Capital Equipment News August 2021

TOTAL COST OF OWNERSHIP

A fleet of Scania mining tippers has proven to be a cost-effective hauling solution for a South African limestone operation.

Driving transport operators’ profitability In the midst of a challenging business environment, transport operators are being squeezed in every direction, hence a renewed focus on total cost of ownership (TCO). With its TCO business model that entails a three-pillar approach, Scania delivers an accurate measurement tool that covers various elements critical to customer profitability, writes Munesu Shoko .

W hen times are this tough, price tends to dictate whatever people buy. Under- standably, in a difficult economy capital isn’t always available, and procurement decisions are forcibly taken based on capital cost, without necessarily factoring the ‘hidden’ lifecycle ownership costs. Total cost of ownership is no new term, but what does it mean for cash-strapped transport operators who need to make wise decisions on their capital equipment purchases? Ongoing costs after you have written the cheque for the truck are just as important, if not principal, as the purchase price. A focus on TCO analysis uncovers both the obvious and the hidden costs of ownership. TCO highlights the difference between purchase price and long-term costs. There is actually a general school of thought according to which owning the equipment could cost between five and eight times the purchase price, if not more.

Scania’s value creation, explains Harold Donachie, Scania Truck sales manager, is built on the company’s ability to provide its customers with profitable and sustainable transport solutions that contribute to the success of their businesses. Various factors “Our TCO business model applies a three-pillar approach to sustainable transport solutions and delivers an accurate measurement tool that covers various elements – energy efficiency, renewable fuels/electrification, as well as smart and safe transport – that deliver lasting value for our customers,” says Donachie. TCO, he says, is a successful tool that most customers use within their operations, as it covers all the critical elements, such as vehicle cost plus finance charges, insurance, driver cost, tyres, service cost, and fuel and toll fees, among others. The importance of being able to design a completely

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CAPITAL EQUIPMENT NEWS AUGUST 2021