Has the "Ton-mile" Any Use?
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Customers May Ask a Haulier for a "Ton-mile" Quotation, but Neither Might Even Know What is Meant : Instances Given of How Prices Can Best be Assessed and when this Factor Could Well be Applied
HE term " ton-mile " is cropping up again in my correspondence. I am being asked what a haulier should do when, as seems lo be happening quite • frequently, his prospective customer wants a quotation per ton-mile. A brief consideration of the data provided usually shows that a quotation on this basis is impracticable, and neither customer nor the haulier know the meaning of the term.
In any case, the reply to an inquiry would be too much to include in a letter and I find myself compelled to deal with it in these articles, This is the sort of inquiry I am receiving. "_How should I set about ascertaining the cost per ton-mile of operating a given type of lorry?" Or again: "What should I charge for the carriage of goods on a lorry • of stated capacity, the quotation to be per ton-mile?"
On reading such a letter, it immediately occurs to me that it is not the haulier who is making the mistake of trying to quote a price per ton-mile. He would not do that off his own bat, for the simple reason that he has never before heard the term and has certainly never made use of it It is the prospective customer who has brought the term into the discussion and it is equally certain that the customer has no more knowledge of it than the haulier. He has heard of it somewhere, or he has read about it and is using it merely to impress the haulier and, so far as that goes, he has been fairly successful. He has at least scared the haulier into writing to me about it.
Rare Request
should think that a request from a customer for a quotation based directly on ton-mileage must be rare: rarer still is the ton-mile applicable to the conditions of the contract of haulage which is the subject of the quotation. Usually, when I get a letter of inquiry I find that the request his been put in error, most likely because the man who asks for the quotation is himself unaware of the real meaning of • the term or of its proper application.
Haulage contracts are usually quite simple. They refer to the use of a lorry or a van for a given number of miles or the carriage of so many tons for quoted distances, Given a knowledge of the running costs of the vehicle per mile, ,s36 the standing charges, overheads and the mileage to be covered per week, the calculation of the total cost of carrying out the terms of the contract is a matter of simple arithmetic. Add to that figure the amount of the profit which is required, and the price to be charged finds itself automatically. The term ton-mile does not appear.
Let me, before I go on to explain what is really meant by the term, take a few examples of haulage work with which I have dealt from. time to time. I can then show just how little we need the term andhow independent we are of it. The first to come to hand is from a reader who owns a 3-tonner, with which he is thinking of running a daily service between two important towns in the Midlands. His intention is to start an express service and he wants to arrive at the proper amounts to charge.
E29 Per Week
My answer to him was that as his mileage was likely to be 400 per week, on the basis of one trip each way per day, the total cost of operating the vehicle would approximate to £22. The overheads would amount to about £2 per week, mainly money spent in advertising and paying commissions to shop-keepers and others who would be willing, for a consideration, to act as his agents. I assumed that he would like to earn at least £5 per week profit so that his revenue must be £22 plus £2 plus £5, making a total amount of £29 per week.
To earn that sum, he runs 12 journeys per week (six each way) so that the income per journey must average at least £2 8s. 4d. The rest of that reply dealt with the method of assessing charges for assorted parcels and does not concern us at the moment. The point I am making just now is that the item " ton-miIe " does not appear in the calculations at all, and none of this haulier's customers would be interested in a price per ton-mile.
Another inquiry—all these are taken at random from my files—is from a man who is being offered a contract to bring paper from a place some 20 miles outside London into Fleet Street. He is going to carry full loads of 6 tons at a time and his quotation must be per ton of paper carried the full distance. Here, the method of arriving at a proper price is to ascertain the total cost of operating the 6-ton lorry out and home, to add a proportionate profit and thus obtain a figure for the charge. Divide by six, and the answer is the price per ton. Again, the entire absence of any need for reference to the ton-mile is notable.
The next inquiry is from a company desiring to start on a contract for the haulage of cylinders of compressed gas. The daily load is anything up to 20 tons. Clearly, in this case, full loads are available for the vehicle both out and home and this is the easiest of all such calculations. Again, there is no need to consider ton-mileage in connection with this instance.
Another letter in the same batch is from a haulier who is discussing prices generally. This communication is of especial interest in that it is from a concern the directors of which have a wide knowledge and plenty of experience of all kinds of traffic. It is only to be expected, therefore, as would be agreed after perusing the letter of inquiry, that if there were any need to consider the ton-mile there would be some reference to it.
The writer is pointing out to me that prices in his district compare unfavourably with rates that I have been recommending. Here it is a case of carrying road-making materials for specified distances. In all cases the quotation is a price per ton over the distance named. For example, on contract concerns the cartage of road metal over a distance of 25 miles. The price quoted was 13s. per ton. That is the usual method of quoting for such traffics: a price is asked and given per ton over a stated lead in miles. There is clearly no need to consider the cost of transport per ton-mile.
Within Limit -then there is another kind of work, referred to in the letter of inquiry as " middle-distance" work. This is from a haulier still in business within the 25-mile limit but who is definitely going to purchase one or more of British Road Services vehicles and is making his arrangements well ahead of time. He has for some time been carrying within the permitted distance. The same customer is desirous of handing over to him the " middle-distance " work, which is the term they use in connection with journeys of 80-100 miles lead. They make no reference to ten-miles: there is no need to do so.
Another popular method of contracting is to offer the use of the lorry, complete with driver and all essentials, including maintenance of the vehicle and all supplies, at a quoted figure per month or per annum. There is clearly no need to consider the cost per ton-mile in such eases.
Then there is what is commonly referred to as council work. A typical inquiry of this kind involves the use of a 4-ton lorry on the haulage of miscellaneous materials for the council. Here, again, the quotation would necessarily be per day or per hour or per week. There is no occasion to use the term ton-mile in such cases.
Charging Difficulty A problem which presents some difficulty as far as rates assessments are concerned is that type of which the following is an example. I will quote the letter of inquiry: "We have a job offered to us, the cartage of Tarmac in 2-ton and 4-ton tipping wagons. We are asked to quote on tonnage, from 1-10 miles radius. The loading will be by chute."
The inquiry came to me because the writer wanted to know how to quote for the work. Also, of course, he wanted to know what his price should be. Even, however, in a difficulty such as this, with wide variations in the lead tnileage, and involving the use of lorries of different size whilst the rate must be applicable to both, the customer naturally enough refuses to be presented with the problem of calculating what he must pay for loads carried on the 2-former and what he should pay for loads on the 4-tormer. There was certainly no indication that a price per ton-mile would solve any part of this problem. The customer wants a price per ton.
Now, curiously enough, if there ever were an occasion for reference to the ton-mile, this is it. Neither my correspondent nor his customer were given the option of using that peculiar unit for the simple reason, as I ant sure, that neither of them had ever heard of it. I will, however, return to this particular problem, with the idea of demonstrating what should be done to fit the ton-mile into it, and see what are the advantages of that method of assessment.
The next inquiry on my files is one in which the ton-mile figures It is one, too, which illustrates my contention that the inquirer who uses the term does not, as a rule, understand it. He tells me in his letter that he has just purchased a couple of used 1-tonners for which he has paid £250 each. The drivers are paid £6 10s. per week, that figure including provision for holidays with pay and the usual insurance premiums. He uses a gallon of petrol every 15 mites and a gallon of oil every week of 250 miles, (It looks as if a rebore is pending.) 1-fe wants what he calls a " basic rate" for charges assessed per day and per ton-mile. He does mention that his average load will be 25 cwt.—information I elicited upon further communication.
Bask Rate i replied telling him, first of all,-that his basic rate would have to be £25 per week, reckoning on 250 miles per week, and that the total operating cost of the lorry would be Is. 3d per mile or £15 12s. 6d. per week. If he received £25 per week he would have £9 7s. 6d. gross profit, that is to say, £9 7s. 6d. per week for his profit and establishment charges together.
I told him that I could not give him any figures for the cost or charge per ton-mile unless I knew more accurately what his actual loads were, how they Varied from day to day, or even from mile to mile, also for what portion of the time the vehicle ran empty.
For our own satisfaction, however, I propose to devote a little time to discussing the matter, to see if, after all, there is any point in trying to give this inquirer the information needed to facilitate dealing with the ton-mile for quoting rates to his customers.
Gross Weight Moved First of all, what does the term really mean? A ton-mile is a ton carried one mile. Two ton-miles may mean 2 tons carried one mile or 1 ton carried 2 miles. The ton-mileage of any transport operation is the product of the distance run in miles multiplied by the load carried, expressed in tons. Thus a 6-tonner, carrying its full load of 6 tons for 60 miles, has completed 360 ton-miles. That is best described as 360 payload ton-miles. I must mention that in theory and according to the strict interpretation of the term, we should take the weight carried plus the weight of the vehicle itself. Suppose for the sake of argument that this 6-tonner we are discussing weighs 3 tons unladen and that there is a driver and mate on board, the total moving weight may be 91 tons, 6 tons for the payload, 3 tons for the unladen weight of the vehicle and ton for the weight of the two men.
Suppose now that the . vehicle carries this load for 40 miles, then the gross ton-mileage is 370. That figure is arrived at by multiplying the weight of the vehicle, its load and the men, 9/ tons, by the distance the vehicle has travelled.
I have stressed this matter because 1 wish to be Sure that the reader fully understands that whilst the actual tonmileage is as stated above, namely 370 ton-miles, that is rarely the figure with which the operator of the vehicle is concerned. He is only interested in the payload ton-mileage, which is the 6 tons weight of the load the vehicle is carrying multiplied by the 40 miles the vehicle is run, a total of 240 ton-miles.
That is an example of the meaning of the term and instances of the two ways in which it may be applied. In a subsequent article I shall show how difficult the calculation can be and, arising out of that, how seldom the term can serve any useful purpose.