The complete lifecycle cost of equipment or services including purchase price, operating expenses, maintenance, consumables, and associated losses or inefficiencies over the useful life. TCO analysis consistently demonstrates that premium cold chain equipment delivers dramatically better value than cheap alternatives—R25,000 additional investment often returns R350,000+ in savings over 10 years.
TCO Components for Transport Refrigeration
Complete ownership cost includes:
Acquisition Costs
- Purchase price
- Installation/integration
- Training and documentation
- Initial spare parts inventory
Operating Costs (Annual)
- Fuel consumption (major cost for diesel TRUs)
- Refrigerant (loss and replacement)
- Electricity (for electric systems)
- Driver time affected by equipment reliability
Maintenance Costs (Annual)
- Scheduled maintenance
- Unscheduled repairs
- Parts replacement
- Downtime costs
Indirect Costs
- Product loss from temperature excursions
- Customer complaints and reputation damage
- Compliance failures and potential penalties
- Opportunity cost of unreliable equipment
Why Purchase Price Misleads
A R75,000 TRU versus R100,000 TRU comparison based on purchase price ignores:
- The R75,000 unit may consume 30% more fuel (R30,000+ annually)
- Higher maintenance requirements from compressor cycling (R5,000+ annually)
- Shorter lifespan requiring earlier replacement
- Temperature excursions causing product losses
TCO analysis often shows the “expensive” option costs less over equipment lifetime.
TCO Example: Variable Speed Compressor
From our Technical Formulas Reference:
- Incremental cost: R25,000
- Annual fuel savings: R31,500
- Annual maintenance savings: R2,500
- 10-year savings: R340,000
- Net 10-year benefit: R315,000
The “expensive” R25,000 upgrade returns 1,260% over equipment life. Purchase-price focus would reject this investment—TCO analysis demands it.
Industry Incentives Against TCO Thinking
Equipment suppliers benefit from purchase-price competition because:
- Cheaper equipment sells more easily
- Higher fuel consumption benefits diesel TRU models
- More maintenance creates service revenue
- Shorter equipment life accelerates replacement cycles
TCO analysis serves operators, not suppliers—explaining why the industry rarely promotes it.
Related Terms: Payback Period, Energy Efficiency (Cold Chain), Variable Speed Compressor
Related Articles: Technical Formulas Reference