Railway costing

Railway costing is the calculation of the variable and fixed costs of rail movements. Variable costs are those which increase or decrease with changes in the volume or service. Fixed costs are normally associated with items such as head office, interest charges and other overhead. Unit costs can then be calculated based on the expenses of the railway divided into standard categories.

Types of cost

The Canadian Transportation Agency has identified various types of costs in order to assist in its deliberations . These costs include:

  • [1] air traffic control, air traffic control,
  • [2] railway and tramway systems, railway and tramway systems,
  • Railway operations, train and yard operations, train control, and intermodal [3]
  • General costs, general administration, employee benefits, taxes, insurance, purchasing and material stores [4]
  • Cost of capital [5]
  • Depreciation [6]

Methodology

The methodology used in railway costing breaks down the costs of railway traffic to their unit. Therefore, as well as the exchange rate, the effect of these changes can be estimated from the unit values ​​previously determined. The costing model methodology allows for variable costs to increase as traffic increases, while the fixed costs will remain constant, regardless of the overall level of traffic.

Mathematical models

Railway costing is typically performed using mathematical models. It is also possible to use the information on the railway. This costing information may be used to estimate the operating cost of a new line and to determine whether it is economically viable. Alternatively, the model could be used to estimate the cost effects of changing speed along a route. The savings that can be achieved with a railway costing model are endless. For example, by knowing the costs of doing business, a railway can appropriately determine the tariffs to be charged.

In addition, railway costing models typically handle passenger and freight traffic, making them applicable in more situations, including mixed traffic situations.

OSCAR railway costing model developed by CPCS Transcom Limited . CPCS is an international infrastructure development firm and has successfully used this model in its projects worldwide.

The Cartage railway costing model was developed by Vectorail, a global provider of railway costing solutions with more than forty years of experience in the field.

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