Wednesday, May 2, 2018

Traffic Costing An Introduction


Traffic costing – an introduction

Ø  Railways the largest carriers in Asia[1]
Ø  Rail transport influence pricing of commodities
Ø  Being a Government undertaking railways are not run purely commercial basis
Ø  Railways perform dual roles – maintaining commercial viability and obligation of meeting  efficiently the increasing transport requirement or rapidly diversifying Indian economy
Ø  Cost study helps in location of inefficiency in any dept of railways and facilitates removal of such
Ø  Railways manufacture and sell transport – cost of products – transport of goods and passengers
Ø  Primary responsibility  - convey passengers and goods cheaply and quickly between the pair of points
Ø  Suitable measures are to be adopted to reduce the cost of
           - Haulage
           - Increased speed – higher capacity locomotives, heavier gauge of rail, long welded non-joint rails
           - Comfort – LHB coaches, intercity trains, more number of coaches,
           - Safety – more ROB, RUB, interlocking signals, track circuiting
           - Punctuality- increased speed, elimination of level crossings, umanned LC manned
              
Ø  Railways transport cost one constituents of overall cost of commodities carried by them
Ø  Railways basically are bulk carriers moving  - raw materials and finished products
Ø  Transport costs enter into cost of commodities and affects general price level
Ø  The primary goal of rail management is to minimize railways’ transport cost without affecting the commercial viability and the quality of service

Uniqueness of rail costing:
Ø  not comparable with other commodities or other services – spread over all India uniform policy
Ø  product not homogenous – common assets are used for carrying passengers and goods traffic – with in both there are varieties – different classes of passenger traffic – luggage, parcels, Railway Mail Service traffic- goods 45 categories
Ø  like any  other transport ‘ a perishing commodity’ – cannot be stored – if a wagon not utilized for loading on a particular day its transport capacity is lost forever – not so for other commodities
Ø  requires creation of vast costly assets – over all cost depends on efficient use of these assets



[1] The US has the largest railway system in the world - about 240,000 km connecting 48 continental states. That is enough track to circle the Earth five times. Russia (154,000 km) and Canada (72,961 km) follow. India comes fifth with 62,658 km of railroad after Canada and China.Jan 16, 2005

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