Quicker Turn-round LOWER COSTS
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BECAUSE he haulier naturally tends to look upon transport as a means . for moving goods from one point to another, other lactors may receive disproportionate attention. The. correct selection of the right vehicle for the job must receive careful consideration, both as regards its load capacity and operational efficiency, but terminal facilities and their effect on turn-round time can have a substantial influence on overall cost, particularly on short. leads.
. The extent to which terminal facilities are under the control of the transport operator will vary widely, particularly according to whether he is an ancillary user or haulier, But even if, as is often the case, the haulier has no control at either the loadmg or unloading point, he should acquaint himself with the real cost of terminal delays to enable him to quote profitable rates.
The larger haulier may well have his own transit shed as an integral part of the trunk service and is considering the adoption of mechanical handling for his own use. As labour costs increase, the advantages of such modern methods become greater.Moreover, in some instances .at least, their adoption may become necessary because of the diminishing supply of labour for work involving heavy manual effort. , Working Capacity Increasing costs in other directions may also make the .adoption of mechanical handling advisable, if not imperative. For instance, the initial and subsequent maintenance costs of buildings or space used as loading bays continue to follow the same upward trend as other costs. Moreover, local townplanning restrictions may prohibit expansion of warehouses or transit sheds. In that event the objective of increased throughput may well be achieved by increasing the working capacity of existing buildings and loading bays by the use of some form of mechanical handling.
When considering its introduction, and weighing the cost against possible advantages, the ancillary user in particular should bear in mind that because terminal delays add to overall transport costs, they will ultimately be reflected in the selling price of the goods. Moreover, it is unlikely that possible savings will be limited to the final delivery. Because transport is necessary on so many occasions from collection of the basic raw material to the final distribution to the customer, the effect and cost of such terminal delays are cumulative • and may well add Up to a surprising amount if all tbe facts are known.
The two basic elements of transport—time and mileage— have their counterparts in the division of commercial-vehicle operating costs into The two groups of standing and running costs.As detailed in "'The Commercial Motor' Tables of Operating Costs," standing .costs can be conveniently divided into five items—licences, wages, rent and rates, insurance and interest. It is because the cost of all these items has still to be met even if the vehicle is not turning. a wheel, that terminal delays can prove so -expensive.
To emphasize the effect of such delays on operating costs, I will give the items of .cost for two popular types of goods vehicle, alternatively with short or long turn-round times.
Annual Duty
Taking the first example of a 5-ton petrol-engined lorry costing £1,150, the unladen weight would be approximately 21-21. tons. The resulting annual duty of £30 would entail a weekly licence cost of 12s. Wages, including provision for holidays and insurance contributions, would. amount to £8 18s. 7d., whilst rent and rates would be assessed at 10s. Insurance would be reckoned at 12s. 1.0d. per week, whilst interest at 3 per cent, on the initial cost would add a further 13s. 10d., making a total standing cost of £11 7s. 3d. per week. Based on a 44-hour week, this would give a standing coSt per hour of 5s. 2d.
Assuming a consumption rate of 11 .m.p.g., fuel costs are estimated at 4.64d. per mile and lubricants at a further 0.21d. With a mileage life of 30,000, tyres would be reckoned at 1.34d., whilst maintenance would add 1.95d. Per mile. The fifth item of running costs—depreciation—would be calculated by dividing £900 (the balance of the initial cost after allowing for tyres and .residual value) by 120,000 as the estimated mileage life for this type of vehicle. The resulting depreciation cost per mile would therefore be 1.80d., making the total running cost 9.94d. per mile.
For a maximum-load eight-wheeled oiler, licences would cost £2 10s. per week and, because of the higher carrying capacity, wages would amount to £9 12s. 4d. Rent and rates will be arbitrarily upgraded to 15s. per week, whilst; largely.because of the increased cost, insurance would amount to £2 Is. 10d. Interest charges -Will also be up. at £3 is., making a total standing .cost per week of 118 Os. 2d., or-s: 2d. per -hour, again
assuming a 44-hour Week.. . -
With a consumption rate of. 9.tn.p.g., fuel will cost ,5-.67d, per mile and lubricants 0.27d. Because of both the increased
number and size of tyres, cost per mile of this item will be 3.85d., whilst maintenance is assessed at 2.47d. per mile.. Adopting the Same • method of calculation, depreciation will amount to 4.13d. per mile, giving a total running cost of 16.39d, per mile.
Assuming the smaller vehicle covered 500 miles per week, an average day's work could well consist of two return trips of 50 miles (four single trips of 25 miles) from factory to warehouse: In line with the division of operating costs into standing and running costs, estimated costs of the day's operations must similarly be divided. Because the vehicle is not engaged on long-distance work, we will reckon that the average running speed throughout the day is 20 m.p.h., involving a total travelling time of five hours.
Assuming in the first instance that the vehicle is loaded and unloaded by traditional methods, terminal time at each point could well be If hours, or six hours to complete two loadings and two unloadings. The total day's work would therefore, amount to the .legal, maximum of 11 hours.
As previously calculated, the standing cost per hour for the 5-tonner operating 500 miles per five-day week, is 5s. 2d. and the total standing cost for the day would be £2 16s. 10d. There must be added to this sum the mileage cost-I00 miles at 9.94d. a mile, or £4 2s. 10d. Total operating costs would, therefore, be £6 19s. 8d,
Terminal Periods
If more modern methods of loading and unloading were introduced, terminal time might be reduced to half an hour. If that were so, the cost of the day's operation would be 100 miles at 9.94d. per mile-£4 2s. 10d.-plus reduced standing costs. These would be based on the same travelling time of five hours plus four terminal periods of half an hour each, making a total of seven hours for the day at 5s. 2d. per hour. Standing costs would amount to £1 16s. 2d., with £5 19s. for the total day's operating costs.
Compared with the first example, there is a difference of £1 Os. 8d. on the day's working, and if we assume the vehicle is moving full loads in one direction only, the advantage will amount to 2s. id. per ton. •
For the eight-wheeler, a typical example could well be a long inter-City run, say,. London to Cardiff, with a mileage of 154, which at 22 m.p.h. would require a travelling time of seven hours for the single journey. Because of the larger capacity, loading or unloading would naturally be expected to take longer, but not necessarily in direct proportion.
Assuming three hours are spent at each terminal point, the total time involved on one out-and-return journey would be 14 hours travelling and six hours at the terminals. Because the standing cost per hour with the larger vehicle is 8s. 2d.. the total time of 20 hours would cost £8 3s. 4d., whilst the mileage of 308 at 16.39d. per mile costs £21 Os. 8d. Operating costs for the double journey, excluding any subsistence allowance and overhead costs, would, therefore, amount to £29 4s. Od.
Again assuming mechanical handling is employed at both terminals, a substantial reduction in turn-round time may well he achieved. Despite the higher capacity of the eight-wheeler, now that loading is not limited by muscular effort, the largest type of handling equipment could be employed. Any time lost in waiting for a position at the loading bay would remain the same as with the smaller vehicle. Therefore, despite the larger size of vehicle, the terminal time may again be reduced to half an hour.
Overall costs for the double journey would amount to 308 miles at 16,39d. a mile (£21 Os. 8d.), plus 15 hours at 8s. 2d. an hour (£6 2s. 6d.), giving a total of £27 3s. 2d. The difference in cost, according to whether manual or mechanical loading is employed, is £2 Os. 10d. If, on average, the 16-tonnes is 75 per cent, loaded outward and return, the total tonnage would be 24. The reduction in operating cost by mechanizing loading and unloading would be Is, 8d. per ton.
Throughout this comparison of alternative costs, depreciation has been based on mileage. This is because, on average, it is considered to give the best results over a wide range of both vehicles -and conditions of operation. If it is known beforehand in specific contracts that long standing time is likely, the operator should calculate depreciation on a time basis, or at least a'combination of time and mileage. If that had been done in this instance, the difference in favour of reduced terminal time would have been even greater.
Standing Costs
When calculating costs for the 5-tormer, the balance for depreciation was assumed to be £900. If, instead of depreciating the whole of this sum on a mileage basis, half was allocated to standing costs, this would have added approxis mately a further 10d. per hour to those costs, or 3s. 3d. per hour for the larger vehicle.
Also, as with many other aspects of commercial-vehicle operation, the human element has to be copsidered as well as facts and figures. When this also is taken into, account, the benefit of installing mechanical-handling equipment may often be even greater than shown here.
Since labour has become increasingly expensive, it has not been uncommon, particularly since the war, for trade and industry to reduce staff employed on loading banks, or to combine loading and unloading with other work, Where traditional methods of loading and unloading are used, time might well be lost before a loading gang was organized. Modern methods of handling would often eliminate that delay.
Whilst any reduction in either labour or total standing costs is always acceptable to the operator, the maximum benefit of the quicker turn-round resulting from modern loading methods will be found in increased vehicle availability. On short leads, extra trips and tonnage may be possible, whilst on longdistance work the cost of subsistence allowances may be reduced because a driver is able to return home legally. Such benefits must be peculiar to each set of circumstances, but it may well be that the increased revenue would exceed the benefit of the Ravines in other directions. S.B.