Unit 16 transport problems

The firm of Harper & Grant has a Transport Manager. His name is Bruce Hill. He is responsible for delivering goods. Some go by rail and some by road. For goods sent by road he uses a firm of contractors who supply him with lorries, on demand.

This morning he has just seen off a load of office desks and chairs ordered for a new liner being fitted out on the River Clyde in Scotland. The tailboard, the back part of the lorry which can be raised and lowered, was only just able to be shut, as every inch of space was used; it was loaded to capacity. Bruce Hill is worried because he wants that same lorry back quickly for a regular south-west England delivery. He could ask for another lorry from Andersons, the contractors, but they have recently put up the charges again for fuel consumption, driver's expenses and so on. It is difficult for him to keep to his budget. He has long been wanting a fleet of lorries of his own, because he is certain it would work out more economically for the firm in the long run. He goes to see his immediate chief, Peter Wiles, to find out if Peter would put up the idea at the next Board Meeting. Peter is sure Hector Grant will reject the idea because of the initial expense. Bruce suggests that if they had their own fleet or at least two lorries to start with, they could control some of the problems better. They could have their own fuel pump, which would mean a reduction on bulk purchase of petrol. They would probably buy vehicles with diesel rather than petrol (gasoline) motors. The initial cost of a diesel vehicle is a lot higher than for one with a petrol engine, maintenance costs are usually higher too; but the operational costs are lower. Peter sees the advantages, but reminds Bruce that the new regulations about road-worthiness of goods vehicles are very strict. Police inspectors have the power to order spot checks, and they can order any vehicle with a defect off the road.

Surprisingly it is Hector Grant himself who proposes that the company should have their own transport. He asks Peter to prepare a D.C.F., Discounted Cash Flow (see Unit 1). Discounted cash flow is a technique for assessing the profitability of a new investment. An investment is normally made on certain obvious assumptions, such as probable sales or operating costs. In addition, when buying two lorries, for instance, other factors should be considered, such as: (1) there will be an investment grant, perhaps thirty per cent of cost, which is a government incentive for firms (who pay tax to the government on profits) to re-equip; (2) there will be a second hand value on the lorries, when at the end of, say five years they are traded in and replaced by new ones; (3) during their lifetime the lorries will represent money which, if left in the bank, would have earned interest.

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The D.C.F, technique takes all such points into consideration and discounts the annual forecast income on the investment by a sum to repay net capital, pay interest and cover all operating costs (wages, fuel and maintenance).

The net discounted income related to the net investment over the life of the investment indicates the degree of profitability or worth-whileness of the project. Neither the D.C.F. nor any other technique can say whether the assumptions on which the investment is proposed are going to be right. Running a business means taking risks. It can, however, say what the consequences will be if the assumptions are right.

But before Hector Grant makes a suggestion for a D.C.F. the driver of Andersons' lorry, Ernie, on his way to Scotland, is asked for a lift by a man he meets in a transport cafe, with rather unexpected results.

(In Peter Wiles's office.)

BRUCE HILL: Peter? Can I trouble you?

PETER WILES: Is it urgent, Bruce? I'm up to my eyes in work this morning. You know H.G. likes you to cope with transport entirely. You're only nominally under me.

HILL: Yes, I know. But this is a policy matter. I think it's high time we had our own transport fleet. Every month it gets worse having to rely on outside contractors.

PETER: My dear Bruce, H.G. wouldn't hear of it. You know the new works extension is working out twice as expensive as we originally estimated. We're supposed to be making economies to offset the increase!

HILL: I don't think it would cost us so much... in the long run.

PETER: There are a lot of arguments against having our own fleet. It's difficult to keep the lorries fully employed, and you've got to calculate depreciation.

HILL: I realise that. Of course the most efficient system would be to have articulated vehicles.

PETER: Well, surely you have to be a very big operator to make that system economic. The traction units that do the pulling are very expensive. Anyway, what's wrong with the contractors who supply us with lorries?

HILL: They can't always let us have one when we want one. And then there's the cost! Andersons' bills get higher each time.

PETER: They why don't you go to another contractor?

HILL: That's just it. We can't. We've been with Andersons so long we get a good discount. It's not the basic charge they increase but the expenses: fuel consumption, alleged breakdown, driver's expenses on overnight stops and so on.

PETER: If we had our own fleet there'd be similar problems and expenses.

HILL: But they'd be controllable. Turn-round time, for instance.

PETER: How do you mean?

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HILL: I mean we can never really be sure of how long they'll take at the other end. This load that's just gone off today, for instance, taking those desks and chairs for the new ship at Clydebank. We need that lorry back here the day after tomorrow.

PETER: H'm. Well, I'll try' to suggest to H.G. that we should have our own vehicles. But I don't hold out much hope...

(The driver of Andersons' lorry, Ernie, has given a lift to a man he has met in a transport cafe.)

'FOXY' RUNCORN: It's good of you to give me a lift.

ERNIE: Well, here we go up Shap Fell. Two thousand feet of it. It's time they built a tunnel under this mountain.

'FOXY': Turn off at the next road on the left, will you, Ernie?

ERNIE: What? What did you say? Look here, what are you playing at?

I thought for a minute you'd got a gun in your hand.

'FOXY': Yes, but it is a gun, Ernie. Just take the next turning on the left!' Here it is.

ERNIE: But that's not a road, it's a private drive. What is this?

'FOXY': Just be sensible, Ernie, and no harm will be done. If you do what I say, there'll be something in this for you...

(Next day. Hector Grant rings his Transport Manager.)

HECTOR GRANT: Bruce? H.G. here. What on earth's happening in this place? I've just had a call from Scotland. They say that load of desks for the new liner never arrived. You're the Transport Manager, you're supposed to deal with this sort of thing. I don't want to be bothered with it. What do I have a Transport Manager for? ... Yes... find out, and deal with it.

(Twenty minutes later, Peter comes into H.G.'s office.)

PETER: H.G, I've just spoken to Bruce Hill. He's sure our load to Clydeside has been hi-jacked.

GRANT: Hi-jacked? What on earth do you mean?

PETER: After you'd spoken to Bruce, he called the contractors. They've also been trying to contact their driver. They checked with a transport cafe near Carlisle and he'd been there. After that, nothing. They've already been on to the police, who've searched the road and found nobody

GRANT: There must be some mistake. He must be somewhere between Carlisle and Scotland.

PETER: The police say they've checked the whole route. Apparently it's the third lorry to disappear in a week. They think it may be the same gang.

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GRANT: Oh, damn it! It was a large order, wasn't it?

PETER: Yes, sixty desks and the same number of chairs.

GRANT: Well, you'd better let the insurance company know. But I'm sure the police will catch up with them, it's funny the driver hasn't been found.

PETER: I suppose it's possible that the driver is an accomplice.

GRANT: These damned contractors. You never know where you are with them. How do we know the driver wasn't involved? I wish to heaven we had our own fleet!

PETER: What was that, H.G.?

GRANT: I think it's high time we had a couple of lorries of our own. Put up detailed proposals with a D.C.F. on the investment at the next Board Meeting, will you. You would be in favour, wouldn't you?

PETER: Er... yes, H.G. Yes, on balance I think I would...

TERMS IN THE INTRODUCTION

1. contractors here, a firm who hire out lorries, trucks, etc. The

cost of hiring includes turn-round expenses, fuel consumption and so on.

2. road-worthiness the fitness of a vehicle to be on a public highway or road. It must be in good mechanical order.

3. spot check here, the detailed examination for road-worthiness of

a vehicle selected at random, which could be carried out by the police anywhere and at any time. The phrase spot checking is generally used in the qualify control of goods in production. A sample of goods, which might, be typical of a large production batch, is selected for inspection.

4. give someone (colloquial) to transport (without charge) in a car or

a lift lorry a person who would otherwise have to use

public transport, or go on foot. Most companies give strict instructions to their drivers that they may not give lifts, usually because they do not pay the extra insurance for passengers. However, this is often ignored.

5. transport cafe cafe or restaurant which provides hot, cheap meals and plenty of parking space for large vehicles.

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TERMS IN THE EPISODE

1. nominally in name only.

2. in the long when final calculations are made (e.g. a machine to

run address letters may be expensive to buy, but it may

work out cheaper in the long run because of the

saving made on time and salaries).

3. depreciation reduction in value owing to use. For example, the

value of furniture, lamps, wall lights, etc., in a home

(known as fixtures and fittings) depreciates in value

every year.

4. articulated large trailer which is pulled by a traction unit and

vehicle can be dropped off at various points for loading and

unloading.

5. traction unit the front, motorised, part of an articulated vehicle,

which does the pulling.

6. breakdown here: failure, collapse. Usually refers to a car, lorry,

machine, etc., which ceases to function.

7. turn-round time from the arrival of a vehicle to when it starts its

time return journey. Time to turn round and face the

homeward direction.

8. hi-jacked here, to seize a road vehicle in transit, and steal its

load. (Also used of the seizure and diversion of planes.)