Milk Haulage Rates for HmoawrkeOtiffin
Page 31
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Standard Formula, Arrive at
the Single-vehicle Operator a"Take-it-or-leave-it"Figure NOT having read the article, " An Assessment of Milk Haulage Costs," by "S.T.R.," in" The Commercial Motor," dated April 21, I was not well equipped to help my neighbour when he called at my cottage with the -news that " the Milk Board chaps are coming in half-an-hour to cut down my money, and I was wondering if you could keep a tab on the figures for me? "
Let it be admitted at once that, apart from providing some moral support and a little simple arithmetic, I was not able to help him, to any extent. On the other hand, I was able to discover' something about the official way of, fixing the rate-pergallon, add this may be of interest,
• possibly even of use, to others.
When the officials arrived, their first request was for certain information. The operator, in this case, runs a single vehicle which he drives and maintains himself. Its make, unladen weight, age and insurance premium were soon declared. Then came the daily mileage (67), hours worked (91) and the daily load (920 gallons in two journeys).
From this last figure, an average daily load was estimated, allowing for seasonal fluctuations. Then -followed a quiet spell for calculations. As the haulier's wife remarked later, there was one to do the figuring and another to do the talking.
The Best Offer „Then the older man who, admittedly, did look as though his favourite beverage was vinegar, announced -that the best he could offer was .85d. per gallon. When I asked him how the figure was arrived at, the answer was, " Well, you need not accept it df you don't want to."
Acknowledging a perfect understanding of the take-or-leave-it situation, I still suggested that the Milk Marketing Board must have some method of arriving at that particular figure. Here, the younger official chipped in With something like the *sired information. The method, he said, had been evolved by representatives of various organizations, which he named, apparently covering the interests of hauliers, milk producers and milk retailers.
This method he then explained. As fixed charges you take licence and insurance costs, plus wages at £5 per week. In this particular case, the total came to £312 10s.
Then, for this 1937 2-tonner, you take 44d. per mile for all running costs: and lid. a mile for management. On 67 miles per day for 365 days a year (there are no holidays in milk haulage, of course), that works out at £611 7s. 6d., making a grand total of £923 17s. 6d.
Now, you take the estimated average daily load of 715 gallons for 365 days and use that figure to divide the grand total, whereupon you arrive at a figure of .85d. per gallon.
Here my ,friend commented that, even on the Id. per gallon which he has been getting, he had not noticed any " accumulation of fat." So he was told that, as he was carrying less milk before the recent reorganization, he will actually receive more money in future than In the past. His reply was that he was then working only half a day at milk haulage, so that he could and did earn other money' in the spare time which he' would no longer have This terminated that particular phase of the discussion, but it made no difference to that .85d.
Converting the Rate-per-gallon Having since read the article by " S.T.R.," I have converted my friend's rate-per-gallon into receiptsper-mile, using the facts as previously given. The figure arrived at is almost exactly 9d. per mile on an annual mileage of just over 4,000. For that same total " S.T.R.'s " 24-tormer should get Is. per mile. Is a 2-tonner 3d. a mile cheaper to run?
One or two noteworthy points emerged, during the subsequent conversation. For example, we were told that the calculations allow for the number of vehicles in the fleet, so that the, presumably, higher costs of the single-vehicle owner are taken into account. Whether it be the 44d. or the lid. thatis reduced for the large operator, was not clear and, anyway, it does not matter much.
Then we learnt that payment is on gallons accepted, not necessarily on gallons actually carried. If, for example, a churn of milk is sour and is returned to the producer, the Milk Marketing Board pays the haulier ndthing for its carriage either way. He must claim his dues for that from the producer.
Again, if through accident or breakdown, a load of milk deteriorates so that it becomes unacceptable, the haulier is responsible for its value. This is a risk against which he should insure.
An incidental point emerged from this interview. Certainly, it is not the fault of the M.M.B., but it is, nevertheless, true that many people get into something of a flat spin at the sight of decimals. Even •a famous statesman once had something to say about " these damned dots." So it is not surprising that my friend and his wife were a little worried at the prospect of 'working out their monthly returns. Multiplying, say, 292,312 gallons by .85 is not the sort of thing they will enjoy. Fortunately, 'in this particular case, there is a fairly simple way which I showed them. In case it will help others, here it is. First, write down the number of gallons. Then subtract one-tenth of that number, this being just the same set of figures with the last one left out. Then subtract a half of that same tenth:— 292,312 29,231 263,081 14,615 248,466 The answer is in pence, of course, and, in the particular example chosen, it happens to be just about id. too much. The same idea can be used with many other figures instead of .85, but it is not quite so easy with all rates., Is there any hope of a set of tables being compiled to meet this difficulty?
Finally, there is a thought which occurred to this milk haulier. If his meagre rate of payment includes even a little extra because he is a small man, what will happen when transport conditions are easier after the war? Will the M.M.B. still shoulder the extra cost per gallon? Or will the single-vehicle haulier have another Irishman's rise?'
. W.
Comments 13f ":S.T.R."
We submitted the above article to our costs expert, " S.T.R.," who makes the following comments:—
It is, Unfortunately, not possible to make any direct comparison between the figures quoted by " W." and those given in my'own article, for the reason that detail is absent from the former.
Qn the face of it, however, the M.M.B. officials seem to have departed very considerably from the standard agreed by the "method . . . evolved . by representatives of various organizations." That method, I have every reason to le#lieve, was the one set Outt in detail in my .article. In that, the total of fixed charges for a 5-tonner (not a 24-tonrier as " W." assumes) was £537 10s. per annum. It is notvery likely that the corresponding figures for a 2-tonner, assessed by the same method, would be as low as £312 10s. (£5 per week for wages leaves only £52 10s. for all other expenditure, which is, obviously,. insufficient).
Some of the difference is, apparently, made up by the unusual figure of lid. per mile for management, equivalent, approximately, to another £150 per annum. Given that, the totals for cost are not a long way out.
The crux of the problem lies in the assessment of a fair and reasonable profit. The ideas of the M.M.B. on that are, as I pointed out in the article, extremely mean and the profit available in the rates paid by the Board is hopelessly inadequate. IDmy view Id. per gallon is probably a fair rate.