TransEco Road Freight Cost Indices
What Is TRFCI?
TransEco Road Freight Cost Indices (TRFCI)
The TRFCI were developed to monitor changes in vehicle and freight costs and to establish a benchmark for quarterly fleet costs. The data from which the indices are constructed come from TransEco’s own comprehensive databanks and are derived from sources including the following: fleet cost surveys; published fleet cost profiles; fleet research data; and specific industry sources.
Because of the markedly different cost profiles of shorthaul (urban) and linehaul (interstate and longer intrastate) operations in the freight transport industry, the TRFCI distinguishes between these activities. Generally the differences arise from the fact that labour costs represent a significantly higher proportion of total costs for shorthaul than for linehaul, while the other major cost categories (insurances and registration, maintenance, fuel consumption and capital costs) are higher for the linehaul operation than for shorthaul.
TransEco prepares a total of twenty cost indices from which the composite shorthaul and linehaul indices are constructed. The indices reflect actual marginal quarterly cost movements in the following components:
The TRFCI do not contain: an inbuilt profit component; provision for the cost of capital for working assets; or provision for increases in depot operation costs.
Until the development of the TRFCI, there had been no published cost series specifically appropriate to the road freight transport industry, despite the large amount of transport cost data from various sources which could be used for this purpose.
The Australian Bureau of Statistics compiles the Transport Consumer Price Index, which reflects amongst other things, movements in the costs of operating urban motor vehicles and changes in public transport fares. However, this index is not directly applicable to the road freight transport industry.
Employing information gathered from many industry sources and with access to a range of data specific to road transport cost movements, the TRFCI were developed to assist the various levels of road transport industry management and their clients to gain a more accurate appreciation of cost movements affecting this industry.
TransEco has also developed overall road freight rate indices for both shorthaul and linehaul operations.
As distribution activities are increasingly being carried out by third-parties, many logistics managers find it necessary to monitor the movements in rates arising from both awards and negotiation.
The TRFCI are intended for the use of all participants in the road freight industry, including:
The TransEco cost and freight rate indices are constructed for each quarter of the financial year. The indices are provisionally constructed six weeks after the end of each quarter and final adjustment occurs when the appropriate quarterly data is published.
This time lag between the end of the quarter and final construction of the indices reflects the fact that much of the quarterly data feeding into the TransEco Indices is only made available some 2.5 months after the end of the quarter being examined.
Currently there are over 200 entities that utilise these indices. The clientele stems from across all facets of the Australian economy including Agriculture; Mining; Construction; Manufacturing; Transport; Government; Wholesale & Retail; and Business Services.
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TransEco Road Freight Cost Indices (TRFCI) – FAQs
1. What are the underlying differences between the linehaul and shorthaul cost segments?
2. Which Index is the most appropriate in determining cost changes in each of the segments?
3. What are the sources of data feeding into the indices?
4. What is the time lag in reporting a particular quarter?