Traffic Costing and Statistics

 

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: 

1. Provide basic data for rate fixing

2. Carrying out the profitable analysis of existing and potential traffic 

3. Create cost consciousness  and help in cost control

4. Provide data for project appraisals and evaluation of further capital investment 

Distinguishing features of Traffic costing

1. 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)

2. Non homogeneity of end products: 

The Transport (commodity) is not homogeneous. Common costs are used for passenger and goods traffic

3. 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. 

4.  Huge infrastructure:

Creation of vast costly assets for a long span and Rail transport depends on the efficient usage of the same.  

• Revenue expenditure is classified into 14 Revenue Abstracts i.e., A to O (except I) 

• 14 Revenue Abstracts:

 

• 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
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 

1. Imputed costs also called Inventory Cost 

 

2. Formulae of Imputed / Inventory Cost per Tonne  = V x R x T / 365  

 

3. V - Value of Tonne of Goods 

 

4. R - Annual Interest Rate 

 

5. T - No of days in transit from Consignor’s Godown to Consignee 

 

6. Trader’s cost = Consignor Cost + Consignee Cost + Inventory/Imputed Cost + Freight  

 

7. The trader’s cost goes into the price of the commodity in the Market 

 

8. Economic Cost excludes Taxes and Duties paid by the Central Govt. and State Govts. 

Regression Analysis

• General meaning is Reversion 

• Helps in working out ratios for allocation of joint expenses between services of Passenger & Goods

 

• Defined as Statistical Tool 

 

• Meaning: “The act of going back or returning” 

• A method of correlating two closely related variables

• With this tool, we are in a position to estimate the unknown values (dependent cost) of one variable from the known values (independent costs) of another variable.  This is called Regression analysis 

• Known variables – Basis – Independent 

• Unknown variables – Derived – Dependent 

• Widely used for prediction and forecasting 

• Estimates the value of the dependent variable changes when any one of the independent is changed while the other independent variables are held fixed. 

•  Example: Relationship between :

1. Advertisement and Sales 

 

2. Demand and Price 

3. Good Monsoon & Crop 

• The earliest form of regression method   - Method of Least Squares –developed by Mr Legendre in 1805. 

• Y = f (x, B) where Y = Dependent variable, f = Function,  x – Independent variable and B = scalar/vector

 

Statistics in Railways - An Introduction 

Sources:  

1. Manual of Statistical Instruction Volume 1

2. 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:  

1. Numerically expressed 

2. Aggregate of facts 

3. Systematically collecting the Data 

4. Should be comparable to each other. 

5. 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: 

1. Quantity - Expressed in the number of tonnes and passengers transported and earnings derived. 

2. Distance - Expressed in Kilometers 

3. Duration - In Hours and Days 

4. Service - In Trains, Vehicles, Wagons & Engines 

• The above Primary Units are linked together to express in Composite items called Fundamental Units.  That is Fundamental Unit = Linking of Primary Units. Examples are: 

1. Tonne Kilometres ( Fundamental Unit) - Tonnes & Kilometres ( Primary Units) 

2. Passenger Kilometres (Fundamental Unit)  - Passengers & Kilometres (Primary Units  

• Derivating Units: Relationship that exists between two sets of Primary Units or Fundamental Units are called as Derivative Units. Examples are: 

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)
Average load in Wagons per Train	Wagon KiloMetres (Fundamental)	Goods Train Kilometres (Fundamental)

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
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
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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