Solving the Problems of the Carrier
Page 22
Page 23
If you've noticed an error in this article please click here to report it so we can fix it.
Contract A Licences for Haulage
Some Figures for Costs for Four Different Sizes of Vehicle. Sound Advice on How to Avoid Some of the
Pitfalls with which. Contractors May Be Faced As "gulai readers will know, I have just finished a short series of . articles dealing with the contract .hire of coaches. It might seem but a short step from that to Contract A licences for haulage, but as a matter of fact the difference is very great.
Contract carriages are. hired for the trip, but it is a condition of a Contract A licence for haulage that the contract must he for not less than a year. It follows, therefore, that the operator who is considering entering into such a contract must not only take care that his figures for costs and charges are reasonably correct, but that he has made provision against being asked to do things with his vehicles which are outside the contract, and for which there has heen no provision in the estimate for costs and charges.
The particular problem of Contract A haulage with which I am about to deal
was recently put to me in Newcastle, Add 15 per cent. .,
and I was asked to let a haulier friend in that district have figures; those which I sent him are similar to those I am now about to discuss. Ho also asked me to give him suggestions on points he should embody in his contract of hire and those, too, I have set out.
The contract was for the supply of seven vehiclestwo 10-cwt. vans, one if-ton van, two 3-ton vans and two 5-ton vans. The mileage to be covered was not specified with any degree of accuracy, but was assumed to be about 10,000 per annum.
Knowing what was likely to be one of my chief difficulties in assessing the overall costs, I took the trouble, to abstract some information from the inquirer about his establishment costs. As a result I got the following. approximate, and, I am afraid, somewhat incomplete, figures. For office rent and rates, .£15 per annum and the same amount for an annual expenditure on heating, lighting and power; for the telephone, £25 per annum; -,r. travelling expenses, which covered the use of a car, £120; for clerical wages, including a clerk acquainted with figures who could keep a cheek on the operating data in corinec
Rate
tion with the business, and a typist, £400; for himself, as manager, £300; for sundries, £75. The total is £950.
Now, the total pay-load tonnage is 18, so that the establishment costs per ton per annum of pay-load conic to £51 7s., anti for our purpose it is sufficiently near to take that as being £52 per ton of pay-load. It means that for the 10-cwt. van the annual figure for e.tablishment casts is E26, for the 11-tan van £78, for the 3-ton van L156, and for the 5-ton van £260. These figure 6 are of considerable importance, as I shall demonstrate later.
The next thing to note is that my friend wished me to deal with the various items of operating costs in a way somewhat different from the usual. He asked me to include in fixed charges the items of interest on capital, depreciation, all insurances (including goods in transit), licences and establishment costs. Wages, which were also to be part Of fixed charges, were to be assessed on the basis of a 55-week year (48 hours per week). thus providing
for the contingencies of holidays with pay and the posst Nifty of a week oil for other causes during the year. The running costs were to comprise petrol, oil, tyres, maintenance and repairs.
It is on that basis that the accompanying tables numbered I to IV have been built up. They show the fixed expenses and running costs for each of the four different types of vehicle. The itemsare all perfectly straightforward, except that the question of the profit percentage may arise.
Most readers of my articles will recollect that 1 usually assess profit in terms of 20 to 25 per cent. of the actual cost. That, however, does not apply in respect of Contract A haulage where, in view of the tact that the haulier is more or less certain of work continuously for . not less than a year and probably several years to come, he can afford to diminish his profit percentage. lie can do that to an extent which is not practicable in other work, where he has to allow for the fact that there may be times during the year when his vehicle is standing idle I recommended him to charge for these vehicles at the rates indicated in Tables I to IV, that. is to say, the total of the fixed expenses plus 15 per cent., plus the total of the running costs per mile, again plus 15 per cent. For example, in the case of the 10-cwt. van, if in a year he covers 10,000 miles then his total will be £449 for the fixed charges plus 10,000 times 2.07d., which is £86 5s_. making £535 5s. in all; similarly, for the other sixes.
What Should be Included in vlie Contract Next, I turned to the discussion of the paragraphs which tie should include in his contract of hire. I did not give these at any length, preferring that he should take from me a list of what I call points to watch, and have a proper agreement drawn up by a solicitor embodying all those points. I numbered them in paragraphs in this way:—
. (1) Description of vehicles.
(2) Driver to be supplied, and everything necessary .•.o keep the vehicle on the road.
(3) The vehicle to be painted to suit the customer.
(4) Period of contract: option to renew and provision for termination. (Minimum period for a Contract A licence is 12 months.) (5) Conditions of hire, i.e., contractor agrees to house, wash, clean the van, and keep it in good repair and running order. In the event of the van being unable to runthrough accident, or any other cause, the contractor will provide a vehicle capable of carrying on for the time being: (6) It is not usual in the case of a contract such as this for the haulage contractor to take out a goods-intransit policy and be does not hold himself to be responsible for any loss or damage togoods carried in the van which he has on contract to his customer.
(7) The customer not to overload anyvehicle.
(8) No goods other than those of. the customer to be carried.
(9) The speed limit not to be exceeded (10) The contractor agrees to pay all present taxation and licences in connection with the vehicles and it is understood and agreed that, in the event of any additional taxation or licences during the continuance of the agreement, the amount of any additional taxation or licences shall be payable by the hirer, (11) Exclude the use of the van in normal circumstances on Sundays and statutory holidays. If by any chance any vehicle be employed on Sundays or statutery holidays the extra wages involved to be paid by the hirer.
(12) The hirer to provide all necessary information to enable log sheets to be completed. Mileage and time corninerice from when the vehicle leaves the premises at which it is housed until it returns there.
(13) In the case of failure of the speedometer, the mileage for the period whilst the speedometer is out of action to be averaged.
Provision for Maintenance Operations (14) The vehicle to be withheld from service one day per calendar month to make adjustment's and carry out maintenance operations. A typical clause is as follows: " The hirer agrees (for the purposes of overhauling and painting) to allow the contractor to have the van for one clear day in every month if necessary and for at least 'a fortnight in every year, another suitable vehicle being provided to take its place."
(15) The contractor indemnifies the hirer against all claims by the driver under the Workmen's Compensation Act, the Employers Liability Act and at Common Law.
(16) The contractor will not be liable for injury to persons who ride on the vehicles without the contractor's permission, or who ride there just tri suit the convenience or the hirer.
(17) Provision for adjustment of the price which may be found necessary as the' result of variations in the price of petrol, wages, tyres and so on.
(18) Include the usual clause relating to strikes, lock-. outs, wars, and other abnormal conditions.
(19) Terms of contract not to be considered to be varied, except in writing.
(20) The contractor to reimburse the hirer for any sum reasonably expended by him, at the request of the contractor's driver, for petrol, lubricants, grease and repairs, either to the vehicle or tyres or otherwise in respect of any vehicle.
(21) The contractor not to accept any risk for goods left upon' the Van, after the conclusion of the day's work, which may be brought into the contractor's premises to be stored at night time.
Schedule to the agreement:— (a) Description of vehicles.
(b) Price.
(c) Contracted annual mileage.
(d) Current prices of petrol, tyres; standard rate of "wages; overtime rates; payments for working on Sundays • and holidays. S.T.R.