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New Cost Tables:

14th July 1972, Page 40
14th July 1972
Page 40
Page 43
Page 40, 14th July 1972 — New Cost Tables:
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Which of the following most accurately describes the problem?

a big jump in

standing costs

A STEEP — 13 per cent — rise in vehicle standing costs between 1971 and 1972, but a relatively much smaller rise in running costs is one of the key factors brought out in the new edition of the Commercial Motor Tables of Operating Costs published this week. The 1972 Tables are now available, price 60p net, as shown in the panel on page 43.

The new publication is the 56th edition of the series, and the 58 types of vehicles for which costings are given include goods vehicles with payloads ranging from 5cwt to 22 tons and passenger vehicles ranging from a 1300cc car to an 80-seater doubledeck bus.

Because the cost of operating a vehicle varies substantially according to the amount of use made of it, the Tables have been compiled to provide alternative costings for a range of average weekly mileages. The examples of weekly mileages chosen for each Table also vary according to the type of vehicle included in that particular Table.

For example, the goods vehicles included in Table 2 have payloads ranging from 3 tons to 8 tons. Accordingly, five alternative weekly mileages — 200, 400, 600, 800 and 1000 — are considered appropriate. In Table 5, however, which consists of articulated vehicles with payloads ranging from 10 tons to 22 tons the 200-mile "steps" commence at 400 miles per week and continue up to 1200.

Two ready-reckoners There is, however, a practical limit to the number of variations which can be included in any standard set of costings such as the CM Tables of Operating Costs, whether as regards mileages or the prices and costs on which the intitial calculations are made. Accordingly, there are also included in this publication two ready-reckoners to help the user of the Tables to calculate alternative standing costs and fuel costs based on his own operating experience. For example, whatever amount is selected as the cost of wages or the price of fuel for inclusion in the Tables may be different to the amounts being paid by individual operators. In such cases two ready-reckoners will facilitate making the necessary adjustments.

Also included in this publication is a detailed description of a recommended cost system. This provides a useful starting point for operators new to road transport who wish to set up their own costing system. Later, however, they will still find editions of the CM Tables of Operating Costs an invaluable and impartial yardstick by which to compare the trends in their own costings, And now for comment on the trends revealed in this 1972 edition of the Tables as compared with the costings shown in the 1971 edition.

Word of warning First, however, a word of warning must again be given as to the "results" obtained by making comparisons of operating costs one year with another. Before the severe inflation current today, any variations in costs such as wage awards or fuel price adjustments were not only moderate: they were also infrequent. Consequently, the comparison of one year with another irrespective of whether the year happened to be January to December or June to May tended to show similar percentage increases.

Basic costs increased Now, however, increases in basic costs can be both substantial and frequent. So it is now possible for the overall increase in one particular 12-month to differ from the results obtained in making yearly comparisons over a similar though not identical 12month period.

Therefore, when differences of this kind do arise they have to be accepted for the reasons just given. Provided errors have not arisen due to other causes, then in these circumstances it is a futile exercise trying to establish that one set of costings are "right" and the other "wrong". Both are probably "right" for the period to which they refer.

Another factor which has to be taken into account when comparing one year's costs with another is the effect which differit variations in standing costs and runnit costs have on total operating costs.

Standing costs up 12.90 pc Take, for example, the new costings show for a medium-size lorry — the standai platform version of a 7-tonner — in th 1972 edition of the Tables. Now the standir costs are £46.39 a week. Last year they wei £41.09 a week. So on standing costs alone tl increase in 1972 compared with 1971 12.90 per cent.

Comparison of running costs, howeve show that in this sector when, for exampl averaging 400 miles a week, the running co per mile rose from 6.44p in 1971 to 6.89 in 1972. Although still a substantial increm of 7.130 per cent this is appreciably less tha the 12.90 increase in standing costs.

As a result of this variation the overa increase in total operating costs (which col sist of the addition of standing costs to rim ning costs) becomes less as the averai weekly mileage increases.

Again using the example of the 7-tonm the total operating cost per mile when aver; ging 400 miles a week was 16.71p in 197 In 1972 it is now 18.48p — an increase 10.59 per cent. But at 600 miles a week tb corresponding operating costs per mile an 1911 — 13.05p; 1972 — 14.37p — a increase of 10.11 per cent. And at 800 milt a week the comparative figures are: 1971 — 11.34p; 1972 — 12.43p; increase 9.6 per cent.

So it follows that when examining it creases in operating costs it should be born in mind that these will remain constant ovf the whole range of average weekly mileagc only if, by a coincidence, the percentag increases in standing costs and running coal are the same. Other than in these exceptiom circumstances, therefore, no one figure can be quoted as an overall percentage increase that would be applicable to the wide range of average weekly mileages run by commercial vehicles over a variety of operating conditions.

Now for a look at the increases which have occurred in most of the 10 items of cost which ire incurred in operating a commercial Jehicle. Five of these are standing costs which arise whether the vehicle is in use or not and are calculated on a time basis..The remaining ive are running costs which, as their name mplies, occur only when the vehicle is in use and are reckoned as a cost per mile.

The five items of standing costs are: icences, wages, rent and rates, insurance and interest.

Compared with 1971 the amount of excise duty payable when licensing a corn'nercial vehicle remains the same in 1972.

Wages fluctuation The item of wages, however, shows no iuch stability. Not only has there been a iubstantial increase in wages paid generally lut there has arisen a wider fluctuation in he amounts paid than occurred when the saditional national awards applied. In these 1972 Tables recognition of this continuing :rend has been made. Arbitrarily the range )f wages payable to an adult goods vehicle triver for a basic 40-hour week has been 'eckoned at £25 with 50p additions for the .ecognized increases in. payload capacity. [he same basic figure of £25 applies to )assenger vehicle drivers and £29 for onerian-oper ation .

However, it should be noted that the amounts shown as wages in the Tables for a )asic week are the corresponding costs to the mployer, ie including provision for holtJay s with pay and payment of statutory contributions.

Recent returns from rating authorities show there will be an increase of about 10 per cent in the rate demands operators will now have to meet. So the item of standing Rent and Rates — has been adjusted accordingly.

In contrast to the insurance premiums paid individually by private motorists, vehicle premiums for commercial vehicle operators are often more directly related to each operator's claims record. Obviously this will vary individually but, following successive increases in previous years, a further addition of 7+ per cent is allowed for this year.

Interest on the capital outlay in purchasing a vehicle is controlled by two factors: the price of the vehicle and the current interest rates. On average, vehicle prices have risen by 10 per cent but last year's interest charge of 9 per cent has been reduced to 8 per cent.

Fuel costs stable Fuel is a major item of operating costs and it is therefore fortunate for the operator that overall, fuel prices have tended to remain relatively stable over the past year. So fuel

costs as paid by a commercial operator — are considered to have remained the same as in 1971. The smaller item of lubricants, however, has increased by 74 per cent. Over the year tyre costs are shown to have increased by 5 per cent.

Maintenance costs continue to show wide fluctuations as operators strive to ensure that statutory standards of vehicle fitness are achieved. To do this, however, increases in the cost of both labour and materials have had to be met and an addition of 124per cent has accordingly been included in the 1972 maintenance costs. Finally, depreciation costs have been increased by 10 per cent as a result of the corresponding increase in the price of vehicles.

The 1972 Commercial Motor Tables of Operating Costs are available by post price 70p including postage from the address in the panel below. They may also be obtained price 60p net, by personal callers only, from the trade counter of IPC Business Press at Paris Garden, off Stamford St, London SE19LU.

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