Cost Analysis of Railway Container Freight Operations : A Case Study of Freight Transportation between Ladkrabang Inland Container Depot and Laem Chabang Port

Abstract

Rail transport has nowadays enjoyed a higher growth rate compared to that in the past. Determination of rail transport cost is nevertheless a complicated task. Knowing the operating costs would enable appropriate pricing decision and effective cost management, so that the organization would be able to compete more effectively. This research therefore studied the cost of container freight transportation between Ladkrabang Inland Container Depot and Laem Chabang Port, which is one of the important routes that generate revenue for the State Railway of Thailand. Since the processes of container freight transportation consist of several work processes and activities, this research chose the activity based costing method to determine the operating costs. The study revealed that container freight transportation consists of many activities and some activities have hidden costs. It is necessary to clearly separate what the costs of each category are. From the analysis, it was found that the calculated operating costs are lower than the cost calculated by the State Railway of Thailand. This is partly because the current research only specified the costs that are directly related to the operations of container freight transportation, while all other costs, including the cost of rail maintenance, were not considered. This implies that if the structure of the State Railway of Thailand is re-organized without having to bear other costs, the organization would be able to lower the freight rates in order to be able to draw more market share from the other modes of transportation.