Traffic Costing
The Railways manufacture and sell the commodity i.e., Transport
Railway transport influences the pricing of commodities. Rail transport costs enter into the cost of commodities and affect the general price level.
Hence suitable measures have to be adopted to reduce the cost of haulage, increase speed, comfort, safety and punctuality which not only helps the customers/traders, but also develops the nation’s economy in the ultimate analysis
Objectives of Traffic costing:
Provide basic data for rate fixing
Carrying out the profitable analysis of existing and potential traffic
Create cost consciousness and help in cost control
Provide data for project appraisals and evaluation of further capital investment
Distinguishing features of Traffic costing
Pan India:
Railways operated throughout India consists of thousands of Railway stations all over India (not limited to the particular area like in Road Transport)
Non homogeneity of end products:
The Transport (commodity) is not homogeneous. Common costs are used for passenger and goods traffic
Perishable commodity:
Like any other transport, Railways transport is a perishable commodity i.e., it cannot be stored. If a Wagon is not utilised for loading on a particular day, its transport capacity is lost forever.
Huge infrastructure:
Creation of vast costly assets for a long span and Rail transport depends on the efficient usage of the same.
Functional: 7 Abstracts - Maintenance - B,C,D & E and Operating Expenses - F,G & H
Overheads: 7 Abstracts - A,J,K,L & M
Others: 2 Abstracts - N & O
Mapping of erstwhile Demands with
SMH - Sub Major Heads and Abstracts
(Major Head: 3002/3003)
Group | Description | Erstwhile Demand | Abstract |
Admin | General Superintendence & Services | 3 | A |
Repairs & Maintenance | P.Way & Works | 4 | B |
Motive Power | 5 | C |
Carriages & Wagons | 6 | D |
Plant & Equipment | 7 | E |
Operating Expenses | Rolling Stock & Equipment | 8 | F |
Traffic | 9 | G |
Fuel | 10 | H |
Others | Staff Welfare & Amenities | 11 | J |
Misc. Working Expenses | 12 | K |
PF, Pension & Other Retirement Benefits | 13 | L |
Funds | Appropriation to Funds | 14 | M |
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Suspense | Suspense | 12 | N |
NPS | Govt contribution for Defined Contribution Pension Scheme (NPS) | 13 | O |
Notes:
There is No Abstract bearing alphabet ‘I’
Erstwhile Demand No. 12 - Two Abstracts - K & N
Erstwhile Demand No. 13 - Two Abstracts - L & O
The above Abstracts are called as Sub Major Heads
The Sub Major Heads are further divided into more than 1200 Minor Heads
This 1200 number will multiply many times, when Primary units (Object of expenditure) are suffixed to each detailed head (last two digits of the Classification of Revenue expenditure)
Type | Consists of |
Consignor | Packing, Charges for loading goods into trucks, Transport from consignor’s godown to the Railway Station, Unloading and loading of the Consignment into the Wagon |
Consignee | Delivery of consignment at the Destination station i.e., Cost of unloading from Wagon and loading in Truck and cost of transport from the destination station to consignee’s godown |
Imputed | Also called Inventory Costs
Interest charges on the capital value of Goods locked up during the period of Transport.
Formulae: Inventory Cost per Tonne = V x R x T / 365
V - Value of Tonne of Goods
R - Annual Rate of Interest
T - No of days in transit from Consignor’s Godown to the Consignee Hence delay in transit puts the Consignee at a loss because inventory costs will go up.
If Railway transit takes longer time, traders would prefer Road Transport which takes much less time, even though Railway Freight may be lower. |
Trader | Consignor Cost + Consignee Cost + Inventory Cost + Freight
Trader’s Cost is useful for comparing Railway freight with the Road Transport freight.
Trader’s cost - Goes into the price of Commodity in the Market |
Operator | Acquisition, Maintenance, Operation, Improvement, Replacement of transport facilities, compensation for damages, interest on borrowed money, Dividend on Capital, etc. |
Economic | Cost of transport to the Nation in terms of national resources of labour and material
Its calculation is required for resource allocation on different means of transport.
Also, take into account the cost of movement of goods by other means of transport also
Excludes: Element of all taxes and duties of Central and State Governments |
Key Points for MCQ
Imputed costs also called Inventory Cost
Formulae of Imputed / Inventory Cost per Tonne = V x R x T / 365
V - Value of Tonne of Goods
R - Annual Interest Rate
T - No of days in transit from Consignor’s Godown to Consignee
Trader’s cost = Consignor Cost + Consignee Cost + Inventory/Imputed Cost + Freight
The trader’s cost goes into the price of the commodity in the Market
Economic Cost excludes Taxes and Duties paid by the Central Govt. and State Govts.
Regression Analysis
Advertisement and Sales
Demand and Price
Good Monsoon & Crop
Y = f (x, B) where Y = Dependent variable, f = Function, x – Independent variable and B = scalar/vector
Statistics in Railways - An Introduction
Sources:
Manual of Statistical Instruction Volume 1
Statistics Manual 1 - Introduction
Origin of the word Statistics: German “Statistik” means Description of a State or a Country
Definition: The discipline that concerns the collection, organization, analysis, interpretation and presentation of Data.
Characteristics:
Numerically expressed
Aggregate of facts
Systematically collecting the Data
Should be comparable to each other.
Data is collected for a planned purpose.
Statistics in Indian Railways:
Statistics Organization Incharge - Executive Director Statistics & Economics, who works under the control of Member Finance in the Railway Board.
Statistical Officer is incharge at Zonal Railways, who works under the control of PFA
History of Indian Railways:
Official Use - Printed triennially (every 3 years).
Sale to the Public - Published Sexennially (every 6 years)
From 1969 onwards - Published decennially (every 10 years)
Factors - Railway Statistics: The Railway Statistics are based on the following factors:
Quantity - Expressed in the number of tonnes and passengers transported and earnings derived.
Distance - Expressed in Kilometers
Duration - In Hours and Days
Service - In Trains, Vehicles, Wagons & Engines
Tonne Kilometres ( Fundamental Unit) - Tonnes & Kilometres ( Primary Units)
Passenger Kilometres (Fundamental Unit) - Passengers & Kilometres (Primary Units
Derivative Unit = Primary/Fundamental Unit + Primary/Fundamental Unit
Derivative Units | Primary / Fundamental Units | Primary/Fundamental Units |
Earnings Per Passenger | Passenger Earnings (Primary) | Passengers carried (Primary) |
Earnings per Passenger per Kilometre | Passenger Kilometres (Fundamental) | Passenger Earnings (Primary) |
Average distance travelled by Passenger or Lead | PKM-Passenger KiloMetres (Fundamental) | Number of Passengers (Primary)
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Average load in Wagons per Train | Wagon KiloMetres (Fundamental) | Goods Train Kilometres (Fundamental)
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Principal Heads - Statistics in Indian Railways are grouped as under:
SN | Principal Heads / Groups | Consists of : |
1 | Economic & Financial Statistics | Tri-monthly approximate figures of earnings (every 10 days), Traffic handled in the shape of passengers booked, monthly statistics of tonnage lifted and wagons loaded and of revenue and expenditure |
2 | Transportation Statistics | No of trains run, Train KMs, Shunting KMs, Wagon/Vehicle KMs, Engine KMs etc |
3 | Commercial Statistics | No of Passengeers /Tonnes carried, PKM, NTKM, Average Lead, Average fare/Rate, Claims etc |
4 | Rolling Stock & Workshop Repair Statistics | Repair & Maintenance of Rolling Stock, Engine failures, Hot Boxes, Outturn etc |
5 | Administrative Statistics | No of Staff, Sick days, Accidents, Pay Scales and Physical Statistics like Route KMs, No of Railway Stations, Gradients, curvature of the P.Way. |
Glossary of Terms - Statistics
SN | Picture | Term | Description |
1 | 
| Authorized Rolling Stock | Sanctioned allotment of Rolling Stock of Zonal Railways Included: Stock ordered for or under construction, but not handed over to Traffic. Included: Stock sold or broken up but not replaced or removed from Authorized Stock Excluded: Stock replaced but still running |
2 | 
| Average Haul / Lead | The Average distance each passenger or tonne of goods transported |
3 | 
| Capital at charge | Book value of the Capital assets of the Railway |
4 | 
| Capital Outlay | Capital expenditure incurred during the period (i.e., Financial year) with the object of increasing concrete assets of a material character. |
5 | 
| Cross Traffic | All traffic which neither originates nor terminates on the reporting Railway. |
6 | 
| Departmental Train | Trains run for: Revenue works / Capital works of an Open Line Workmen Inspection Pilot / Patrol Trains - In front of trains
Note: Trains for Railway Coal are not included. |
7 | 
| Empty Running | Running of Vehicles without being loaded |
8 | 
| Engine Failures | An Engine, if unable to work its booked train within the prescribed load from start to destination
For a Period of:
30 minutes or more - Passenger Trains 60 minutes or more - All other cases
Due to reasons:
Defective design or material or bad workmanship in Shed / Workshop Mismanagement by Crew or bad water / fuel
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9 | 
| Engine Kilometre | Movement of an Engine, under its own power, over a distance of 1 Kilometre |
10 | 
| Equated Kilometre | Track Kilometres are equated to a standard unit by giving weightage for factors of: Traffic Density Gradient Formation of Soil Alignment (Curves) Rainfall Track connections & Layouts
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11 | 
| Fare | Money realized from Passengers transport |
12 | 
| Gross Revenue | The True Revenue in an accounting period whether actually realised or not. Complies Commercial Accounts |
13 | 
| Gross Receipts | Revenue/Earnings actually realized during an Accounting Period. Complies Government Accounts |
14 | 
| GTKM (Excluding Weight of an Engine) | Movement over a distance of 1 KM, of 1 Tonne of Vehicle & contents excluding the weight of an Engine.
GTKM stands for Gross Tonne Kilo Metre |
15 | 
| GTKM (Including Weight of an Engine) | Movement over a distance of 1 KM, of 1 Tonne including the weight of the Engine, Vehicle & its contents
GTKM stands for Gross Tonne Kilo Metre |
16 | 
| Gross Weight of a Train/Vehicle | Total Weight of a Vehicle, or group of Vehicles, equal to the Tare plus Load |
17 | 
| Local Traffic | Originating and Terminating of Traffic within the limits of Zonal Railway |
18 | 
| Net Revenue | The Difference between Gross Revenue Minus GWE - Gross Working Expenses
Notes: Gross Revenue = Coaching Revenue + Goods Revenue + Sundry Revenue Refunds are excluded Apportionate Revenue will be considered (Not Originating Revenue) GWE - Gross Working Expenses = OWE - Ordinary Working Expenses + Appropriation to DRF - Depreciation Reserve Fund + Appropriation to Pension Fund Suspense on both sides (Revenue and expenses) was excluded.
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