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Excessive costs of Delivery Driver

WhyTheFace

Hi,

I work for an independent company that requires deliveries to the same 7-8 customers (business to business) every evening. At present we use a taxi driver who charges us a set fee per delivery. The fees are less than what it would be on the meter but in some cases not by much. e.g. One delivery is 10e instead of 13e but he then charges another 10e to drop to another client 500m away from that one. He also charges 10e to return items to our shop at the end of the run.

This is working out around 100e per evening (6-9pm), over 6 days thats around 30k per year which is handy considering this is just a side job for him. But unsustainable for us.

While we are not at the volume yet to justify buying our own vehicle and employing our own driver I'm wondering would we be better off to negotiate an hourly rate instead? He is a reliable driver and represents the company well but we need to somehow cut down this cost.

Would offering someone €20-25 per hour for a 3 hour shift be a better pricing structure. An average shift would require less than 10e in fuel. I am not trying to exploit anyone, just trying to figure out how to get costs under control!

Thanks

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Bandana boy

WhyTheFace wrote: »

Yes. We have told him to come back with a renewed pricing structure. I told him we need to cut by 50% and expect him to reduce by 25%.

We are looking into sharing the work between existing employees. We could buy a second hand van. Tax & Insurance would be hefty enough but after that our evening costs would be reduced to €40-45e including petrol instead of €100.

Getting a driver who will be presentable in front of your customers and handle the back and forth of daily struggles including processing returns is going to cost you a min of €13-15 and hour.
I would expect a premium to have him working a limited time schedule out of hours
assume 20% so €15-18 an hour
Using 16.50 that is 49.50 in labor alone
Add in PRSI and holiday pay you throw another 5-6 Euro on top

Then pay back on the van , You can get a cheap second hand van , but do you want your customers to see you driving up in a beat up van ?.

At 10,000 over 3 years it will work out at €13 a night
Tax and insurance 6-7 Euro a night.
Fuel you will be able to work out your average mileage yourself better but I am assuming €8 a night

If you are getting this done in house in a crap van for less than 80 euro a night I think you are doing very well.

I think you are on the brink but short of enough volume for this to be worth doing yourself .

vandriver

No maintenance on this old van?

vandriver

However,I will say one thing:to waltz off and not provide a replacement solution in the middle of a review is boneheaded.

masculinist

Its a handy part time job for anyone especially if its outside the hours of a regular job. Provided theres no drugs or anything dodgy in the deliveries, I'd even do it for you. I'm sure theres loads of people who would for a lot less especially for cash in hand. Taxi drivers have a lot of bureaucratic overheads.

nuckeythompson

What is the product? Is it perishable, valuable fragile? Same day delivery required?
The above is what I would ask before pricing anything up. Also the size and weights. What areas need to be covered. Taxi insurance for luggage is different than cargo. That area is a minefield
Knowing the above I might be able to steer you.

[Deleted User]

Tender it - write down your requirements and send it out to a range of courier companies, taxi companies and your existing guy to get their quotes. It's the best way to get value for money for non-core operations.

Bandana boy

AndrewJRenko wrote: »

Tender it - write down your requirements and send it out to a range of courier companies, taxi companies and your existing guy to get their quotes. It's the best way to get value for money for non-core operations.

Tenders are expensive to run , and for this tiny an amount of business you might get no responses.
You could end up with the savings taking years to pay back the tender process

iamtony

One thing I will say about getting your own van to do it is you can claim for depreciation on it off your tax bill every year and things like fuel and maintenance are tax deduct able. That is providing your business is in a position to pay tax like this.

[Deleted User]

Bandana boy wrote: »

Tenders are expensive to run , and for this tiny an amount of business you might get no responses.
You could end up with the savings taking years to pay back the tender process

They are as big or a small as you make them. If the requirement is simple, it is a one-page statement of requirements and a number of one-page quotes in return.

If the business requirement is more complex, the work that you do in clarifying your requirements and analysing the responses will pay you back many times over in the quality of the decision around choosing the provider.

the_pen_turner

one thing to remember is that normal commercial insurance doesn't cover you for carrying other people stuff. you need special insurance.
I discussed this with my insurer when I renewed. she asked me a question and it lead to this discussion.. she asked will I be caring goods belonged to any customer. I asked her to clarify that a bit . the head guys had to be called to clarify. turns out if a customer pays for the materials and I collect them then I'm not insured for the in the van.

not sure how that would apply in your situation . it would come down to when the ownership changed.

the_pen_turner

personally I think the 100 is cheap. you wont come close to that by doing it in house.
add in all the costs , insurance, diesel , doe, servicing, tax, staff, holiday pay, days off, manual handling stuff, paper work side of it. paying someone to organise all that, even tolls

you will find it hard to find a guy with a van and all the relevant insurances and be 100% above board tax wise for that. take of vat, and diesel your at about 75 for 3 hours.
take off the overheads and your not making that much an hour. your probably only getting 15 euro an hour

it would be worth it but its a big commitment for mediocre benefit.. nothing wrong with 45 euro for 3 hours work but look at the stress and constant going involved. that would take its toll on you

WhyTheFace

Bandana boy wrote: »

Getting a driver who will be presentable in front of your customers and handle the back and forth of daily struggles including processing returns is going to cost you a min of €13-15 and hour.
I would expect a premium to have him working a limited time schedule out of

Then pay back on the van , You can get a cheap second hand van , but do you want your customers to see you driving up in a beat up van ?.

At 10,000 over 3 years it will work out at €13 a night
Tax and insurance 6-7 Euro a night.
Fuel you will be able to work out your average mileage yourself better but I am assuming €8 a night

If you are getting this done in house in a crap van for less than 80 euro a night I think you are doing very well.

These are not premium hours, it's handy money for someone who already has a 9-5 job.

We are looking into the option of using existing members of staff and so reduce their shift to 6 hours on site and 3 hours driving so no increase in staffing costs. They won't be doing any processing of returns. Not too worried about the van as long as it passes the NCT, probably pay €3-4k.

vandriver wrote: »

However,I will say one thing:to waltz off and not provide a replacement solution in the middle of a review is boneheaded.

Not sure what this means.

Bandana boy wrote: »

Tenders are expensive to run , and for this tiny an amount of business you might get no responses.
You could end up with the savings taking years to pay back the tender process

I've typed up a tender. It took about an hour. I'll have no problem going through replies.

iamtony wrote: »

One thing I will say about getting your own van to do it is you can claim for depreciation on it off your tax bill every year and things like fuel and maintenance are tax deduct able. That is providing your business is in a position to pay tax like this.

Yes that's one of the main benefits of doing it in house.

vandriver

WhyTheFace wrote: »

These are not premium hours, it's handy money for someone who already has a 9-5 job.

We are looking into the option of using existing members of staff and so reduce their shift to 6 hours on site and 3 hours driving so no increase in staffing costs. They won't be doing any processing of returns. Not too worried about the van as long as it passes the NCT, probably pay €3-4k.

Not sure what this means.

I've typed up a tender. It took about an hour. I'll have no problem going through replies.

Yes that's one of the main benefits of doing it in house.

The taxi cost is 100% deductable.What's the difference?
Obviously no increase in staff costs if you can get someone reliable,but have you factored in the loss of productivity?

NephinView

Hi there. Just wondering if you managed to work out a more financially viable plan for yourself with this? I'd be interested to hear about it

the_syco

TheBlock wrote: »

Tons of people out there who have there own vehicle and are looking for additional income.

Tons of people will not have the correct insurance for using their vehicle for commercial business.

Use a courier from a company. This way there'll always be someone available.

Has the taxi driver ever not been able to make it?

peteb2

nuckeythompson wrote:

What is the product? Is it perishable, valuable fragile? Same day delivery required? The above is what I would ask before pricing anything up. Also the size and weights. What areas need to be covered. Taxi insurance for luggage is different than cargo. That area is a minefield Knowing the above I might be able to steer you.

Taxis don't cover your luggage. There is no cover there on the insurance. They are covered for hire and reward which is what this work is. OP should have his own goods in transit cover

BillyBobBS

Just reading through the thread now and tbh OP you are doing okay if you still have a driver on that rate. Maybe going back a year or two you could have done better but you'd be doing well now.

I know a couple of lads driving taxi's at present and a owner driver van courier and they are out the door between the hours mentioned. The owner driver is a friend and he's talking about 1300 a week over the lead up to Xmas before his overheads. There is a courier company based in Dublin who are now offering a starting bonus for owner drivers with post 2015 vans paid over the first 12 weeks of employment at 50 euro a week for just taking the job. One of the taxi drivers does straight airport runs 4 hrs in the morning and 4 hrs n the evening to and from Sandyford business park and he's making similar money.

WhyTheFace

Hi,

Sorry for not replying until now. Totally forgot about this thread.

So the taxi driver refused to review his rates and we parted ways (on good terms).

A driver who used to do 2 shifts per week agreed to take over all shifts and we negotiated a rate of 15% less than what the taxi driver was charging.

I also tightened up on deliveries, not sending orders automatically and confirming first if the item(s) could wait until the following day etc.

I think overall this has resulted in a cost saving of around 25% which I am happy with.

Thanks for all the input