Check Your Operating Costs
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E figures given in ' 'The Commercial Motor 'Tables of Operating Costs " are averages based on statistics
collected and analyzed during the period between one issue of the Tables and the next. They are not put forward in any dogmatic "fashion as indicating what the costs may be in any particular instance or example-of usF.
The fact that they are averages -means that actual costs rnay be higher or lower than the published figures. Theyserve their purpose best when they are used as a guide, a standard for purposes of comparison.
There are many examples of use which from their very 'nature should suggest to the user that his costs may reasonably he higher than those in the Tables. Equally, there are conditions of use, favourable to the vehicle, in connection with which the costs of operation may be lower than those in the Tables, i.e„ lower than average.
Handling Counts
Given equivalent conditions, however, there seems to be no obvious reason why the cost of operation should not be the same for all machines of the same size and type. The fact that it is not provides food for thought. Generally the
personal element is adduced as the principal cause. . . Nothing could be more true: the way a. vehicle is driven can be an important factor in determining whether the cost of operation shall be higher or lower than average.• A factor of similar importance is the Way in which the vehicle is maintained. To put it briefly, it is•a.fact that, other things being equal, it is the way the vehicle is handled which determines whether its operating costs shall be above or below the average.
The answer to the question: "1-low can costs be kept to a minimum?" can be given in two words—by care. It is helpful to amplify, .the meaning of that term by indicating how it should be interpreted in respect of its application to the various items of cost, so that each may have its fair share of attention and, more particularly. perhaps, to ensure that none may be missed.
The most important thing is to start right, and second to that comes the need to discriminate between the various items selecting those which, upon consideration, seem to offer most prospects of success. As a preliminary, it is advisable to appreciate the relative importance of each of them. Most users think of cost in terms of fuel and lubricating oil.
Many go no further, but of those who do, the majority merely adds tyres and is content with those three, as against the 11 items which appear so regularly.in the Tables which have all to he met, sooner or later, in the life if every commercial vehicle.
Fuel and tyre costs are undoubtedly important hems in the cost of operation. Their relative importance, however, does vary considerably in accordance with the use which is made of the vehicle. Fig. 1 is a diagram designed to show the relative importance of five items of operating costs. In assessing the cost figures 1 have taken a 7-ton, petrol-engined, sided lorry, and art oil-engined vehicle of the same capacity.
As a preliminary to discussing the diagram and explaining how it can be used to the end in view, I propose to set out 1336
in detail the probable amoUnts. of those five running costs. Taking the petrol-engined vehicle first, 1 am going to assume that its prime cost, when painted and lettered and ready for the rOad, to be £.1,400. It is equipped with 9.00-20
tyres; costing £175 per set of six. .
Following the usual procedure, let us first work out what should be allowed on account of depreciation. From the initial investment' of £1,400 take away the cost of tyres, £175, leaving £1,225. From that we deduct the allowance for the residual value—the amOunt the operator expects to get-for it when he disposes of it—which I take to be £125. That leaves me with £1,100 as the net figure from which to
calculate the allowance for depreciation. .
If I aSsume, as I can nowadays, that the vehicle covers 240,000 miles before its sale becomes a Measure of economy, I get I.10d. per mile as the figure for depreciation.
Taking the running costs, I have first of all, petrol. My recent records justify me in allowing for 12 m:p.g., and if I .take 4s: per gallon as an average figure, then the cost of petrol per mile is seen to he 4.00d.
Running Coss-9.1d. a Mile Lubricants can be taken to average 0.25d. per mile. The cost of a set of tyres has been stated to be £175. Allowing 24.000 miles per set makes the tyre cost per mile I.75d. For maintenance I propose to take the figures from the Tables plus a small percentage to cover increases in cost of materials and labour which have taken place since the current issue of those Tables was compiled. That makes the cost of maintenance. to be 2.00d. per mile. The total is. 9.10d. per mile.
Now for the corresponding figures for the oiler. The first cost.I take as £1,850, that being for a sided lorry. Deduct tyres, as before, £175, and. £175 for the residual value, leaving £1,500. At 240,000 miles that is equivalent to 1.50d. per mile.
It should be noted that, on this occasion, I am ignoring the factor of obsolescence as not having a bearing on this particular aspect of running costs.
Oil fuel consumption can be taken to he at the rate of 20 m.p.g. and, at 4s. per gallon, that is equivalent to 2.40d. per mile. For lubricating oil I take the same figure as the petrol-engined vehicle, 0.25d. per mile. The tyre cost is likely to he the same for the oiler as for the petrolengined vehicle--1.75d. per mile. Maintenance can be taken as being 10 per cent, less for the oiler, that is, 1.80d. per mile as against 2.00d. The total of running costs is thus 7.70d.
Fig. 1 is a. diagram showing the relative importance of the five items of Miming costs; its value lies in the fact that it indicates,: pictorially, how the items compare one with another and that it shows where there is the most room for reduction.
On the face of it, .expenditure on fuel appears to offer most scope, being 44 per cent. of.the total in the case of the pctrol7engined job and 31 per cent. in the case of the oiler.
Readers, might easily be led astray in this matter; they rnay be tempted to fiddle with the carburetter in an endeavour to reduce the petrol consumption, or with the fuel pump and injectors when the vehicle is an oiler. That would be a mistake. The line to follow is the indirect one.
The first thing to do is to ensure the co-operation of the driver. Counsel him to drive steadily, not necessarily slowly, hut with due regard to the fact that rapid acceleration is expensive not only in fuel but in tyre wear. Then turn attention to maintenance: spend a little more on that and save still more on fuel, Tyre Costs Halved
Tyre cost can be materially affected by care. 1 have known cases where tyre costs have been reduced by one-half as the result of attention to tyre pressures and the removal of flints and 'other damagiof agents.
Do not attempt to reduce the expenditure on lubricants: it is small enough anyway, and I have found by experience that to change the oil in the crankcase twice as,often as the vehicle manufacturer recommends is an economy.
It should be borne in mind, too, that the care of tyres helps to reduce fuel costs. Tyres which are always properly inflated may be said, as a general rule, to absorb less power, and therefore to use less fuel, than tyres which are underinflated. Faulty alignment of wheels and axles, an important . factor in the care of tyres, also conduces t9 increased fuel
consumption and heavier maintenance costs. , The cost of maintenance cant be redueed, first by good Organization, so that the minor operations are performed whenthe vehicle
• and driver would otherwise be idle, and secondly by applying the Moral implicit in the old saying that " a stitch in time saves nine." rEncoutage cleanliness of chassis as well as of bodywork and the same auto
niati recognition of the need for occasional adjust. ment will occur. ..
Figs. 2 and 3 are included to pin-point another aspect of economy. They show how the increase in weekly mileage affects the total cost per mile and the relative importance of the several items. The actual figures for the standing charges are as follows: Taking wages first, am going to surprise quite a number of operators, especially those who, when estimating costs, are content to debit the • vehicle with the net amount set down in R.H.(54), as well as those who arc inclined to think that the weekly amount paid to the driver is all that will have to be paid.
Hidden Wage Costs Take the case of the driver of this 7-tonner. The basic wage in a grade 1' area is £7 5s. per week. To that must be added provision for holidays with pay. There are three weeks to be provided for:—a fortnight's annual holiday and six other national holidays. Instead of £7 5s. per week for, 52 weeks, provision must be made for an additional three weeks in a year, bringing the average weekly wage up to £7 19s. 6d. To that must be added 6s. per week for national insurance and Is. 6d. for premiums under the Workmen's Compensation Act. The real amount of provision for wages is thus £8 7s. per Week.
The other standing charges are: Tax, 17s. per week; levy, 4s. 7d.; garage rent,, 10s.; insurance 17s.; interest on capital outlay (a) for the oiler, 22s., and (h) for the petrol-engine vehicle, 17s. The totals are: (a) for the oiler, £11 17s. 7d.;
(b) for petrol, £11 12s: 7d. .
I make an arbitrary allowance of £2 10s: per week for establishment costs, bringing fhe totalsup id £14 7s. 7d.
and £14 2s. 7d., respectively: i, ..
In the diagrams I have dealt with only the Petrol-engined vehicle, as being sufficient to iliUStrate. the vast difference that mileage per week makei te. the tenal co`st.—S.T.R.
ilkS,72.R., is willing to ..deal with inquiries by post. All ; relevant information should be given to reduce unnecessary correspondence and to enable a prOOer answer to he supplied; and a stamped, 'addressed envelope • should be enclosed
• with . theinquiry.