FAIR TREATMENT INv JNICIPAL CONTRACTING
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Solving the Problems of the Carrier THIS series of articles on the calculation of charges, basing that calculation on vehicle operating costs, is running to a greater length than I had originally intended. It must be said, however, that many matters with which I am dealing have arisen in the course of writing the articles_ They are, therefore,. 'topical and related to problems which, to-day, are troubling hauliers.
Typical of such problems is that relating to municipal haulage, in which special conditions apply. They operate for and against the haulier—against him so far as vehicle costs are concerned and for him as regards establishment expenses.
This matter has, indeed, in some quarters, readied the point of becoming a scandal. In two areas the Licensing Authorities have intervened, at least to the extent of recommending the municipal authorities concerned to look into the matter and discover for themselves the reasons for these obviously unprofitable charges.
Who Should Take The Blame ?
The blame for this state of affairs may be said, however, to be evenly divided between the two partieschiefly concerned, municipal authorities and hauliers. The former, following the procedure which, in most cases, is incumbent upon them, invite tenders and accept the lowest. Hauliers have, in a sense, accepted this challenge and have vied with one another in endeavouring to meet the wishes of the municipalities.
Another factor which often appears to be overlooked is that there is, in all municipal contracts, a clause insisting that the contractor shall pay his workmen fair wages, corresponding with those ruling throughout the district. It is common knowledge that this clause is more honoured in the breach than in the observance.
Presumably civic bodies find it difficult to reconcile their two conflicting duties—first, that they should serve what appear to be the best interests of the ratepayers, in getting work done at the lowest possible price, and, alternatively, in insisting that those they employ abide by the terms of tiacontract.
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It is probable that the question of wages is rarely brought to light, although I have found that when it is brought, in due and proper fashion, to the notice of municipal authorities, they are willing to deal with the. matter in a fair and reasonable way.
Moreover, there is always the difficulty of the unbusinesslike owner-driver, who pays no wages and to whom, therefore, this clause does not apply. If he be content to operate his lorry for a mere pittance, it is hardly the business of a municipality to argue otherwise The fact that the owner-driver has in mind the fear that if he does not work for a pittance he may have no work at all, and a lorry standing idle, is not immediately obvious to those with whom he is dealing. Nor is it apparent that the haulier is wrong in so regarding the matter.
The first thing to note about municipal haulage is that the costs of operation are disproportionate in relation to the mileage run. In the majority of provincial towns the radius of operation is only about three miles and, although the total weekly mileage may be in the neighbourhood of 200 or even 250, the running costs approach more nearly those experienced in the case of vehicles doing about 100 miles per week.
The reason is the fairly obvious one that there is so much standing about between jobs, and so much starting and stopping, that both petrol consumption and maintenance costs are greater than they might normally be, having in mind the total weekly mileage.
As an example of what I mean, I will cite some figures which I recently presented to the municipal authorities of a town in the Midlands. They. relate to the use of a 2-ton vehicle in municipal haulage.
The standing charges are, with two exceptions, the same as those which appear in The Commercial Motor Tables of Operating Costs. They are as follow : Licence, 12s.; wages, with allowance for Unemployment, National Health and Employer's Liability, also provision for a week's holiday with pay each year, 65s. per week; rent, 7s.; insurance, 13s.; interest, 4s. The total is £5 Is. Od. per week, which is equivalent to 2s. id. per hour of a 48-hour week.
The items which are different are those for wages and insurance. The wages quoted in the Tables are Grade 2. Those which apply in the majority of municipalities, certainly in practically all boroughs, are Grade 1. The insurance figures quoted in the Tables, as everyone knows by now, are those relating to ancillary users. Haulage contractors, in all but exceptional cases, have to pay at least double those rates.
The running costs per mile I have estimated as follow : Fuel, 1.60d.; lubricants, 0.09d.; tyres, 0.36d.; maintenance, 1.50d.; depreciation, 1.35d. : total, 4.90d. Readers who compare these figures with• those in the Tables will find several apparent discrepancies. The amounts quoted agree neither with those given in the Tables, under the heading of " 100 miles per week," nor with those for "200 miles per week." Moreover, in some items the difference is in one direction, in others in another.
Part of the divergence is due to the fact that the difference is shown principally as regards depreciation and maintenance. Depreciation is less, in these figures, than in the Tables, and that is because the initial outlay is less and because, whilst I am taking the figure of 100 miles per week as a basis for calculation of petrol consumption and maintenance, I cannot fairly do so where depreciation is concerned.
As regards maintenance, a van is more expensive to keep clean and to repaint and varnish, apart from the fact that most vans are engaged in such work as necessitates more attention being paid to appearance than is absolutely necessary in the case of municipal vehicles.
As regards petrol consumption, this is not quite so excessive, in the 'case Of municipal vehicles, as it is in respect of vans covering only about 100 miles per week, which means that they must be engaged on door-to-door collection and distribution work.
We have now arrived at the essential figures for time and mileage. These are figures of costs, let it be -noted, not charges. Assuming that the vehicle covers approximately 6 miles per hour, then the total cost of operation is 4s. 7d. Taking the simplest means for calculating charges, that is to say, adding 33i per cent. to the above, the total of 6s. 2d, per hour is reached.
Using the method recommended in the "Costs Record," that is to say, adding 50 per cent, to standing charges and 25 per cent, to the running costs, the amount is 6s. 3d. Using the correct method and assuming establishment costs to be 15s. per week and that 25 per cent. be a fair basis for estimating profits, as it should be, since municipal haulage is not an " allthe-year-round" job, the figure is again Os. 3d.
Relief From Establishment Costs.
But there is this to be said for municipal haulage work : hauliers engaged in it are relieved of some of their establishment costs. Moreover, the municipalities themselves actually take over some of those expenses. They issue instructions to drivers, deal faithfully with accounts, and so on. Actually, in the case of vehicles entirely set apart for municipal work, it is fair to assume that the establishment costs could be reduced to 5s. per week. If that be so and the profit of 25 per cent, be still assumed, the rate per hour becomes 5s. 10d.
In an actual example I justified, in the first case, the addition of 33+ per cent, for vehicle costs, which made the amount 6s. 2d. In doing so, I pointed out that vehicles on this class of work did not put in a full year. I then agreed that 25 per cent. would be fair, having in view the fact that the municipality does relieve a haulier of some of his expenses. That brought the figure down
to 5s. 9d. S.T.R.