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Don't Just Price Right, Select Right

The truck sales swing is swinging. Sure it hasn’t yet hit the heavy side of the market but sales are certainly improving in the medium sector. Given that the time is not far off that operators are going to have to start replacing their aged fleets, we thought it apt to get an early visit into the issue of vehicle selection, a subject which draws heated debate in most transport circles. Jack Webster, FleetWatch's correspondent on legislation, gives his guidelines and thoughts.

Given that the selection of the right vehicle for the job can make or break a transport operator, it remains an unfortunate fact that in many cases, important decisions are made based on opinions rather than on a scientific analysis of all the financial, technical, legal and other available options.

In this modern day and age, it is true to say that the computer is doing most of the thinking for us. If, for example, a road transport operator is invited to submit a tender for a large contract - and needs new vehicles to do the job - he merely feeds the computer with details of the 'job to be done' and the computer will select for him the best vehicle/combination.

What is often forgotten, however, is that the accuracy of the final selection all depends on the information fed into the computer and herein lies a potential problem. How do you determine accurate information - and particularly when no accurate historical data is available?

Influencing factors

Factors which have a significant influence on the selection of the most suitable vehicle or combination of vehicles for a particular operation or type of operation include the following.

Obviously the most important consideration in any transport operation is that the vehicle selected to do a job must be capable of operating at a cost which is lower than the revenue it generates.

In the road freight industry, the unit of payload is usually the ton or 1 000 kg, or a conversion, for example; liquids to kilolitres or aggregates to cubic metres. The maximum payload is determined by deducting the unladen mass from the maximum permissible mass.

In the determination of the cost of a road transport operation, the first step is to establish the annual fixed cost which basically includes:

• Cost of capital (finance)
• Annual depreciation
• Annual insurance costs
• Annual licence and permit fees
• Annual wages of on–vehicle staff
• Administration costs
• Annual fixed maintenance costs
• Any other annual costs

The annual fixed costs can be broken down into cost per month, cost per day or cost per kilometre, as required.

The second step is to establish the variable or running costs which are only incurred when the vehicle is actually running. The variable costs include:

• Cost of fuel
• Cost of lubricants
• Running maintenance
• Cost of tyres
• Other costs

The variable costs can be collated and determined on an annual, monthly or daily basis or per kilometre.

The third step is to determine the distance to be travelled in kilometres, which can be established on an annual, monthly, daily or even a per trip basis.

Having ascertained the information referred to in the above three steps, it is possible to establish the cost of operating a vehicle or combination, or a number of alternatives which could be used to do a particular operation. A typical example is an operation involving the conveyance of 6m containers, loaded both ways, between Durban and Johannesburg. The operation could be done by:

1. A 6 Axle Articulated vehicle conveying two containers, each container having a gross mass of 15 tons. Total Payload – 30 tons. (Maximum legal gross mass 46.7 tons, less unladen mass 16.2 tons = 30.5 tons payload).
   
   
2. A Combination consisting of a 6 x 4 Freight Carrier drawing a 4 axle trailer conveying three containers each having a gross mass of 12 tons. Total Payload – 36 tons (Maximum legal gross 56 tons, less 20 tons unladen gives 36 tons payload).
   
   
3. An Interlink Combination conveying three containers each having a gross mass of 12 tons. Total Payload – 36 tons. (Maximum gross mass 56 tons, less 20 tons unladen mass = 36 tons payload.)

Using the Road Freight Association Vehicle Cost Schedule – Edition 20, March 1999 - as well as the analysis in the accompanying Table 1 and the payload analysis made above, the following cost comparisons can be made. It must be remembered that the real meaningful comparison is the cost in cents per ton.kilometre

The 6 Axle Arctic

Truck-Trailer Combination

7 Axle Interlink

The figures used are not necessarily actual but typical. The object of the exercise is intended to illustrate the methodology. It does, however, illustrate that the cost in cpk is not the total measure of the cost of an operation.

• In general freight it is: c/t.km
• In tanker operations it is: c/ml.km
• In tipper operations it is: c/m³.km
• In passenger operations it is: c/passenger.km

There are other considerations such as:

• Required payload modules
• Manoeuverability – turning corridor
• Topography and road conditions
• Interchangeability and flexibility and possibly other - But

The importance of the need to consider all options in vehicle selection cannot be over emphasised. Vehicle type and category together with the vehicle specification, are of major importance and must not be compromised in favour of price and make.

Table 1 : Comparison Analysis

Where :

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