COSTS INCREASE
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BY ABOUT 7 PER CENT LAST WEEK copies of the 1972 edition of the Commercial Motor Tables of Operating Costs became available price 60p (or 70p postage paid).
This new edition of the Tables contains detailed costings of a wide range of 39 goods vehicles and 19 passenger vehicles. For each of these 58 vehicles standing costs, running costs and operating costs have been compiled, varying according to the weekly mileage averaged by the particular vehicle.
Standing costs of a 7-ton truck averaging 400 miles a week have risen from 141.09 in 1971 to £46.39 in 1972 — an increase of 12.09 per cent. The corresponding running costs, however, have risen from 6.44p a mile In 1971 to 6.89p in 1972, an increase of 7.00 per cent.
The addition of standing costs and running costs gives the total operating cost. For a 7-ton truck averaging 400 miles a week the operating cost per mile in 1971 was 16.71p. It is now 18.48p — an increase of 10.59 per cent. But at double the mileage, ie. 800 miles a week, the comparative operating costs are for 1971 — 11.34p; 1972 — 12.43p an increase of 9.61 per cent.
Psv costs
Passenger vehicle costs show a similar increase. This week Table 7 — Coaches — is reproduced alongside. The standing costs for a 41-seater coach fitted with ' a diesel engine have risen by 10.35 per cent and are now £54.60 a week — in 1971 they were £49.48.
When this coach was averaging 400 miles a week in 1971 the running cost per mile was 9.19p; today it is 9.89p — an increase of 7.62 per cent. The total operating cost in 1971 was 21.56p a mile; it is now 23.54p a mile, an increase of 9.18 per cent.
For those using the Tables for the first time it is necessary to have a basic understanding of the principles on which they are compiled.
The costs incurred in moving a vehicle are termed running costs and are expressed as so much per mile. Costs incurred irrespective of whether the vehicle is standing or moving are called standing costs which are expressed on a time basis, ie. per week or per hour.
Per mile or per week?
Operating costs are the sum of the standing costs and the running costs at 23.54p. per mile and was obtained by dividing the standard charges by 400 and adding the answer to the running cost per mile. Alternatively, the cost could have been reckoned at £94.16 per week, obtained by multiplying the running cost per mile of 9.89p by 400, ie. the assumed weekly mileage and adding it to the weekly standing charge of £54.60.
The proportion of standing costs per mile included in the total operating cost per mile diminishes as the mileage for the period increases. Referring again to the 41-seater coach the standing cost per week is £54.60. So at 400 miles a week the standing cost per mile is 13.65p. If, however, the average weekly mileage was 800 then the standing cost per mile is reduced to 6.82p.
Operating to standing ratio Taking this a stage further the total operating cost (obtained by the addition of standing costs and running costs) is 23.54p a mile at 400 miles a week. At 800 mile week it becomes 15.57p a mi Correspondingly, as the average wedl mileage increases, the proportion of the to operating cost attributed to standing co becomes less.
Consequently, the more productive um vehicle is put to the lower the cost will be each unit delivered. This in turn increase the margin available to t operator to provide for overhead costs al profit margin while still remainii competitive.
On other occasions, however, ti percentage in running costs one year mig be greater than the increase in standii costs. In that event the percentage increa in total operating costs would tend to rise the mileage increases.
So from those two opposing possibiliti it will be seen that no one blank percentage increase can be justifiah claimed to apply to all operating conditior particularly as regards substantial variatia in average weekly mileages.