We need to talk about TCO
29 APR 2022
CONTENT SUPPORTED BY NEW MOTION LABS
As the cargo bike is adopted by more and more organisations across commercial, governmental and voluntary sectors, the demand for a coherent story and vision about the Total Cost of Ownership is becoming increasingly necessary.
Total Cost of Ownership (TCO) is defined as “the sum of all expenses/costs associated with the purchase and use of equipment, materials, and services”, and it is an area in which the automotive industry – light years ahead and with decades of structural investment under its belt – excels.
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Buy a car, van or truck and whether it is powered by fossil fuels or electricity, the costs for an organisation over the lifetime of the vehicle are possible to predict. For key parts, a predicted lifetime in terms of kilometres driven is available, after which replacement is recommended. This makes it possible to look ahead and – knowing roughly how far the vehicle will drive – work out how much maintenance is likely to cost.
Until recently in the cargo bike world, this is not something that has been easy to do in such a comprehensive way. For organisations which are cautious in nature, or whose cultures make it difficult to enact change, this could be one of the most significant barriers to making the switch to cycle logistics. After all, why risk doing something you know little about, which could backfire, and which you could be held accountable for?
When you look at the situation, the fact that TCO hasn’t historically been high up on the agenda in the cargo bike industry it isn’t so strange. Consider that until just a few years ago, the industry had not yet matured to a point where its scale allowed such hallmarks of professionalisation to occur. That is all changing now though, as that professionalisation gathers pace, investments in the industry are on the up, and external factors such as fossil fuel price rises mean that – now more than ever – cargo bikes are being seen as a serious alternative to traditional vehicles.
One company making waves on TCO in the cargo bike world are New Motion Labs. Their cargo bike-specific drivechains – a.k.a. Enduo Cargo – are designed to be stronger and more durable than standard bike chains. A by-product of this being a reduction in TCO – but was that intended?
“Yes… and no!” answers Chief Technology Officer Lucas Lobmeyer. “No; because we first developed our chain drive technology for track bikes on the velodrome – sport. But also yes; because the technology reduces wear on sprockets and chains, it soon became clear to us that cycle logistics was an ideal application. We were on to something; we could make a big impact in the industry – and on our streets – by reducing TCO.”
“How do we do that? We do that in practice by saving costs in all kinds of areas; on planned and unplanned servicing – once a year instead of three times; on replacement parts; on a reduction in downtime; and on a significantly lower chance of a breakdown. All of these things save organisations time, money and effort. And they also mean that bikes are on the street and not in the workshop.”
But that’s not all; New Motion Labs claim that – depending on various factors – their Enduo Cargo chains last 10-15,000km versus around 5,000km for conventional bike chains. Lobmeyer explains; “What we offer is extra strength and durability, so we are also talking about chains that need to be replaced far less often; the savings all adds up over the lifetime of a vehicle. So, for a relatively small investment you can actually avoid a lot of headaches. And that’s not even mentioning the fact that the extra strength means you can haul larger loads – which makes route planning more efficient. Returning to base less and getting more done in a day.”
Another player in the cargo bike market which has TCO on their minds is manufacturer Urban Arrow. Frank Oudegeest, who heads up their B2B department, outlines their approach: “First, we start with the frame of the bike, which we designed to be really strong. We regularly see bikes that have ridden over 50,000km in three years – and there’s no problem with the frame at all.”
“Then it’s about component choice; for example, we use Bosch motors because they are so far one of the most stable on the market. We also choose the strongest brakes and front suspension is also really important. Our customers are demanding more and more heavy-duty components, and we are looking beyond bike components and into areas like moped and motorbike parts.”
“But there’s also a third aspect that many people forget, and that’s training. We work in partnership with a provider which runs training courses for riders; many of whom have never ridden cargo bikes. They train riders how to treat the bikes well – and if they do, then you can prevent unnecessary maintenance. So, in that way, training ends up being a TCO issue too.”
And how about closing the gap with vehicle manufacturers on TCO? “That’s at the top of our agenda” states Oudegeest. “You do get a general service manual with every bike, but in the end the bike is a different beast. What you find in the automotive industry is parts and components that are over-engineered, which brings a lot of extra weight. But the thing is, they are not penalised for this, whereas you can’t afford extra weight on a bike. So our design challenge is to close that gap”
It’s clear that there is still some way to go before the cargo bike industry matches the long-established auto industry in its mastery of TCO. And it’s perhaps unfair to compare the two industries, since traditional vehicles and cargo bikes have such different characteristics. Despite this, concerted efforts towards higher TCO standards are being made by manufacturers across the cargo bike industry. What is also clear is that these higher standards will become increasingly demanded by customer organisations which are accustomed to purchasing fleets of vehicles with predictable product life cycles.
One thing is clear: if we’re going to get to 2030 and look back on the 2020s as a successful #DecadeoftheCargoBike, TCO is something that the B2B side of the cargo bike industry will have got to grips with.