Cost Charges Up to Date
Page 74
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By S. Buckley
Assoc. Inst. T.
THE 1963 (47th) edition of "The Tables" is due to be published on June 26, price 4s. through newsagents, or 45. 6d. postage paid from the London office of this journal. As an indication of the contents of this publication three representative extracts are given here in respect of the operating costs of goods vehicles (ranging from 5-cwt. to 2-ton carrying capacity), buses and staff cars. As the previous edition was completely sold out early this year readers are advised to order their copy of the new edition promptly to avoid disappointment.
The remaining six tables not shown here detail the operating costs of goods vehicles—both rigid and articulated—with carrying capacity ranging from 3 tons to 16 tons, electric vehicles and coaches. The complete tables contain operating costs of 60 representative commercial vehicles made up of 41 goods vehicles, 15 p.s.v. and four staff cars.
In addition to these detailed estimates of operating costs " The Tables" includes useful information such as addresses of organizations concerned with road transport, current road haulage wage rates, a 10-year comparison of costs and a table to facilitate the calculation of fuel cost at varying prices. There are also two articles on systematic cost accounting including a recommended vehicle cost sheet and advice on the recording of hire costs.
The Commercial Motor Tables of Operating Costs have been in publication since 1911 and are widely recognized for their
comprehensiveness, accuracy and impartiality. This new edition has been brought completely up to date and should prove invaluable not only to every road transport operator but also to traders, insurance companies and others concerned with the cost of operating commercial vehicles. In view of its usefulness for reference purposes this new yearly edition remains good value at 4s.
Dealing first with variations in the tables since their publication last year, this new 1963 edition makes allowance for increases in wages paid to the operating and maintenance staff of both goods and passenger vehicles. Adjustment to the item of " wages " has also been made in accordance with the increases in employers' contributions to National Insurance which commenced on June 3.
Another item of standing costs which has been increased since the last edition is rent and rates in respect of garaging vehicles. Because of the substantial rise in site values over the past few years and the increase in rates payable by operators as a result of the new valuations made in April this year, the opportunity has been taken to make a substantial reassessment of this item so as to bring it in line with current costs. There has also been some adjustment in the price of oil fuel (derv). spare parts and tyres.
As it is the practice when compiling the tables to make a percentage increase to the total operating costs—namely 20 per cent—in respect of overhead or establishment costs, the sum total of the increases already mentioned will have the effect of a corresponding increase in overhead costs.
For those not familiar with the principles on which these tables are compiled the following comments are made. Two fundamental elements are involved in the operation of commercial vehicles, namely time and mileage. These are reflected in the grouping of the several items of operating costs. Thus all expenditure directly chargeable to the operation of specific vehicles is correspondingly divided into standing costs and running costs.
Standing costs relate to that expenditure which has to be met a48 throughout the period a vehicle is in the possession of an operator, regardless of whether it is in useful employment or not, and consists of five items—licences, wages, rent and rates, insurance and interest. These costs, whether separately or in total, are calculated on a time basis whether per year, per week or per hour. To provide for a period of at least two weeks a year when a vehicle may not be available for service because of major overhaul or driver's holidays, the weekly amount is obtained by dividing the yearly total by 50 instead of 52. As the current standard working week is 42 hours, the hourly rate is obtained by dividing the weekly total by this amount.
Dealing individually with the five items of standing costs, licences relate to the duty chargeable under the Vehicles (Excise) Act 1962 with adjustments appropriate to the particular type of vehicle. Thus, in the case of goods vehicles, a small proportional addition is made in respect of carriers' licence fees—C licence up to three tons and A licence above that carrying capacity. In the case of the p.s.v. vehicles, in addition to the appropriate hackney carriage duty, allowance is made for the proportional annual cost of a p.s.v. licence, road service licence and certificate of fitness, where appropriate_ Staff car licences are, of course, limited to the annual excise duty of £15 per annum.
Wages relative to goods vehicles are based on the current Road Haulage Wages Order R.H.(74) as applicable to the intermediate (grade 1) area. Whilst there is no corresponding single national wage rate for the drivers of p.s.v. vehicles, the amount shown in the appropriate table is calculated according to an average of the relevant national scales. In both cases additions are made in respect of employers' contributions to national insurance, voluntary indemnity insurance and an adjustment to provide for holidays with pay.
The cost of insurance is limited to premiums paid in respect of the vehicles themselves. Insurance of buildings and equipment is assumed to be included in establishment costs. Because of the substantial difference in the amount of premiums paid by professional hauliers as distinct from ancillary users a compromise has been adopted. Goods vehicles with a carrying capacity under 3 tons have insurance costs calculated on the basis of comprehensive cover on C-licence operation in medium-risk areas. For goods vehicles of higher capacity, A-licence operation is assumed. As in the previous edition interest charges are calculated at the rate of 5 per cent per annum on the initial cost of each vehicle.
Running costs are similarly divided into five items—fuel, lubricants, tyres, maintenance and depreciation. Fuel costs are now based on a price per gallon of 4s. Id. for petrol and 4s. 2id. for oil fuel (derv). In the case of staff cars petrol is assumed to be purchased retail at 4s. 10-id. per gallon.
Tyre costs are obtained by dividing the cost of a set of tyres specified as standard equipment, but excluding the spare, by the estimated mileage life appropriate to the particular type of vehicle. The term "maintenance" implies all work necessary to keep vehicles in a clean, efficient and roadworthy condition. But as it is common practice to do washing and some servicing periodically—say weekly—irrespective of mileage, there is some variation in overall maintenance costs per mile relative to the distance run.
Depreciation is calculated on a mileage basis ranging from 75,000 miles as the assumed life of the smallest vehicles to 300,000 for the largest.