TCO & Fuel Efficiency

Total cost of operation (TCO) is a top concern of many fleets today. At least according to a recently issued report from Frost & Sullivan. The findings are based on surveys Frost & Sullivan conducted of fleet managers over the last five years and reported on earlier in Fleet Owner.

This bodes well for those of us working on improving freight efficiency because it means fleets will be looking well beyond initial purchase price of a new technology or truck when doing the math to see if a technology makes financial sense for their operation. When you look at cost over the life of a truck rather than the upfront price of the technology solution, investing in technology that improves fuel economy or freight efficiency may become easier to justify. 

But also keeping in mind that new technology may come at some other total cost of ownership elements.

We have spent the past several years studying a variety of fuel saving technologies trying to understand the case for their adoption. And from idle reduction to tire pressure monitoring and automated manual transmissions to 6x2 axles and wide base tires we’ve shown that while some technologies cost more upfront, the downstream benefits offset their initial higher cost.

Recognizing the importance of total cost of ownership in making purchasing decisions, as part of our most recent Confidence Report on low rolling resistance tires, we developed an Excel-based total cost of ownership tool. Users of the tool may input various operational features such as the axle configuration of their tractor and trailer and associated miles driven as well as tire-specific data for steer, drive and trailer tires they are considering. The tool then calculates the total cost of ownership. From there the fleet manager or owner can see the savings over the life of the vehicle.

We hope to develop this type of tool for other technologies we will be studying in the future in order to help fleets continue to look at the bigger picture when considering fuel efficiency technologies. Focusing on the value over the life of the vehicle will help make the case for the initial investment in technologies that may cause sticker shock at first glance.

Why wouldn’t we want to know and use the Total Cost of owning something before making a decision to buy it?

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