ILT???? ???? MOVEMENT OF GOODS

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ILT???????? MOVEMENT OF GOODS

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2
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• Transport and Movements
• The importance of transport within and its
  demand-dependence on other components of the
  supply-chain
• Transport Characteristics
• Different elements of the transport system, and
  their special characteristics of the supply of
  transport
• Industry Structure and Legal Framework
• The structure of the industry and its legal
  framework
• Transport Costs
• The description of transport cost structures and
  the determination of prices

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1. Transport and Movements

• Principles of movement
• Types of traffic
• Commodities and market segments Goods
• The supply chain

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1.1 Principles of Movement

• Movements (??)
• The planning, monitoring and controlling of the
  movement of goods through all the stages of the
  journey between origin and ultimate destination,
  including any interchange, documentation
  processing, temporary accommodation and the
  procurement of the means of transport.
• Transport (??)
• The executive agency that actually carries out
  the physical movement.

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1.1 Principles of Movement

• Basic principles (????)
• Centralised control
• Regulation
• Flexibility
• Maximum utilisation
• Centralised control
• Movements organization must be able to coordinate
  the use of all the different means of transport
  to which it has access and so make the most
  efficient and economical use of all available
  resources.
• At the highest level to adequately exercise, at
  where information and resources are available

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1.1 Principles of Movement

• Regulation (??)
• Planned and regulated to ensure an even flow is
  maintained by keeping traffic moving without
  unnecessary checks or congestion to occur at
  bottlenecks, transfer points and terminals.
• Failure in an even flow will extend journey times
  and turn-round and be less efficient use of
  resources
• To avoid congestion, the traffic dispatched must
  not exceed the capacity measured at their
  critical points.
• The traffic must also be dispatched in the
  correct order of priority with the desired time
  of arrival.

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1.1 Principles of Movement

• Flexibility
• Traffic cannot be forecast accurately, be
  sufficient flexibility to accept at short notice
  without disruption.
• If a route or transport system is disrupted by
  weather or breakdown, it is to switch to another
  route or means of transport to enable even flow
  to be maintained.
• Maximum utilization
• Loading a unit of transport to its maximum
  capacity
• Keeping the return journey time as sort as
  possible
• Avoiding congestion along the route and at
  terminals
• Loading and unloading without delay

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1.2 Types of Traffic

• Movements are distinguished by
• the frequency over any given route
• the degree to which the demand is predictable
• Four types of movements for goods (????)
• regular open-access
• regular dedicated
• predictably variable
• casual/spot/on-demand.

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1.2 Types of Traffic

• Regular open-access movement of goods
• Scheduled public transport services, sea or air,
  or rail A continuous production system with
  good vehicles utilization and crews/terminal use
• Require an efficient timetable
• sufficiently demanding to require brisk operation
• sufficient margin to be reliably attainable
• rapid turn round at terminals
• even interval frequency
• constraints such as laws governing hours of work

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1.2 Types of Traffic

• Regular open-access movement of goods (????)
• From the users viewpoint,
• being predictably available
• low unit cost for the service is shared between
  users
• The drawback is inflexibility. The departure
  times, stopping places, routes and available
  capacity may not be the shipper requires.

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1.2 Types of Traffic

• Regular dedicated movements of goods (????)
• Dedicated regular service which is not open to
  public.
• Contract distribution services with regular
  scheduled runs from distribution depots to
  supermarkets.
• offer the efficient utilisation of resources and
  can be altered at short notice for special
  requirements.
• Dedicated shipping and cargo aircraft movements
  run on regular schedules but to Q timings, run
  if required. This combines the advantage of a
  regular schedule with a degree of flexibility to
  be cancelled or rerouted if required.

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1.2 Types of Traffic

• Predictably variable movements of goods (??)
• Between scheduled trips and on-demand basis
• Predictable variations may be due to
• the time of year
• seasonality of some goods
• fixed-term nature of some contracts
• holiday periods
• fashion
• political reasons
• cultural reasons.
• Haulage of grain from farms to export ports at
  harvest time, a short period of intense seasonal
  transport

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1.2 Types of Traffic

• Casual/spot/on-demand movements of goods (??)
• casual or tramp movements, spot traffic,
  one-off movements or special trips, or on-demand
  movements.
• Done by an operator with spare capacity or
  vehicles/craft hired for the specific job.
• Casual or tramp traffic is often not urgent, but
  is awaiting movement to a named destination.
• Spot traffic is the results of changes in the
  spot prices for commodities, having a short-term
  change of price, or wars, or crop failures

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1.3 Commodities and Market Segments Goods (????)

• D market segments for the movement of goods and
  their characteristics may determine the mode and
  specification of vehicles to be used and the
  features of the service offered.
• Freight commodities
• The normal state of the goods, eg solid, liquid,
  viscous, gaseous or living
• The temperature range in which the goods can may
  be kept without damage
• Any dangers inherent in the goods
• The value and disposability of the goods

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1.3 Commodities and Market Segments Goods

• Gases, liquids and powders
• Gases are transported under compression, requires
  strong containers, or as liquid, requires low
  temp.
• The most common liquid to be moved is water.
• Powders and powdery materials can be pumped for
  loading or discharge. They are often carried in
  bulk.
• Livestock
• Moved by road, roll-on/roll-off ferry and air.
• Animals going to markets, shows or race meetings
  must be kept in prime condition with requirements
  as humans ventilation, warmth, water and
  cleanliness.

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1.3 Commodities and Market Segments Goods

• Temperature control
• Ambient, tolerant to the normal temperatures
• Heated, including products like bitumen which
  solidifies at ambient temperatures
• Warm, a comfortable temperature for livestock
• Cool, tolerant of temp 225C, computer disks,
  films and goods must be kept out of direct
  sunlight
• Chilled, unfrozen but cold, chocolate, milk
• Frozen, to be kept refrigerated, frozen meat
• Cryogenic, kept at ultra-low temperature, liquid
  gases

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1.3 Commodities and Market Segments Goods

• Perishable goods
• require fast transport and temp control in
  transit
• economically perishable, perishable by virtue of
  their limited economic life, newspapers, seasonal
  gifts (Christmas), on sale, examination papers
  and ballots
• Dangerous goods
• may be solid, liquid, gaseous.
• The element of hazard is related to the
  instability, frequency of movements, size of
  loads, and handling.

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1.3 Commodities and Market Segments Goods

• Dangerous goods
• common hazards are as follows.
• Low flash points, eg petroleum
• Fire, eg crude oil which are flammable in certain
  conditions
• Explosion, eg ammunition
• Corrosion, acid and alkaline products, sulphuric
  acid, lime
• Poisonous, noxious goods, eg asbestos
• Contamination, eg household refuse
• Radio-activity, eg spent rods from nuclear power
  stations
• Sharp edges (eg sheet steel)

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1.3 Commodities and Market Segments Goods

• High-value goods
• The conventional trade meaning of high value
  goods
• are easy to dispose of when stolen
• have a value in a small size of space
• Bank notes, precious stones, precious metals,
  drugs, and business data.
• Small quantities in a secure case attached to a
  courier
• Or large quantities
• movements by security vehicles
• movement by registered mail with tracking
• protected from loss, deterioration and delay

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1.3 Commodities and Market Segments Loads
(??????)

• Abnormal indivisible loads (?????)
• Cannot be moved on a public road within the
  Construction and Use Regulations which govern the
  width, length, and gross weight of goods
  vehicles.
• Too wide for ordinary road haulage, portable
  buildings, bulldozers, excavators and off-road
  dumper trucks.
• Requires careful planning of proposed route plan
  and schedule have to be agreed by DOT, with the
  police, escort vehicles, routes, timings at busy
  junctions.

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1.3 Commodities and Market Segments Loads

• Freight loads (????)
• Three categories bulk movements, multi-drop
  movements, and multi-part loads.
• Bulk movements
• The most common movements are commodities, coal,
  grain, aggregates, cement, oil, household refuse
  and commercial waste.
• Low-value commodities moved at low cost, with no
  urgency, but could be dangerous goods
• Easy and cheap to enter, and so is highly
  competitive, especially on cost.

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1.3 Commodities and Market Segments Loads

• Multi-drop movements (????)
• Usually involve road delivery, include
• groupage traffic, where an organisation such as a
  freight forwarder puts two or three part loads on
  one lorry
• smalls, commercial traffic of consignments
  weighing less than one tonne
• home delivery services (including milk)
• parcels and mail traffic which may be destined
  for commercial premises or homes.

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1.3 Commodities and Market Segments Goods

• Multi-part loads (?????)
• Made up of several discrete part loads.
• A train or cargo ship carrying merchandise
  traffic will be operating a multi-part service,
  ie carrying different types of goods on the same
  trip.
• The customers may be different, as is usually the
  case with a container ship. For example a company
  train may carry box vans containing car
  components such as gearboxes, but also skeletal
  car-carrying wagons transporting complete new
  vehicles.

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1.4 Supply Chain

• The development transport systems
• manufacturers obtain raw materials from a variety
  of quite remote sources, for their production
  site.
• manufacturers no longer had to sell to meet
  demand in the immediate vicinity
• Supply-chains is effective when each is provided
• the right resources at,
• the right place at,
• the right time in,
• the right quantities and at,
• the right price.

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1.4 Supply Chain

• ?????(???????)
• Supply Chain Management encompasses the planning
  and management of all activities involved in
  sourcing and procurement, conversion, and all
  Logistics Management activities. Importantly, it
  also includes coordination and collaboration with
  channel partners, which can be suppliers,
  intermediaries, third-party service providers,
  and customers. In essence, Supply Chain
  Management integrates supply and demand
  management within and across companies.
• ----US Council of Supply Chain Management
  Professionals
• (US Council of Logistics Management, ??????)

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1.4 Supply Chain
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2. Transport Characteristics (????)

• The Demand For Transport
• Transport Supply Characteristics
• Modal Characteristics
• Terminals, Interchanges and Services
• Intermodal and Combined Transport Operations

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2.1 Demand for Transport

• Resources have economic value only if they are
  made available at the places where will be used.
• Various types of transport available within the
  four modes (road, rail, sea and air).
• Transport has a derived demand.
• Transport is a necessary condition of achieving
  the right goods, in the right place, at the right
  time, at the right price and in the right
  condition.

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2.1 Demand for Transport

• Transport is importance to a countrys economy
• Employment
• Energy
• Transport was responsible for approximately 33
  of the UKs inland energy consumption in 1997.
• Wealth
• Gross domestic product (GDP), is the total annual
  domestic output expressed financially. In 1996,
  8.4 of UK GDP came from transport and about
  11.5 of the total capital investment by business
  was in transport (lorries, buses, rail stock,
  ships and aircraft).

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2.1 Demand for Transport

• Employment (in thousands)

1994 1995 1996 1997 1998
Transport, storage and communications 1,314 1,307 1,302 1,332 1,389
Land, transport and pipelines 488 472 453 448
Water transport 23 27 24 23 21
Air transport
Support and auxiliary activities 57 56 60 65 69
Post and telecommunications 431 431 442 485 521
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2.2 Transport Supply Characteristics (?????)

• Non-storability
• It cannot be stored it is instantly
  perishable.
• Operator of a container vessel cannot cancel its
  passage because it does not have a full cargo
  load.
• Indivisibility
• Transport comes in fixed capacity units all
  vehicles have a set amount of space (limited
  payload).
• For an excess demand, operator has only two
  choices ignore and lose the extra business to a
  competitor, or put on another vehicle with less
  than a full load.

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2.2 Transport Supply Characteristics

• Transport as a system
• Transport is systematic, made up of a number of
  different components all of which must work
  together to produce the necessary output.
• The infrastructure
• The way or track, road
• The terminal or interchange
• Control and communications
• The vehicle or carrying unit
• these system components determine the
  characteristics of the various modes of transport
  and their suitability for different purposes.

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2.2 Transport Supply Characteristics
?? ?? ???? ???
Road Public Private No inherent guidance Artificial, shared way Infrastructure provided centrally at public expense and at nominal cost to users
Rail Heavy Light Metro Inherent guidance Artificial, dedicated way Track and control centrally provided and charged to operators at full cost or owned by operators
Air Natural, shared way Infrastructure provided by third party at full cost
Maritime Coastal/short sea Deep sea Natural, shared way No inherent guidance Infrastructure provided by third party and charged at full cost
Inland water Natural or man-made shared way No inherent guidance Infrastructure provided by third party and charged at full cost
Pipelines Artificial, dedicated way Inherent guidance Infrastructure usually provided by user
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2.3 Modal Characteristics

• Road
• For door-to-door collection and delivery, often
  in the same vehicle.
• All other modes must use road transport, at one
  or both ends of the trip, to complete the link.
• Traffic congestion at peak times resulting in
  extended journey times, for freight traffic, add
  to the costs of both operators and users.

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2.3 Modal Characteristics

• Rail
• Confined to its own track or network which is
  referred to as the permanent way.
• The provision and maintenance of the fixed
  installations are very costly.
• This infrastructure (permanent way signals and
  safety equipment stations and goods depots)
  together with locomotives and trains have to be
  provided whether or not large quantities of
  traffic are carried.
• Best suited to the fast carriage of bulk cargo
  over long distances.

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2.3 Modal Characteristics

• Air
• The way is natural and costs nothing to
  maintain.
• Air transport has the advantage of speed, direct
  routes between their points of departure and
  arrival.
• Airports occupy large areas of land and extensive
  facilities.
• The high cost airport infrastructure is partly
  recovered by charging take-off and landing fees
  to airlines and additionally impose airport
  taxes which are charged to all departing and/or
  arriving passengers.

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2.3 Modal Characteristics

• Sea
• Some restrictions to free movement.
• Every coastline is a band of territorial waters
  which is sovereign to the country concerned.
• Vessels reach the ports by travelling along
  navigable rivers.
• Vessels may only enter these waters with
  permission of the sovereign country and, usually,
  on payment of a fee.
• Large sums of money have to be spent maintaining
  and controlling traffic through the seaway.
• Sea travel is slow, cannot make several trips
  each day.
• Ships have large capacity and are well suited to
  heavy and bulky cargoes

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2.3 Modal Characteristics
Motor Rail Air Water Pipeline
Economic Characteristics
Cost Moderate Low High Low Low
Market coverage Point-to-point Terminal-to-terminal Terminal-to-terminal Terminal-to-terminal Terminal-to-terminal
Degree of competition (in numbers) Many Few Moderate Few Few
Predominant traffic All types Low-moderate value moderate high density High value,low-moderate density Low value,high density Low value,high density
Avg length of haul (mile) 515 617 885 376 to 1,367 276 to 343
Equipment capacity (ton) 10 to 25 50 to 12,000 5 to 125 1,000 to 60,000 30,000 to 2,500,000
Service Characteristics
Speed (time-in-transit) Moderate to fast Moderate Fast Slow Slow
Availability High Moderate Moderate Low Low
Consistency (delivery time variabilitty) High Moderate High Low to moderate High
Loss and damage Low Moderate Low Low to moderate Low
Flexibility (adjustment to shipper's needs) High Moderate Moderate to high Low to moderate Low
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2.4 Terminals

• Terminal (??)
• The way for a mode ends, mainline railway
  stations
• The service goes no further but the way
  continues, the final stop on a bus route
• Cargo has reached its destination.
• Changing to another mode or vehicle (??)
• Freight to change to another mode, or to a
  smaller vehicle in the same mode, transferred to
  smaller vehicles for transport to its final
  destination.
• Called interchanges but, facilities and services
  required are similar to those needed at a
  terminal.

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2.4 Terminal Determinants(????)

• Size
• Depend upon the modes and volumes of traffic
  using it.
• Freight terminals have a similar wide range of
  requirements.
• Siting
• Provide an efficient handling of traffic, be
  dispersed quickly, be safely stored and cared for
  loading.
• Often sited as far as from centres of population
• Occupy large sites and city centre land prices
  are high.
• Urban roads are often congested, makes access
  difficult.
• Activities cause inconvenience or nuisance to
  neighbouring

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2.4 Terminals Determinants(????)

• Infrastructure and support services
• May vary, but general requirements are
• Space to load and unload vehicles
• Space for temporary storage during transshipment
• Crew rest areas
• Stabling areas for vehicles not currently in
  use
• Maintenance areas for vehicles
• Administrative areas for operators
• Customs and immigration facilities
• Refreshment facilities for passengers in transit
• Mechanical handling equipment
• Space and facilities for interchange with other
  modes.

42
2.5 Intermodal

• Intermodal (????)
• Transport of unit loads that can be transferred
  between two or more modes with the minimum of
  rehandling. A standard shipping container can be
  transferred with one lift from a road vehicle to
  a rail wagon.
• It may involve the transshipment of freight
  between different carrying units within the same
  mode, cargo from an ocean-going ship has to be
  put onto a barge or smaller coaster in order to
  reach the final port of disembarkation.

43
2.5 Intermodal

• Combined transport (????)
• The carriage of freight by two or more successive
  modes where the vehicle, or part of it, is
  transferred along with the freight onto another
  vehicle for part of the journey. A tractor unit
  and trailer, containing cargo, can be transported
  on a rail wagon, or a road vehicle can be carried
  across the Channel on a vessel.

44
2.5 Intermodal

• Reasons
• The development of more complex logistics
  strategies
• the extension of market areas
• increasing environmental pressures on industry
• the new improved systems of modal interchange
• increasing road congestion
• the operation, in some countries, of lower
  vehicle size and weight limits, and restrictions
  on road freight vehicle operating times.

45
2.5 Intermodal

• Intermodal options (??????)
• Containerisation, using road, rail, sea and
  inland waterways
• Sea transport combined with road transport, ie
  ro/ro
• Sea transport combined with rail transport
• Road and rail combinations, ie trailer on train,
  truck/trailer on train
• Swap body systems, for road/rail use

46
2.5 Intermodal

• Three types of road/rail combination vehicles
  (????????)
• Piggyback semi-trailers are driven onto special
  rail wagons and travel without the tractor unit
• Rolling motorway low-deck rail wagons allow an
  entire road combination, ie truck and trailer, to
  be driven onto the train and transported.
• Bimodal trailer train this dispenses with the
  rail wagon. The road trailer sits on rail bogies
  and travels as part of the train.

47
2.5 Intermodal
48
3. Industry Structure and Legal Framework

• Transport Operation
• Regulation
• International Transport

49
3.1 Transport Operation (??)

• Transport law divides the operation of transport
  into two categories own-account and hire and
  reward.
• Own-account operation
• An organisation uses transport solely for the
  movement of its own goods or people.
• The manufacturers use vehicles to move components
  and part-finished goods between factory sites are
  operating on an own-account basis.
• Hire and reward
• One carries goods belonging to someone else with
  payment of a fare or carriage charge.

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3.1 Transport Operation

• Ownership

Mode The way Carriers Terminals
Road freight State owned Private companies Private companies (may also be carriers or not)
Road passenger State owned Private companies or private companies under arms-length municipal control Private companies or municipalities
Air State ownership of national airspace, otherwise free Private companies Private companies, may be municipal involvement
Sea State ownership of territorial waters, otherwise free Private companies Private companies, may be municipal involvement
Rail Private company (Railtrack) 25 private train operating companies (TOCs) 3 private freight operators Private company (Railtrack), may be involvement by TOCs
51
3.2 Regulation (??)

• Economic safety, quality and licensing
  regulations.
• Economic regulation
• governments control the supply of transport, the
  number of different operators in any mode and
  services offered.
• Types of economic regulation can be viewed as a
  spectrum ranging from total government control
  (command economy) to complete operation of the
  free market (laissez-faire)
• In UK, all road transport, shipping and aviation
  are under quality regulation and rail is under a
  sort of quantity regulation through the franchise
  arrangements.

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3.2 Regulation
Full government ownership and control (nationalised) Quantity regulation Operators are private companies but the government controls the number that are allowed to operate in a given area Quality regulation Operators are private companies and there is no control over the numbers of them but only over their fitness to operate Free market No controls at all except for general safety legislation
53
3.3 International Transport (????)

• Maritime and air transport operates mostly on an
  international level, thus, is It is necessary to
  establish international rules and regulations.
• For aviation the body is the International Civil
  Aviation Organisation and for shipping it is the
  International Maritime Organisation, both
  agencies of the United Nations.
• Each country are monitored by a number of
  national bodies, Civil Aviation Authority, The
  Marine Division of the Department of Transport.

54
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63
4. Transport Costs

• What is Costing?
• Recovering Indirect Costs
• Running Costs
• The Profit Requirement
• Calculating Rates
• Marginal Costing

64
4.1 Costing

• Costing shows the total cost of the service
  rendered. The effective control over each element
  of cost can be exercised.
• To measure profit, for the business as a whole, a
  depot, department or service, for a group of
  vehicles
• To provide information for management control of
  revenue, costs and stocks
• To provide information for planning and decisions
• To determine the pricing

65
4.1 Costing

• Costing is necessary in road transport operations
• To provide regular up-to-date information on
  profitability
• To highlight adverse trends so that management
  can take early corrective action
• To enable management to determine the extent to
  which charges may be cut during severe
  competition
• To assist in charging/fixing rates, by the
  inclusion of basic costing data
• To ensure that the business is providing an
  adequate return on the capital employed

66
4.1 Costing

• Cost unit (????)
• A unit of output for which costs may be expressed
  (a tonne/mile in a haulage operation).
• Cost centre (????)
• A cost centre is a location, a piece of equipment
  against which costs are charged (a particular
  vehicle in a transport operation).
• Direct costs (????)
• Can be directly attributed to a cost centre or a
  cost unit.
• Fuel, oil, tyres, repairs and maintenance,
  insurance, drivers wages are direct costs
  attributable to a vehicle.

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4.1 Costing

• Indirect costs (????)
• Cannot be attributed directly to a cost centre or
  cost unit. Referred to as overheads, or
  administrative costs, or establishment charges
  (advertising, office staff salaries, heat and
  light, rates, insurance on premises, telephones)
• Fixed costs (????)
• Will not normally vary over a given period or be
  affected by mileage or vehicle activity (standing
  costs licences, insurance and depreciation).
• Variable costs (????)
• Will vary in relation to the usage (fuel and
  tires).

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4.1 Costing
Fixed costs Variable costs
Direct costs Drivers wages Vehicle insurance Vehicle excise Duty O licence Fuel Vehicle maintenance Tyres Overtime and subsistence
Indirect costs Rent and rates Building maintenance Office salaries General insurance Telephone Postage Stationery Advertising
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4.2 Recovering Indirect Costs

• Indirect costs have to be spread over the
  revenue-earning transport fleet (??) on an
  equitable basis
• 38-ton vehicle charge-out rate is far more than
  7.5-ton
• None of appropriation methods is more
  satisfactory than the others.
• Ensure all overhead costs are covered.
• ?????The common method is to total the operating
  costs and add on a percentage to cover indirect
  costs.

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4.2 Recovering Indirect Costs

• Vehicle use ()
• Overhead/standing costs (????) on an annual
  basis, needs to be broken down for pricing.
• An assessment has to be made of the number of
  days (???) in the year, this vehicle will be
  working.
• Higher vehicle utilization, will reduce daily
  costs.
• Number of vehicles
• To apportion to individual vehicles, the simplest
  and most commonly used system is to total all the
  indirect costs and divide by the number of
  vehicles owned.

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4.2 Recovering Indirect Costs

• Load factor (???)
• Overhead and standing costs still have to be
  recovered from the consignors of the goods that
  are carried.
• Load factor is a percentage Actual tonnage
  carried divided by total tonnage available
• It is tied to service level. Frequency is a key
  feature of service quality. The more frequently
  the service runs, the lower is likely to be the
  load factor. (??????)
• What is required is that full costs are recovered
  and that can be done by increasing the unit
  charge so that 100 of the costs are covered by
  whatever the load factor is.

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4.2 Recovering Indirect Costs

• Payload (??)
• An alternative method is to apportion by
  reference to the fleets payload capacity. The
  larger the vehicles payload, the more
  administration costs are allocated.
• Larger vehicles have the potential to charge
  higher rates and can absorb more of the costs
  than the smaller ones.
• Number of vehicles and payload
• When mixed fleets are operated, a combination of
  these two methods may be found to be more
  realistic.

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4.3 Recovering Indirect Costs

• All running costs are converted to pence per mile
  (PPM) or pence per km (PPK) figures.
• Fuel
• Most significant of all the variable costs
• All fuel costs for a given period should be
  divided by the actual number of miles run in that
  period.
• Tyres
• The sum cost of a tyre, tube and flap multiplied
  by the number of wheels on a particular vehicle
  (trailer and semi-trailer) divided by the
  estimated number of miles life of the tyre.

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4.3 Recovering Indirect Costs

• Servicing, maintenance and lubricants
• The accumulated costs for the vehicle over a
  given period (all oil costs and a proportion of
  grease) is divided by the actual number of miles
  run in that period.
• Drivers overtime, subsistence and expenses
• Overtime and bonus payments, overnight
  subsistence, sundry toll and parking expenses,
  etc are added to a quotation as a separate item,
  not converted into a PPM.
• Consolidation
• Individual costs, once converted into PPM, should
  be added for the total running costs (in PPM) of
  a vehicle.

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4.4 The Profit Requirement

• A margin is added to give a satisfactory return.
• It must be sufficient for the money used, to
  cover the risk element and, provide for a cash
  flow sufficient to finance normal business
  growth.
• No magic percentage that can be quoted to result
  in a satisfactory profit
• There is a percentage below which profit should
  not fall. This figure generally is at least 5
  more than the amount that could be obtained by
  leaving the capital in the bank deposit account
  (????).

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4.5 Calculating Rates

• Rate quotation schedule
• To state a quotation clearly for how long it is
  valid and should be dated and revised at least
  every three months.
• Time and mileage basis
• Provide a quotation for casual daily hire, casual
  jobs, etc, for any particular type of vehicle
  owned.
• Vehicle/driver are supplied from the time of
  leaving to the time of return, plus a charge for
  all miles run.
• A job that covers 200 miles in total and lasts
  one day.
• 1 day _at_ 221.72 per day 221.72
• 200 miles _at_ 56.35 pence per mile 112.70
• Total charge per job 334.42

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4.5 Calculating Rates

• Per tonne basis
• Total price to be charged should be divided by
  the number of tonnes to be carried.
• When part loads are carried, the charges should
  not be calculated on a pro rate basis.
• The rate must include the additional costs
  incurred in the collection of consignments from
  various clients premises, delivery back to
  depot, unloading and temporary storage, reloading
  and final delivery of the consignment. Therefore,
  the charges for four separate consignments of 2.5
  tonnes each in total will be greater than the
  charge for one single consignment of 10 tonnes.

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4.5 Calculating Rates

• Per mile basis
• Total price to be charged should be divided by
  the number of miles to be run. The example
  earlier may state that the rate provided will be
  the charge per mile up to 200 miles and that all
  miles run in excess of 200 will be charged
  additionally at a specified rate of PPM.
• It must also state a minimum charge, if, for
  example, at the end of the one days work, the
  client says he has only run 50 miles.

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4.6 Marginal Costing

• Transport operations are characterised by high
  fixed costs and often a fluctuating level of
  demand.
• This combination usually results in expensive
  assets standing idle for some of the time.
• The off-peak services may be priced to the
  customers on a marginal cost (variable or running
  costs) basis, called contribution.
• It prevents the peak fare from becoming even more
  expensive.

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