COAL PRICES

Dominion, Volume 12, Issue 233, 26 June 1919, Page 8

COAL PRICES

p HOW THE INCREASES CAME r. P NO EXCESSIVE PROFITS iV ';.■■;.';'.■■.■, IHE BUSINESSIN WELLINGTON. r «>•■■■ la interesting section of the report, on ■U-CoalSupply.deals with distribution costs. ,': 'It is generally bolioved that sea. freights ["■:■ are big factors in price. The freight l;- : .-":on'West. Coast coal to Wellington has '.'.';■■ increased during'tho war from ss. 7d. to ;\B,s. 7d, per ton, and on Newcastle coal or 10s. 6d. to 16s. C 3., \\ ;';' '';■ '■■ • ■ Froight Costs. ; ,Wr ■Wellington-draws its supplies of houseb'.'rlhold'icoali'from the West Coast, the Wni-f-j-i'/kato..district, and Newcastle., Probably fv- the Westport coal constitutes SO per cent. f;M..of the coal consumed in Wellington housej'.o.:holds.. Up to the winter of 1916 house-|ij-liold coal was rescreened in tho retailers' [ : ;.;:yarda in Wellington. , Since that date n' ; .the coal has been mine-screened only. [''The cost of transporting the coal from j '■'<■■■ the mines to the'wholesale depot at Welf;; .lington for the years 1914-18, and the k'-;.' percentage which that cost i_g of • the p'-'retail price at the present time, are j--,"eh'own in the following table:— [;■■"■;.,Cost of Carriage of Coal to Wellington. [."■'■. .' . ' . . ' Eatioof p:' J /- lr ■';■■.; ■■ ' Costof |-'. ; . •'"■ • Carriage to \i:^ : : ■ : -, ' . 1914 1918 Increase Eetail |\<;C:// ■■;;■"*'.■ i a.d. s. d; p.c. Price. £*:-Westport and l> , Greymoilth 5 7 9 7 72 19p.c.» ■■Uuntly .„:.. 12 7 15 3 21 29 p.c. £ Newcastle ... 10 0 16 6 65 32p.c. ■:^7'- : :: X *Westport coal. '■:.; .The retail.dealer-takes delivery of the [.''■coal-atthe wharf or the railway station, I":;' carts it foose to his,yard, bags and. stores ; v it, and thence delivers it as required to i the consumer. In Wellington twenty bags ■■ ;go to the ton. Cartage and delivery costs ■1; are heavy, because of the jiaturaMty steep' •? -. and.. uneven. ' configuration of much 'of fe the Durban and suburban areas. A'man (. ..with a dray ,and two horses delivers from ft'fijl -.'to i tons, per day within the. town '"fares, and 2J to 8 tons within the suburb/tan, area; tut frequently two men are i required to deliver a load. There are f -abont thirty tradors, nearly all of whom , : -'nie. of the Wellington Coal , Affiooiation, most of-them(con- ■ v.'.iduotingibusinesses on a small scale,' work- ; / ing themselves and\ employing -on the }h average', anotb.e'r man; Neither the aeso- :■;, piation.. nor its individual members ap- '■'.'. 'pear to.exercise any trade discriminaton. :• against non-members; The association ■'fixes the changes in ,tne retail prices of 'V : coal, and this scale of prices-is-generally by' the traio, though occasion::J iilly" higher priocs are charged by individual dealers. . !■•■': -The regular traders in coal miffer hard■•lly any. competition from outside', sources aone, for example, from car- ■'- 1 tiers,;Vho in!'some, other centres do a L 'not' inoonsiderablo trade in small lots ■"*. idirect. from'tlie wholesale- depot to the i'V.consumer. In Wellington the margin for (sa. 6d. per ton; Is. 9d. per rvtciuarter-ton; 3d. per cwt.) appears to be ('•'V-^eo'small between'.the retail rate and the p :; depotrato as to precMe any profit fTom t-'-"'Enoh'tradoV . ■ f' : ;-;.;,■■;;' ; • Prices. . 1,. ''•>'■" The-,priees fixed by the sssooiation are i^Kfor'caeh,'booked 2s. extra, and Iβ. dis-•j.'v-cdunt if paidby the 20th of_the month I.'.following pitrchase. It is estimated that r' : .the cash business forms about one-half I' : of-,thb total business, and that' the mafiviprity of the remainder of the other half i ; j,;-is monthly discount business. There are ; ,-''-.'two ■ scales-of prices—one for the city ■.'V- 1 and .the other for the suburbs—the latter ; ' 'being,.for the greater part of the period ?:' ■ under review, 3s. more than the city rate, I-," ati 4 lecentlr'4a. more." :•;' The retail prices of coal in Wellingi'' ton have risen as follow^— /X_:;_...,- ..... , ■■ In-Percent- ) ; ■•'■■.-■■■. ■ 1914. 1918. crease, age. *vWestport ; .->. SB*'.'.- SO' U 3D

V'iTaupiri ■.;.... .86 ' , 51 18 50 ■vSSfenreastle"....- 36 52. 16 . 40 •:• State; City ... 33. 37 4 12 „ -gubuTbs .36... 41.- 5 ,' 13.9 Dealer Gets No Extra Profit. !'"••;- -This shows an ihorease of 14s. per ton, ft:'/er.:'39 per cent., in the case of I lie stasia "idaTd'household coal. This increase is f*..'.- : '-'Jriade''iip of 9s.> 6d.. in the wholesale price '(&tti:- the coal dealer, which rose from f?5-55."6d.i to £1 15s.—a rise of 88 per cent — |W;?andf4s.:6d.': i ih the increased lost'cf'.teAr failing, excluding prime cost. Of the in-;-;Screaee; in'.the wholesale price, 4s. las i'!7..;Veen due to the rise Lα shipping freight, • ■':-the remainder to railway increases (about '':>7d;);'andvto the rise in the general , cost »)'bi}]productionVat the mine. The quoted j^owholesale' , .'.price includes. Is. wharfage, [•i'rrfii'ch has'remained unchanged ever the i'vf:period.' <The increase is, therefore, tough-f-'.a It. equally dwided between the rise in the rise in the cost of tiiitrensport.; These rises; in the wholesale kXprloe occurred on'the following dates:— H :'::'■ '.•"' itise. Canso. ' \;:':' : \-'::". Date.'- '■' s.;d. ..-'■"■. . '• , F ■ Feb. 14, 1516 2 0 Inorease in tteamsr ii ; July 3, 1916 2 0. freight,. wages/ LVj .. ••■ railway carriage, (•.-■ayX', /.'.' '' .■■;■•■■ and general cost of 1;'.:,-.: . ■;■■'■.■■; ' production. tV' 'April 10, 1917 2 0 Increase in general )-: . cost of production. [;. M truly 18, 1917 3 6 Increase in freight, i' : L .'_, .. , wages, and other fV";. '"' '.•■■■.•'■'•■• • costs. ■ . 1.,;. InVthe'case of another coal supplied IVv from the same field to the Wellington iv.maritet-the wholesale price has increased [<"' ■'•by : tW same amount (9s. Cd.), the. risoa '.'-.taking place as follow:— p".;\" ■■/ : ' .', Kise. Cause. t.-- : :-: ;; V 'Date. s, d. ■.V'-'No'?., 1915 — o>4 Increased railage. ii , "'.'.'July,' l9l6 2 8 Steamer freights, ;:'■/;'. . . . and increases in Lv';;. , ' , , ■■•', •■'■, mine -wages, p' 'January, 1917 10 Further increase_in fv'."-April, 1917 .... 2 0 the mine cost of '■'.■'■ '•• ■ ■ . ■■ ■..production. [•iV'July, J917 ... 3 6 Advance in sitea mar ■\':- ;,.;,.. ' ' . freights and in ?"',. .' ■•.;•■ mine labour cost. '•■■■:•■;'•'The increased cost of retailing the coal f '.'ls roughly:equal to the separate increas- '.-, ed cost in mining or in transport, each v '■accounting for about a third-of the total j.'i Increase. 'The extra retail cost has 'been [Vvdije mainly to higher wages to Hie ynrdj..' nieif"aiid drivers, increased cost of ft,r- -|.,/ \ ;-age-and'of maintenance of plant, with i..."a,rise, in .the per ton cost of delivery owl\ ' inir to the shortage of supplies. price of State house e< al was '/■•'■ Increased once only, via,,, in July, 1916, iv by 4s. a ton, or 12.1 per cent., made up !"'. of increased charges—freight, Is. Gd.; '"••-■ Ta'il, r mine to Groymouth, 6d. (approximate); 2s. increased wages, cartage: and :. v ot'ner costs. The increase in freight of 2s. 6d, per ton in December, 1917, has b-- : Vn6t been passed on to the public; other i charges have'also increased, and the I. ; :State depot appears to have been losing j "at least 33. 3d. per ton on the house (■coal it retailed'at Wellington in March, i ' 1918; the estimate of present loss h \ 'about 4s. Gd. 'Any profit it makes is 1 ''■■' made out of tho ex-ship wholesale trade. I "Increase in the Prices .ex Ship, Wholek/ eale, of State Coals at Wellington, :.: ■- • 1915-18. ' „ ' .. ■ ■)■ . Eateof profit p;, ,f ■ g i :> ■ I',-■ or 1 u ■<*■ l; I. --P SI K i * -k is it ii s. d. . ! Screened* — — 6.66 - ■ Unscreened— • ' i Pt. Elizabeth 9 0 .13.9 7.89 20 1 ■ ■.. Liverpool ...... 9 0 43.9 7.59 5.05 j' Point Elizabeth ' (small) 9 0 64.29 3.7 6.56 '■:■ Liverpool (small) 7 0 43.75 18.52 6.5G I; - ~-■■. *No sale in 1918.. I Items in Cost. '.'.-.;; -The: following estimate of the-present [•■'" cost (January. 1919) of retailing house- ;. ..hold coal in Wellington may be accepted '" as accurate. This estimate differentiates ' ,between ,the city and the suburban trade, J '• and'refers to a turnover handled, by one i '- V raan iwitE two horses and a dray, worfcj.i ing'. l 27s'"tlAys in thtf'yearj' , 'aiiil''Handling I'. 1100 ton's' , in the, town', 0i : '825 in the sub- ','■ .mrbs.- T ■'■■■. !' . City. Suburbs. ; ■: s. d. ■ s. d. J ,r. Cartage to yard 3 6* 3 6 j expenses L 4 3 .43

Sacks 16 16 Cartage to customer .65 S 7 Total distributing costs 15 8 17 10 Coal ex ship 35 0 35 0 Total retail costs 50 8 D 2 10 Average retail price .. 53 0 56 0 Profit 2 4 3 2 •Average of railway nncl wharf. In this estimate no allowance has been made for the times during which no coal has been available to distribute. Durinz the past year such contingencies have not been infrequent—in one case during January, 'lDlfl, the yard had been baro of coal for ten days, with none in sight. On 6uch occasions the hands are generally kept on, and a large proportion of the expenses continue with no corresponding income. It is to be noted also that the "average retail price" is not tho ton rate, but a rate between the quarter-ton rate and the hundredweight rate, as the greater, part of the business done by retailers of late has been in small lots. This fact, however, increases the cost, and this/|incvease in cost, due to the diminution' in tho size of the average order, has not been fully allowed for in the above estiinate. The' suburban . portion of this estimate refers to a 'business which is worked from a yard in the city. The following is an estimate of the costs of a retail suburban dealer whose yard is situated in the suburb itself:— s, d. Cartage to yard ; It) Of Cartage to customer ; 6 6 Sacks ...:., 2 1 Rent and depreciation ».■ 1 6 Coal ex ship 35 0 . . ' 55 1 Average retail price 56 0 Leaving 0 11* ■(During shortage of euppliee—about 7,5. with normal supply. *For bagging, weighing, • office expenses, etc.,...-_" The increase in the cost of conducting a retail business, excluding the increase in the prime cost of the corl, amounts to at least 4s. 6d.—an increase of about 40 per cent, over the period since the beginning of 1914. 'l'hia increase in cost clay be analysed thus:— Per ton. s, cl. Cartage to yard, rise of 1 3 Increase in wages to yardmen and drivers, and in the price of for-

Increase in other expensess, salaries, rates and taxes, insurance,' maintenance, advertising, depreciation, etc. 1 3 Total ....;....;.... i 6 Comparing the years ending March' 31, 1914, aril March; 31, 1918, the State deu'ot finds' its wages cost increased from 2s. 9.08 d. to 4s. 1.91 d. per ton over all coals, wholesale and retail, and its cartnKe costs increased from 4s. 1.3d. to Gs. 2.11 d. per ton'. The total cost of handline and- .distributing these coals increased by 28.5 per cent, between these years. The cost of handling the retail business, is higher, cartage accounting for over 75.. or nearly half the total cost (14s. 2.32 d.) on the average of the year ending March 31,, 1918. The charge for sacks is very much lower than in the case of private firms, being only 3.17 d. per ton. For that year State coal cost, landed into trucks or carts at Wellington wharf, Jil 5?. 10.97d..;made up of f.o.b. price, Greymouth. 15s. 3.97d.j freight, 9s. 7d.; harbour dues, Is. The total cost from mine to consumer worked out nt £2 os. 1.29 d. PW-ton, the coal then selling at £1 17s. per ton in ton lots.

Profits.—Considering the rise in the prices of materials and in wages in relation to the decreases in the average turnover and in the amount of work per day done by the workmen, we consider the increased charge (4s. 6d.) which retailers generally have passed on to the consumer-is reasonable; In this connection it is interesting to compare the changes in the margin available to dealers who take supplies of conl direct from tho wholesalers' yards to the consumers. Up to December, 1916, this margin—i.e., the difference between tho ex <]epot or exyaid price to the dealer and the cash retail price—was 4s. per ton; from December. 1916. to July. 1917, it was 4s. Gd; from July, 1917, it has teen ss. Gd. This is an increase of 37i per cent., which is approximately the same as tho percentage increase in the retailer's business costs, excluding the price of his coal.