Complete lifecycle cost of refrigerated vehicle including purchase price, fuel consumption, maintenance and repairs, insurance, product loss from temperature excursions, downtime costs, and eventual disposal/replacement – the proper economic analysis method for evaluating refrigeration systems versus industry-standard focus on purchase price alone. Why It Matters: TCO analysis reveals that cheap equipment costs far more than quality engineering. Example: Fixed-speed TRU costs R45,000; variable-speed costs R70,000 – R25,000 premium appears expensive. But over 10-year vehicle life:
- Fixed-Speed TCO: R45,000 purchase + R1,125,000 fuel + R80,000 maintenance + R50,000 product loss = R1,300,000
- Variable-Speed TCO: R70,000 purchase + R810,000 fuel + R55,000 maintenance + R15,000 product loss = R950,000
- Savings: R350,000 (27% TCO reduction) from R25,000 additional investment
The R25,000 premium recovers in 18 months via fuel savings, then continues delivering R315,000 net benefit over equipment life. Yet industry focuses on purchase price because:
- Suppliers profit from fuel consumption (diesel TRUs) and maintenance
- Buyers see upfront cost, not lifecycle expenses
- Operators lack TCO analysis tools/knowledge
- Marketing promotes “affordable” equipment hiding expensive operation
TCO Components:
- Purchase Price: One-time equipment and installation cost
- Fuel Consumption: Largest ongoing expense (R90,000-R150,000/year depending on efficiency)
- Maintenance: Routine service, component replacement, emergency repairs
- Product Loss: Temperature excursions causing spoilage, write-offs, customer claims
- Downtime: Revenue lost when equipment fails during delivery operations
- Insurance: Coverage costs affected by equipment quality and claims history
- Disposal: End-of-life removal and replacement costs
Related Terms: Return on Investment (ROI), Payback Period, Energy Efficiency (Cold Chain), Variable Speed Compressor, Lifecycle Cost