 x I0.14d. per mile).
In otherinstances it may well be that the assumed saving of half-an-hour per day would be exceeded.---S.B.