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Significant and Explanatory Notes

Know Your Costs!

●   The following brief notes are provided.

●   A Supplementary Paper avaliable here, fully describing the process of determining costs

The costs assembled in the cost tables result from a combination of the annual survey undertaken by the Road Haulage Association and DFF International research on vehicle costs. The figures are averages based on the numbers of vehicles for which relevant information was provided. They are averages; they are not your costs!

Accordingly, it would be dangerous and misleading for you to assume that the costs shown in the accompanying tables relate exactly to your fleet. As part of our research we have compared our results with several of the published cost tables. The variations across those tables, for every cost except VED, lend weight to our contention that depending on averages is simply untenable.

It is for this reason that, alongside the average costs for each type of vehicle as determined in the survey, there is a column in which you must insert the relevant comparable figures for the vehicles in your own fleet. In order to assist you with this, we adhere to the contention that it is wrong to use costs and rates per mile or per day. There is no such thing as a fits-all figure per mile or per day.

Time-Related and Distance-Related Costs

Separation of these costs is encouraged by these tables which bring costs together but no figure per mile. There is no such thing and it is dangerous to measure costs in such a way. Costs are an infinitely variable mixture of time-related and distance-related. Time-related costs are accruing even when the vehicle is not being used while the distances we may cover in any given period of time can vary enormously according to the type of work we are doing.

These tables are accordingly designed to arrive at a cost per average day (see below), which can be reduced to a cost per hour depending on the number of hours worked in a day, and then, quite separately, an average cost per mile actually run.

Time Cost per Day

These tables are accordingly designed to arrive at a cost per average day, which can be reduced to a cost per hour depending on the number of hours worked in a day, and then, quite separately, an average cost per mile actually run.

Vehicle Prices

These are given on a representative basis because of the enormous variations encountered. These arise from:

●   Euro-specifications

●   Specification required in your particular operation.

●   Discounts available.

●   List price differences.

See also below under Average Depreciation/Residuals

The advent of Euro 6 on 1st January 2014 will involve higher initial cost and some changes in running costs. These have not been incorporated in these Tables.

Average Days per Annum

One of the most vital keys to profitability is the number of days per annum you effectively use your vehicles. This governs the rate at which you can recover time-related costs, since these will mostly be accruing against you, whether you use the vehicle or not. You must accordingly determine, either from available records or from an informed view of your work, the number of days likely to be worked by each type of vehicle. In these tables, to be consistent, we have continued to assume 240 'Earning Days' throughout, but it is essential that you determine your own utilisation and hence your competitive edge. There is evidence to suggest that many hauliers are in fact achieving higher utilisation factors, particularly where multi-shifting is possible.

Average Miles per Annum

These average figures are used to calculate typical cost percentages per annum here, .

Average Depreciation/Residuals

This is calculated on a straight-line basis over periods appropriate to the type of vehicle. There is no allowance for residual values, to compensate for the escalating price of replacing with new vehicles.

Driver Employment Costs

Employment costs must cover actual weekly wages, bonuses, holiday entitlements, relief drivers, sick leave, NIC and pension costs together with training. In other words, the total cost of ensuring that you have a driver in the cab for every available working hour.

Insurances

These are average premiums for vehicle only. There are in practice wide variations in premiums paid, related to fleet size and claims record.

VED Licences

Rates shown are for typical vehicles. There are however some variations based on age, engine size and carbon emissions.

2014 sees the introduction of the Lorry Road User Charge. As the cost impact of this is to be neutral, we continue to refer to VED.

Interest on Capital

This has been estimated at a notional 6.0% on mid-life value, i.e. effectively half the original cost.

Overhead per Vehicle

This again is the average obtained from the survey. You must assess the total overheads in your business and allocate them to vehicles. The simplest way of doing this is in proportion to gross weights. Remember also that if you run a business with other activities besides vehicle operations, only overheads attributable to the vehicles should be allocated to them.

Overheads are all business costs not specifically identified in the cost sheets.  Typically, but not exclusively, they will include:

a)            Management (including working directors), Supervisory and Clerical Salaries and Wages, including NHI and pension costs

b)            Administration Overheads:  Include total property costs (i.e. rents and rates paid, gas, water and electricity, property repairs and maintenance, general insurance, general office expenses, postage, telephone charges, legal fees, bank charges (not interest), hire of furniture and equipment, IT systems, depreciation of staff cars, audit fees, management consultancy fees and sales promotion, bad debts and security services, welfare and ancillary wages.

c)            Operational Overheads:  Include carriers licence, goods in transit insurance, price of sheets, ropes, dunnage, running of breakdown vehicles, service vans and staff cars, maintenance and cleaning of tanker/refrigerated/garage equipment, tachograph, tools and consumable materials.        

 

Other Costs

Additional costs such as bonuses, excess hours and subsistence, tolls and ferry costs, do not accrue on any consistent time or distance-related basis. They are specifically individual both to companies and to individual jobs within those companies. They must, therefore, be charged direct to jobs as incurred and have not been included in these Tables.

Distance-Related Costs

These are based on a best view of industry averages, adjusted annually by reference to the Survey.

Figures for these costs have been calculated as follows:

 

Fuel:                Latest bulk diesel price as recorded weekly by the RHA. Consumption figures were the subject of a question in the 2013 Survey and have been updated as appropriate. However, you will need to

                        keep a close watch on fuel prices and incorporate changes in your costs as they occur.     

                       (Average price at 15.11.13  =  108.9 pence per litre =  495 pence per gallon). 

See the Fuel Adjustment Specimen Agreement and Calculations download in PDF here

Lubricants:            Included in maintenance (see below).

 

Tyres:   Average costs per mile from survey.

 

RepairsAll such costs have been included under this heading: however, routine servicing costs

and      and contract  repairs (which are often charged on a monthly basis) are frequently

Maintenance:   recovered as a time-related item.

NOTE   All of the costs we have outlined above will vary from operation to operation. This is why you must incorporate your own fleet figures when using these Tables.