What's included in my quote
Quotations to use an established scheduled service where you may be simply booking a space on an intermodal service or pallet space on an established conventional wagon movement are relatively quick. Market rates dictate the cost of the service and naturally this is likely to improve as volume and commitment increases.
Bespoke arrangements that may use terminals that are lightly used or specific rail wagons will take a little longer.
In many ways the process of quoting for business in these circumstances bears more similarity to a logistics company responding to an invitation to tender. The rail operator has to negotiate a number of items individually with separate parties, assemble, cost and present it as a package to achieve the result.
As with a road based cost model, the price quoted to a customer is made from a combination of fixed and variable costs. The main difference between road and rail costs is the balance of fixed to variable. Rail carries a large percentage of fixed costs compared to road. Direct regulation is also heavy compared to road.
While there isn't the transparency of costs found in road logistics, the freight operating company should be prepared to breakdown any quote for you. Much depends on what the freight operating company has been asked to include, however the price quoted will be contain elements familiar to any transport operator:
Capital costs
- Provision of locomotive - typical modern locomotives cost about £1.1m each with an operating life of 25 years.
- Maintenance - typical locomotive service intervals are 90 days, with major engine work required every 6 years and bogie overhauls every million miles.
Cost of service
- Fuel - either diesel or electricity depending on locomotive.
- Staffing - the vast majority of services are manned by a single train driver.
- Terminal movements - breaking trains into sidings and moving wagons around terminals usually requires additional staff resources and occasionally the provision of a smaller locomotive.
- Wagon hire - if required by the customer.
Cost of access to the network
- Track access charges - these charges, payable to Network Rail, are the freight operating companies' contribution towards the upkeep of the rail network. They are designed to recover various elements of cost, including maintenance and renewals and expenditure resulting from network congestion. Tariff levels are published by the Office of the Rail Regulator. Within this structure, charges for individual services vary depending on locomotive and wagon types used, haul weights, commodities carried and distances travelled. Payments must be made every four weeks.
Office / administration
Corporate Overheads - Finance, marketing, operations and regulation
Profit
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