Truck Hauling and Delivery Costs Representing Island ConditionsHonolulu, Hawaii Agricultural Economics Report No. 17 May, 1953
true k HAULING and DELIVEl~Y COSTS
rep re sent in g
ISLAND CONDITIONS
Department of Agricultural Economics
Procedure. . . . ' . , . .~. .. . .... . . . . . . . •. . . . . . . . ' . . Variable .Costs
Overhead Costs ·., . Depreciation. • • • • • .... : • . ' ' ... . . . . . . . . . . 5
Insurance • • • • • • • . . . . . . . . . . . . . . . . . . . . . . . 5 ·· ::: .Taxes and License Fees. • • • • • f • • • • • 6• • • • • • • f • f f f •
Interest•••••• , • I
6t I t I t t t t t I I I t I I t t t . t t t t t t
General Garage and Storage. . . . . . . . 7
Unit Costs Size of Load. !
-Total Truck Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Truck Cost Equations. . . . . . . . . . . . . . . . . . . . . . . . . 9
, .. . . . . . . . . . . . . . . . . . . . . . 10 Truck Costs per Unit•• . . . . . 10t t t I t f f t t t t I • f t I t
Labor ·Costs . • • • , • • . . . . . . . . . . . . . . . . . . . . . . . 13 ' Total Trucking Costs. • • • . . . . . . . • • . . . . . . . • • . . . . . . 13 Summary. . . . . . . . . . . . ... . . . . . . . . . . . . . . 14
TABLES
' 1". ·Effect of Mileage and Gasoline Consumption, Delivery Trucks . On Oahu, 1951-52. , • • • . • • , • • , , • • , , • • •· • . . . 2
, ~ ~ . ~'"". iiasoline Costs Applied to Physical Inputs Given in Table 1. · . . . . 2
3: Inputs of Oil by Type of Truck, 1951-52. ~ ••••.•.• , . . . . . 3
4, Repair Costs for Trucks, By Type, 1951-52 • . . . . . . . . . . . . . . . 3
5. Depreciation Costs for Deiivery Trµcks, 1951~52 . . . . . . . .'. . . . 5
6. Motor Vehicle ~icense· Fees for Territory of Hawaii, 1951-52 • • • • • • • 6 ,.. i 1I •
7. Interest Costs for Deliv;~ry Trucks. . • • • . : • • , • • , , • • • • • • , • 7
8, Summary of Costs of Operating Delivery Trucks, Type A •••• , • , , , • 7
9, Summary of Costs of Operating Delivery Trucks, Type B , , , •• , • • • 8
10, Summary of Costs of Operating Delivery Trucks, Miscellaneous Types. 8
11. Summary of Costs ,of Operating Delivery: Tru.cks, -All Types. , . . . . . . . 9
CHART
A. Unit Truck Costs Related to Hours Operated and Number of Units Hauled ·Per Week • • • • • , • • , • • • • , • • . •. , • • • • • • 12
TRUCK HAULING AND DELIVERY COSTS REPRESENTING ISLAND CONDITIONS Robert H. Reed*
Trucking costs constitute a large percentage of total mark~ting costs, especially at the producer level. These costs are also highly significant for wholesalers or jobbers who operate thei.r own pickup and delivery routes.
A variety of truck bodies have been devised for hauling specific commodities. In Hawaii, trucks used for transporting eggs and vegetaoles are usually of the flat-bed type, equipped with side boards, and ·ra~ge from 3/4- to 11/2-ton capacity. The load varies from 40 to .200 units depending on the size of the trucks, type and size of the truck bed, the commodity hauled, and the size of the container (case, crate, or bag). Seasonal variation in crop p~oduction also affects load sizes and frequency .of hauls. Most economical use of trucking facilities is obtained when trucks are operated at, ,or as .near, -capacity as,is practical.
This study was made to provide farmers, wholesalers, jobbers, and other marketing agencies with cost relationships representing typical trucking operations. Naturally, the results presented will not be strictly applicable to any particular truck, because trucks identical . in make, size, and age vary widely in performance. Also, factors not subject to quantitative analysis, such as road conditions, number of stops per route, and the skill of the driver, influence operating costs. However, these variations tend to compensate each other, and the error, when applied to a group of trucks, will be small. The results should be interpreted as a description. of trucking costs on routes handled with, or slightly above, average efficiency.
PROCEDURE
To determine the physical and economic inputs included in the operation of delivery routes, 32 individual truck records covering operations for a 13-month period, June ~951 to July 1952 inclusive, were obtained from one large marketing organization.11. Several producers of eggs and vegetables on Oahu were contact.ed . for supplementary data. These records gave details by months as well as annual totals. All records included the operating costs for gasoline, oil, tires, and repairs, and the overhead co~ts for depreciation, taxes and licenses, insurance, and interest. Metho9s u~ed in the analysis are presented in the discussion of the separate cost components.
Of the 32 truck records, 17 were rated 3/4-ton and 11as11/2-ton capacity. There were four miscellaneous trucks ranging from 3/4- to 1 1/2-ton capacity. The trucks vere . classified into types, depending on rated tonnage. The 3/4-ton tru~ks were called type A, the 11/2-ton type B, and the remainder comprised a miscellaneous group~ · Operating performances for each type were analyzed.
VARIABLE COSTS
Gasoline
rhe amount of gasoline consumed by delivery trucks is, of course, closely associated with mileage traveled. Factors such as motor idling at stops, ' warm-up, and stop-and-go driving influence gasoline consumption. For the types and sizes of delivery trucks studied, it was found that gasoline consumption could be expla:in3d in terms of a rate per mile traveled plus a fixed amount per hour operated.
* Assistant Agricultural Economist, Hawa.ii Agricultural Experiment Station·, and Cooperative Agent of the Bureau of Agricultural Economics.
l/ Grateful acknowledgment is extended to Love's Bake~y Company, which gave wholehearted cooperation in this study.
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Variable gasoline consumption per mile traveled for delivery trucks averaged 0.103 gallons for the entire group. This is approximately 9 3/4 miles per gallon. In addition to the gasoline attributable to milos traveled, these trucks used an average of 0.122 gallons per hour of operation. The number of miles traveled per month explained 84 percent of the variation in total gasoline consumption. Table 1 presents the performances with respect to gasoline consumption for each type of truck. The lower gasoline consumption of type B, which was not dependent on miles traveled, was undoubtedly influenced by fewer stops per route driving.
and less stop-and-go
Table 1.--Effect of mileage on gasoline consum delivery trucks on Oahu, 1951-52.*
ption,
Type Number Gasoline consumption Percentage variation in of of Constant per hour Variable gasoline consumption explained
truck records of operation** per mile by miles traveled
Number Gallons Gallons Percent ·
A--3/4 tons ... ...... 17 0.136 0.096 58 B--1 1/2 tons .. 11 0.036 0.107 94 Miscellaneous ..... 4 0.082 0.083 69 All . .... .. ......... .. .... ,, .. ,,,, ..,, 32 _,_______________ 0.122 0.103 84....:...______________
* Constants determined from mathematical regression using the following equation: Gasoline consumption= a+ b (mileage).
** Assumes 26 days of 8 hours operation e~ch month.
Gasoline costs were determined from the physical relationships above multiplied by the unit price of gasoline. As of December 31, 1952, regular gasoline averaged
v- $0.293 per gallon at r etail on Oahu. Using this rate, average gasoline costs for delivery trucks of all types were approximately $0.036 constant per hour plus . $0.0302 per mile traveled. Gasoline costs are summarized in table 2 for each type of truck.
Table 2.--Gasoline costs applied to physical inputs given in table l.*
Type of
Number of
Dollars Dollars
0.024 0.0243 0.036 0.0302
* Changes in price per gallon do not affect the physical inputs listed in table 1. If the price changes, all that is necessary is to apply the new price per gallon to the figur es in table 1, thereby arriving at changed costs.
Oil
--
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sense. As trucks get older, mechanical condition · usµally becomes poorer, arid oil consumption increases. Therefore) age was used ~s .an .indax of .mechanical condition in this study.
Monthly oil consumption was related to age of truck and mileage per month. · In terms of average monthly oil consump~ion, the above factors explained JO percent of the variation.
The following table summarizes the physical r elationships between oil constunp­ tion, age, and mileage. In addition, oil costs are listed by applying current prices to the physical relationships. ~
Table J.--Inputs of oil by type of truck, 1951-52.
Type of trucks
Number of I'.ecords
(3)
Miles
0.0015 .0.0014 0.0027 0.0017
* Costs at retail average 42.5 cents per q~art. Costs per mile arrived Jt by multiplying entries in column 4 by 42.5 cents,
As is observed in table 3, oil costs are relatively unimportant, averaging about $0 .0017 pe~ mile for trucks of all types.
Repairs
Repairs are like oil consumption in that they aro related to the mileage traveled and condition of the motor. When age is used as an indication of motor condition, repairs tend to increase with age until the motor is replaced, rebuilt, or overhauled.
Unfortunately, no data is available for a period of years so a summary of r epair costs by type of truck will be given for one year only. These figures are broken down to monthly intervals to afford a more comprehensive picture.
Table 4.--Repair costs for trucks, by type , 1951-52. ----·---------------------------------------
Type of
Miscellaneous ....... ..... ....................... All ...................................................... .............. .. . .
Number of
DolJ.ars
·---- Cents
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Although type A costs less in repairs per month, type B costs less per mile. The higher monthly cost is due to the fact that type Bis a heavier truck (11/2 tons) and that repairs, though fewer in number, are more expensive .than for the lighter trucks (type A). The lower cost per mile is due to the fact that type B traveled farther, on the average, than did type A, while repair costs· did not increase proportionally.
~ .
Tire and tube outlays occur intermittently--that is, recapping and replacement takes place irregularly as the nee.d arises. Based on complete tire records for a 13-month period, tire costs per mile were $0.0097 for 32 trucks operating out of Honolulu and vicinity. An additional annual cost of $56.40 represents deterioration, sidewall damage, and stop-and-go wear and is fairly constant regardless of mileage.
The following equation represents annual tire costs under Hawaiian conditions:
(1) .Annual cost.:. $56,40 + $0.0097 (annual mileage)
For example, a truck traveling 10,000 miles per year would require an annual outlay of approximately /jf;56.40 + $0.0097 (10,000) = $56.40 + $97.0g] or $153.40. This takes into account adjustments for the value of the original equipment (tires) and the partially used values of tires in service when the records ended.
The life of/a tire in physical terms before recapping is required can be approximated by~
19,439(2) (Years or lHe) = (miles per year) + 5,814
Each of the 32 trucks included in this study averaged 11,131 miles per year. Using equation (2) and the data on annual mileage, the estimated life of a tire before recapping is necessary is about 1 1/6 years. That is:
19,439Years or 11re = : 1 1/6 11, 131 t 5,814
The expected life in miles per tire before recapping is:
19,349 - (5,814) ( 1 1/6) = 12,654 miles
According to the opinion of several tire recap specialists in Honolulu, recapping efficiency depends upon how much rubber is left over the tread, the skill of the technician, the method used, and the condition of the casing. On the average, recapping will give about 85 percent more mileage per tire, A tire may be recapped as many as four times under ideal conditions, but two times is considered as typical. At the present time, the cost of recapping is slightly less than one-half the cost of a new tire.
y This equation is de'rived from the cost equation as follows: A set of four new tires averages $188.56 according to the size bought.
The years of service (until recapping is needed) for tires can be ·given by dividing tho total cost by the annual cost, i.e.,
(A) Total cost of 4 nBw tires= $188.56. (B) Annual cost= $56.40 +$0.0097 (annual mileage) dividing (B) into (A)
gives equation (2) above.
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The expected life of a tire, assuming it is recapped twice, is 12,654 miles times 270 percent, or 34,166 miles.
OVERHEAD COSTS
Depreciation
Depreciation is the charge made to current operations necessary to repay the investment in equipment or· ·of providing capital for replacement when present equipment is worn out. The customary, or "straight-line," method of calculating periodic depreciation divides the cost of an asset, less its estimated scrap or turn-in value, by the number of periods during which the asset will be used.
Delivery trucks are commonly depreciated over a period of 7 or 8 years in this territory. However, in view of practical analysis, delivery trucks have been depreciated over the average useful l~fe of the truck in this study.
Average annual depreciation for the trucks analyzed was $316.79 . This amounts to $24.37 per truck montb..21 and $0 .868 per day/based on 1953 pri~es.
Based upon the records available, table 5 presents average depreciation rates by type of truck.
Table 5.--Depreciation costs for delivery trucks, 1951-52.
Type of truck
Miscellaneous .... .. .. ... .......... All .. .... .....'........ ...... ... ,.. .......... .......... ..
Years Years1 7
10 8.5 8.3
Insurance
Truck insurance is the premium paid to. cover the risks encountered in trucking operations. The owner may bear these costs directly, or he may transfer the risk to insurance companies in return for a stipulated payment.
In Hawaii, it is not mandatory for truck owners to carry insurance, but most owners do so· to -rid themselves of possible high losses occurring at periodic intervals and to gain entry to docks and military reservations.
The usual types of insurance include public liability anq. property damage~ : Other types s1,1ch as collision, fire, . and the like, are variab;ie·, depending on.. the ag8 and value of the truck, and such costs are included as repair items for each truck.
Due to increased exposure risks, qahu has higher rates than the other islands on public liability and property damage •. Basic r~tes given below are for $5 ,000 to
J $10,000 public liability and $5,000 property damage •
. 2/ A truck year is : based on thirteen 28-day periods • .
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Annual average territorial truck insurance costs, including Oahu's higher rates, are $23 .00. This represents an average cost of $0 .063 per day. Annual rates for Oahu-based trucks are approximately $~0_public liability and $23.00 property ~ damage. For Hawaii-, Maui-, and Kauai-based trucks these rates are ,.13.00 and $14 . 00, re spectively. -
Taxes and License Fees
Motor vehicle license fees in the Territory of Hawaii ·are calculated as 1 cent p~r pound for the total weight of the truck, plus $1.00 plate charge and $0.25 for the tab. In 1954, the price of the tab will increase to $0.50. Tabs giving year of i_ssue are used instead 9f issuing plates each year • .
During 1951 and 1952, average license fees were $55 .72 for type A and $75.44 for type B. The average fee for all types of trucks included in this study was $64.34. Table 6 summarizes these costs by type and time period.
Table 6.--Motor vehicle license fees for Territory of Hawaii, 19.51-52.
Type of truck Number of
records Territorial license fees
Number
Interest
Interest on investment is usually thought of as the payment requ~red on the unamortized portion of the investment in trucks.
Annual interest costs depend on the interest rate, years of useful life , and the original investment •.
These costs can be calculated easily by utilizing the following formula:
I = (P - S) ! ( n + 1 ) + Sr, where "I" is tho annual cost, "P" the · 2 n
11 r 11origirl~l investment (less tires and tubes), the rate of interest, "n" the years of exp~cted use, and 11 811 the salvage value at the end of useful life.
Interest costs for each truck included in this study were unavailaqle, so these charges were based on 1953 prices (original investment) with an estimated scrap value of $300 at the end o~ the truck's useful life .
• I
Using the above formula and a rate of 5 percent, interest ·costs have been calcul~ted and are summarized in t able 7.
v
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.. . '
Tons Dollars- -·· ~ A ... .................. ................................ . B ......... .... .................................,........ Miscellaneous ......:::.. ..... .... All**................................. .'...:.... ....
J/4 11/2 Varies
Interest costs Annual Daily
60.00· .·0.164 77.00 0.211 6t .11 . 0.187 68.48 0,192
* Original value less $JOO salvage value and less cost of tire~ and tubes. ** Unweighted averages.
General Garage and Storage
General garage expenses include such items as storage, washing, servicing, and painting. For the trucks studied, general garage costs averaged about $175 per
\/ year, or about $0 .48 per day.
TOTAL TRUCK COSTS
The components of truck costsA/ have been discussed at some length and are brought together in tables 8 to 13. The elements f all into three categories: overhead costs; constant operating costs per hour of operation; and operating costs associated with miles traveled.
Table 8 .--Summory of costs, in dollars, of operating del_ivery trucks, . typo A.
Operating,;--~--Overhead Constant VariableItems Per day Per week per hour per mile
0.0281Gasoline ................................ ....... .................. ....... 0.0015011 .. .. ................. ... .... ... ... ............................ ....... ... .... ......
.0,063 0.441Insuronce ................ ......,.... ,. ... ..... ..................·-··· 0.153 1.071Vehicle licenses..... ......... ... .............. ......
Interest .'... .. ................ .. ...... ....:........................ ... ... 0~164 1.148
0.063 0.07761.721Totals ...... .. ...... ... ..... ......
it/ Truck costs do not include labor costs associated with operation.
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vi Table 9~--8ummary of costs, ·in dollars, of operating delivery trucks, type B.
Overhead Operating Items Constant Variable
Per day Per week par hour per mile ··--------------- - ·-------- -- ·----- - ·-- - ·- --..·-··------ ----..-·----·---· Gasoline ... ................. ....... ............... ... ...... ......... 0.011 0.0314 ti nc)
0.0014 P,!!0,7Oil ......................... ......... ...... .... .. ..................... .. ............ Tires ..:....................... .. .......... .......... ...................... .. 0.023 0.0070 Repairs .................... ... ....... .. .... .. ............... .............. 0.0324 General garage and storage .... .. 0.480 J.J60
· o.877 6.139Depreciation .................... .. ..... .. ... .. ................. . Insurance ...... .................................... ...... ......... .. 0.063 0.41+1 Vehicle licenses ... ..................... .......... ..... 0.207 1.449 Interest .......... ...... ....... ..:... ... .. ...... .......... 0.211 1.477
Totals ....... ... .... .. ........ ..... ....... .. .................... 1,838 12.866 0.034 0.0722 = =============-=·-=-====-----------=-========:==========.==-·---·-
Table 10.--Summary of costs, in dollars, of operating delivery trucks, miscellaneous types.*
Overhead Operating Items
Variable per mile
Gasoline ............ ... .. ........................ ........... .. . 0.024 0.0243 Oil ....... .... ......... ...... ...... ............................................ . 0.0027 Tires ... .......... .. ................ ...... .. ................................ 0.023 0.0070 Repairs ..... ..................... .. .. ........... ....... .. ... ... . 0.0461 General garage and storage .... .. .. 0.480 3.360 Depreciation ................... .... .. ........ .. ......... ....... o.886 6.202 Insurance .... ........ .. ..... .................... .. .. .. ............... .. 0.063 0.441 Vehicle licenses ... ......... ................ .. ........ 0.176 1.2.32 Interest .............. .... ............ ...... .... ....... ... ........ .. 0.187 1 •.309
Totals .................... .. .............. ..... .... .. .. ............ 1.792 12.544 0.047 0.0801 ·-·======================:::::.====================
* Includes both 11/2- and 3/4-ton capacities. . ' •
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Table 11.--Summary qf costs, in. dollars, of operating delivery trucks, all types.
Items Overhead
-
Gnsoline .......... ..................................... ................. ... Oil .... ........ ........................... ........ ... .:.. .. ...................... .. . Tires .: ................................. ......................................... Repairs ............. ............ ....... ...... ...... .... .. ......... .... ...... General garage and storage........... Depreciat ion ................................. .. ............. ....... Insurance.................... ..............:...... .............. ... .. .. Vehicle licenses ................................. Interest ................. ......................... ..................... .
0~480 o.868 0:063 0.176 0.192
3.360 6.076 0,441 1.232 1.344
0.036
0.023
TRUCK COST EQUATIONS
Equations in which average cost per week is dependent on hours operated per week and miles traveled plus an overhead cost per week are set forth below. Weekly costs _are given because such costs emphasize the overhead item more effectively,
~ A trucks
(1) Cost per week = $12,047 + $0.083 (hours operated P.er week) + $0 .0776 (mileage per week)
Type B trucks
(2) Cost per week= $12.886 + $0,034 (hours operated per week) + $0.0722 (mlleage per week)
Miscellaneous types
(3) Cost per week = $12,544 + $0,047 (hours operated per week) + $0,0801 (m!leage per week)
All type trucks
(4) Cost per week= $12,453 + $0 .059 (hours operated per week) + $0,0764 (mileage per week)
In order to interpret the abdve equations, one must substitute values for hours operated end miles driven; multiply these vnlues by the regression coefficients and add the results to arrive at a single cost figure,
For example , assume that a type B truck was operated 20 hours and driven 450 miles for a particular week. The weekly average cost under those assumptions can be secured by using equation (2), that is:
Cost per week (type B) = $12, 868 + $0 ,034 (20) + $0,0722 (450)
= $12. 888 + $0, 68 + $32, 49
= $46 .036
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Using equation (4) wherein ·truck costs are given for all type trucks, costs per week under the above assumptions are:
O,st per week :: $12,453 + $0.059 (20) + $0,0764 (400)
= $12,453 + $1.18 + $34.38
Size of Load
The foregoing analysis dealt with total truck costs, and no consideration was given to truck costs per unit. Before a marketing agency can ev~luate its truck efficiency, unit cQsts must be considered in detail. Since tFuck'c~sts are spread over the number of .units (cases, crates, bags, etc.) hauled, it is econ·omical to operate as close to capacity as possible. In spite of the size of the agency concerned, seasonal variation in production and unforeseen events will account for substantial variation in load sizes throughout the year.
Truck Costs per Unit
Truck costs per unit can be calculated by dividing the total truck costs per period by tho number of units hauled per period. Total weekly truck costs appear on pages 7 to 9.
Q
The following equations can be used in determining truck costs per unit:
Average weekly unit costs
Type A truck
( 1) unit cost per week= $12,047 + $0,063 (hours operated per week) + $0,0776 (miles per week) number or units hauled per week
Type B truck $12,866 + $0,034 (hours operated per week) + $0,0722 (miles per week)
(2) Unit cost per week= number or unlts hauled per week
Miscel~aneous~-~rucks $12,544 + $0,047 (hours operated per week) + $0,0801 (miles per week)
(3) Unlt cost per week= number or unlts hauled per week
All types trucks $12,453 + $0,059 (hours operated per week) .+ $0,0764 {miles per week)
(4) Unit cost per week= number or units hauled per week
The equations given above are relatively easy to use, but a discussion of their use may help those readers who are not mathematically inclined.
Assume a marketing agency has the following information. concerning his truck operations for last week.
Given data: (a) 11/2-ton (type B) truck (b) Traveled 500 miles (c) Hauled 650 crates of lettuce (d) Operated 40 hours
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. · .§ubstituting into the weekly· cost equation for type B trucks £equation (2) abov~/ gives the following results:
$12.866 + $0,034 (40 hours)+ $0,0722 (600 miles) untt cost per week= -
660 crates .
68) crates
Unit cost ror that week 1: $50, 326 = $0,0774 per crate 660
If the return trip were utilized to haul supplies back to the agency, unit costs would decline somewhat because the costs would be spread over more units.
Chart A has been prepared to illustrate the effect of hours operated, mileage, and number of units hauled per week. · As has been pointed out, overhead costs occur regardless of use, and the ·more a truck is utilized, ,the less the unit overhead costs:. . The following graph assumes 150 miles are traveled per 8-hour operation. Weeklj.: ·co·sts are then calculA'ted for an 8-hour, 24-hour, and 72-hour week. As is readily: observed, unit costs decline with more intensive utilization and a corre­ SJXJndirigly ·higher number of units hauled per week. This decrease in unit costs is caused by spreading the weekly overhead cost over more units.
-----
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Chart A,--Unit truck costs related to hours operated and number of uni ts hauled per week. i~
Cents 50 ·---·-·----· .. -·. - · -· ----------------------
0 ------1---------'--------'------....._________,______, Units hauled in
8 hours ........... ........-> 50 100 150 200 250 JOO 24 hours ....................).150 JOO 600450 750 900 72 hours ···················· .> 450 9d0 1350 1800 2250 2700
/ 8 hours operation weekly
24 hours operation weekly
72 hours operation weekly/
* Assumes 150 miles are traveled in each 8-hour operat~on.
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Labor Costs
The data given above represent truck costs alone and do not include the costs for the driver and driver's helper. Family labor is widely used in performing hauling and delivery functions, Such Iabor performs a variety of tasks including both production and marketing.
Labor costs in hauling are of a variable nature, depending upon the number of hours the labor is performed. In practice, the driver and his helper (if any) will probably be asked to perform other tasks in addition t-0 driving.
TOTAL TRUCKING COSTS
To arrive at total trucking costs, labor must be includod as varying directly with the number of hours the truck is in operation. Accordingly, cost equations must be rewritten to include labor costs, This adjustment will increase the multiplier in the second term of the cost equation by the amount of the hourly wage. The weekly cost equation for each type of truck will be changed as follows:
(1) Average weekly costs including labor
(a) Type A truck
Cost per week = $12.047 + ($0,063 + hourly wage rate) (hours operated per week) + $0,0776 (miles per week)
(b) Type B truck
Cost per week = $12,866 + ($0,034 + hourly wage rate) (hours operated per week) + $0.0722 (mlles per week)
(c) All types
Cost per week= $12,453 + ($0.059 + hourly wage rate) (hours operated per week) + $0.0764 (miles ~er week)
-To illustrate the use of :the above equations, assume a marketing agency has the following information concerning his truck operations for last week:
Given data: (a) 11/2-ton (type B) truck (b) Traveled 500 miles (c) Hauled 650 crates of lettuce (d) Labor, $1.75 per hour (driver and driver's helper) (e) Operated 40 hours
Using equation (b) above, the total trucking costs would be:
Cost per week• $12,866 + ["($0.034 + $1.75) (40 hours)]+ $0,0722 (500)
• $12.866 + ($1,764) ' (40) + $0.0722 (EOO)
• $12.8(16 + $71,36 + $36.10
• $120,326
Total cost under the above assumptions is $120,326. Unit costs are:
$1a). 326 crates = :io.165 per crate650
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SUMMARY
The 11/2-ton trucks (type B) were found more efficient for long hauls and heavy loads. For light loads, 3/4-ton trucks are as efficient, if less than 600 miles are traveled per month.
In order to spread overhead and thereby lower unit costs, it is advisable to operate as close to capacity as possible. More intensive use at capacity also lowers unit costs.
Full utilization of labor in trucking operations presents a problem for most marketing agencies. Frovisions should be made for using the driver and helper for other production or marketing operations during periods of light trucking activity.
Rates of commercial truckers are usually calculated on a unit basis, or in other words, at so much a crate, bag, or case. The agency can calculate unit costs by using the formulas on page 10. The costs can then be compared with commercial rates, thus enabling the agency to truck by the cheaper method.
Efficient trucking operations require detailed records with reference to mileage traveled, hours operated, units hauled, and labor rates.
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