New CM cost tables Published
Page 32
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DETAILED TABLES of the cost of operating 40 classes of goods vehicle with payloads ranging from 5cwt to 22 tons and 19 passenger vehicles ranging from a 1300 cc car to an 80-seater double-deck bus are included in the 1971 Commercial Motor Tables of Operating Costs which are published this week.
The publication includes two ready reckoners to help users of the Tables to calculate alternative standing costs and fuel costs. There is also a description of a recommended costing system and a list of addresses of organizations associated with road transport.
The costs shown in this new edition are based on those prevailing on June 1, 1971. Compared with the same period last year there have been substantial increases in nine out of the 10 items into which the total cost of operating a commercial vehicle can be conveniently divided.
Not only has the amount of increase in operating costs over the past year been both substantial and across the board but the pace on increases has quickened. As a result more than one increase can have occurred between successive editions of the Tables—although these more frequent increases are not necessarily at regular intervals.
Consequently, comparisons of annual increases in costs based on a date other than June 1 could produce different results. It is important that this possibility is borne in mind when comparisons are being made.
How costa have moved With this qualification, here are the main changes in the cost of operating a commercial vehicle now, as compared with a year ago. (There are five items of standing costs which have to be met whether the vehicle is in use or not —licences, wages, rent and rates, insurance and interest; and five items of running costs which arise only when the vehicle is operated and so vary in relation to the mileage run. These are: fuel, lubricants, tyres, maintenance and depreciation. The addition of standing and running costs gives the total operating cost.) Current price lists of some commercial vehicle manufacturers include the effect of more than one increase compared with the prices which applied a year ago. There is also a continuing trend towards the more comprehensive specification becoming the basic specification, with corresponding effect on prices. It is becoming increasingly difficult to make valid comparisons one year with another. But, overall, the average increase in the price of vehicles is high, namely 15 per cent, and directly affects two item S of operating costs—interest and depreciation.
Returns from 900 rating authorities in England and Wales show that there will be an increase of approximately 14 per cent in the rating bills operators will have to pay. Accordingly the item "rent and rates" has been increased by this amount.
Insurance costs are becoming increasingly allied to iudividual operators' accident records, resulting in wide variations in the premiums paid by operators. Overall, however, an increase of 5 per cent has been made to this item of cost.
The rate of interest charges on capital outlay in this new edition of the Tables has been reduced from 10 per cent in 1970 to 9 per cent. This corresponds to the reduction in Bank Rate with the service charges remaining the same. As mentioned earlier, however, the amount on which the reduced rate of 9 per cent is charged will itself be increased by the 15 per cent rise in the cost of vehicles.
As with all other items of costs shown in the Tables, fuel prices are shown in decimal currency. But whereas the decimal fuel costs included in last year's edition were based on the old currency prices converted to decimal currency, those shown in this 1971 edition of the Tables are based on the decimal prices published by the oil companies. This adjustment slightly affects direct comparison but does not alter the fact that fuel costs have also increased. For this edition the selected prices per gallon on which the costing of fuel is based are: petrol, commercial vehicles, 31.50p private cars, 34.00p dery 31.00p.
There can, however, be wide variation in the price each operator may pay for fuel because of price zoning and the effect of bulk, fleet or agency discounts. Abnormal operating conditions may also affect fuel consumption. Because it is the major item of running costs, alternative fuel costs, relative to varying prices and consumption figures, are shown in the Tables so that they may be readily substituted in appropriate circumstances.
The cost of lubricating oil is comparatively small but this year the increases in the price of oil have totalled 15 per cent. Tyre prices have increased by an average of 10 per cent and this item has been adjusted accordingly.
Maintenance costs continue to increase as operators strive to keep their vehicles up to the 'statutory standards of vehicle fitness now demanded, and an addition of 10 per cent to this item has been made.
As already mentioned, the cost of depreciation has been affected by the 15 per cent increase in the price of vehicles.
There remains that major item of operating costs—wages. In recent years the basic rates of pay recommended as a result of the traditional national award procedure have become less realistic. Other agreements have been reached awarding higher rates of pay and this trend was recognized in last year's edition of the Tables. This trend continues and in this new 1971 edition the item of wages in the Tables is accordingly adjusted still further upwards. The minimum wage for a basic 40-hour week for a goods vehicle driver is reckoned at £20, with 50p additions for each increase in payload category (ie basic 1 to 5 tons, over 5 to 10 tons, over 10 to 15 tons, over 15 to 18 tons, over 18 to 21 tons and over 21 tons). Similarly, the basic wage for a passenger vehicle driver is also reckoned at £20 (with a 20 per cent increase for one-man operation) and £19.50p for a conductor. But it must be recognized that all these basic rates may need adjusting to meet local conditions, quite apart from any further adjustment when overtime is worked.
When comparing the total operating costs shown in this edition with those of previous years the following factor should be borne in mind. Because wages have always been a major item of standing costs the substantial increase which has been made to this item in this edition has correspondingly raised the proportion of standing costs which, together with running costs, comprise the total cost of operating a vehicle. So, despite large increases in other items of cost, the overall percentage increase in the total operating cost per mile compared with previous years will be greatest when the weekly mileage is low.
Example explained To take an example from Table 2 (reproduced here as an extract from the new 1971 edition) a 7-ton-payload goods vehicle with a platform body when averaging 600 miles a week is shown to have the following costs (with the corresponding figures for 1970 in brackets): standing costs per week £41.09 (35.56); running costs per mile 6.21p (5.72p); total operating cost per mile 13.05p (11.64p). The increases over the previous year are therefore: standing cost 15.55 per cent, running cost 8.56 per cent and total operating cost 12.12 per cent. Compared with this latter figure, however, if the average weekly mileage is only 400 the increase in the cost of operating this 7-tonner rises to 12.74 per cent, but at 80C miles a week the increase amounts to 11.61 per cent.
(A form for ordering copies of the new Cos Tables appears on page 13.)