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3.2 Vehicle Configurations and Equipment Life Cycle 3.4.9 Indirect Costs: Administration, Interest, and Insurance 3.0 APPROACH3.1 OverviewThe approach used for the 2005 updated study is the same methodology used since 1972, and widely accepted by the trucking industry and private fleets, for evaluating operating costs to provide trucking services to users. Documentation of this approach has been widely described in prior editions of Operating Costs of Trucks in Canada. Furthermore, this method has been presented by the author to open industry seminars, called the “Know Your Truck Costs” series, sponsored by the Canadian Industrial Transportation League (now CITA), the Propane Gas Association of Canada, the Alberta Motor Transport Association and the British Columbia Trucking Association. In this context, the method has been widely exposed to industry and generally accepted in these forums. We follow essentially an activity based approach, that itemizes each case study's distance travelled, operating speeds, fuel consumption rates, and all additional work hours not driving (i.e. waiting time, loading / unloading time) where drivers and equipment are "on duty". The foregoing activity measurements result in specified resource needs and costs for over the road operation of trucks. These vehicle related resource costs include driver costs, fuel costs, repairs, tires, equipment ownership and licensing. The latter two costs are proportional to the number of vehicles needed to haul a given volume of freight, within a given timeframe. In addition to the direct hauling activity related costs, provision is made for assignable indirect costs for the fleet business. These include over-all administrative activity (management and supervision, billing and accounting, information technology, sales and marketing, and provision of business premises for operating the fleets), interest costs for moneys invested in equipment and for working capital of the business, insurance costs and an operator profit margin. Whether the trucking operation is for-hire, or part of a private fleet, providing an operator profit margin in the assessment of over-all operating cost (or user cost) covers the costs associated with the fleet business owner earning a "return on investment". -- either an operating margin to cover return for investment in a for-hire fleet, or for "opportunity cost" when a firm invests monies in a private fleet operation. In 1972, industry profit margins of for-hire trucking were generally significantly higher than is common today -- hence earlier Operating Costs of Trucks In Canada editions set operator profit at 10% of revenues. Currently, operator margins tend to be lower, perhaps averaging from 2.5 to 5% of revenues for industry leading fleet operations. Exceptional trucking operators can still earn margins around 10% -- for example these are comparable to margins reported by express transportation companies operating a premium service (eg. Trucking division of UPS, according to Transport Topics’ Top 100 For 2004, for example). As compared to the earlier studies, the current study compares three levels of margin: 10%, 5% and 2.5% operator profit margin -- enabling the user to tailor the costs to their understanding of the particular trucking market being benchmarked. To enumerate all of the foregoing cost components, we employ an Excel based costing spreadsheet that calculates annual component costs for a single vehicle -- operated as part of a fleet operation -- for each of the vehicle configurations shown in Figure 1. Costs are enumerated as total and component costs of the vehicle for a year, costs per hour, and costs per kilometre. The calculation is a specific instance of the same methodology that is commonly used by fleet operators to work out costs, hence rates to quote customers for undertaking specific trucking activity. The author of this study has employed this methodology and used it to develop custom applications to consult within the for-hire trucking industry, and with operators of private trucking fleets, to undertake feasibility studies, quote new business, and benchmark cost efficiency of fleet operations. Input Unit Costs In order to implement this methodology for Operating Costs of Trucks In Canada a database of factor costs for wages, fuel, tires, repairs, equipment purchase and other cost inputs is maintained -- and these costs must reflect the various case study specifics identified at the end of Section 1.1. For updating the database to 2005 from the values used in the prior study, five basic sources of information were consulted: 1) Truck Fleet Supplier Quotations (Equipment, tires, fuel). 2) Fleet Operator Expert Consultation in all Regions. 3) Literature Review on the Subject of Driver Costs (rates of pay, working conditions, benefits, bonuses, etc.) including web references and employment advertisements. 4) Regulatory Agency Publications (vehicular size and weight restrictions, license fees, fuel taxation, sales taxes, etc.) 5) Review of published literature and Internet sources such as Statistics Canada, US Department of Energy, Natural Resources Canada, Bank of Canada and other data sources. For US Regions, unit costs for inputs were obtained in US $. These were then converted to equivalent Canadian $ costs using the average 2005 exchange rate of 1$ Cdn = 82.53 cents US (see earlier discussion accompanying Figure 3). For operations on international Canada - US corridors, most costs were based on the assumed home country of domicile for the trucker, except that fuel costs were based on US cost levels (reflecting ability to purchase fuel in US, taxed at US rates, for both truckers regardless of domicile). 3.2 Vehicle Configurations and Equipment Life CycleFor the vehicle configurations illustrated in Figure 1, vehicle specifications can vary considerably for even a single equipment type. Such variations can reflect in significantly different costs for vehicle purchase, vehicle repairs and fuel consumption. These significant variations are present, when considering the trucking industry as a whole. Specific fleet operators will be using their own chosen specifications, engine sizes and other equipment selection preferences. The "mix" of vehicles on the road will reflect all of these differences, together with a mix of vehicle ages -- since not all vehicles are brand new. In order to better standardize Operating Costs of Trucks In Canada, some general vehicle specifications have been developed -- and these are reviewed every time that the study is updated -- by asking equipment suppliers and fleet owners whether the assumed basic specifications are still "representative" of what the majority of the industry chooses to operate. Power Unit Configurations • For the regional case studies, cabs were assumed to be NOT sleeper equipped (for purposes of estimating tare weight and purchase costs) • For the longer distance corridor cases (Canadian East-West and International Canada-US Corridors), additional costs were added (and weight) to the basic power unit specifications to reflect a sleeper equipped power unit. • TRACTOR FOR A FIVE AXLE SEMI CONFIGURATION: Conventional configuration, Caterpillar C-13 Series Engine, 380 HP, 13 Speed Transmission, 40,000 lbs rear end, air ride suspension, 11R24.5 tires, 209” wheel base, 12,000 lbs front axle, GVW approximately 80,000 lbs, Canada 87,100 lbs. Tractor Tare Weight: 7620 kg • TRACTOR FOR A SIX AXLE SEMI CONFIGURATION: Conventional configuration, Detroit Series 60 Engine, 430 HP, 18 Speed Transmission, 46,000 lbs rear axle, air ride suspension, 12,000 lbs front axle, 195” to 210” wheel base, 11R24.5 tires, 4.56 gear ratio, GVW approx 100,000 lbs. Tractor Tare Weight: 7938 kg • TRACTOR FOR AN EIGHT AXLE SUPER B TRAIN CONFIGURATION: Conventional configuration, Caterpillar C-15 Series Engine, 475 HP, 18 speed transmission, 46,000 lbs rear axle, air ride suspension, 12,000 lbs front axle, 209” wheel base, 11R24.5 tires, 4.56 gear ratio, GVW approx. 140,000 lbs. Tractor Tare Weight: 7938 kg Trailer Configurations • FIVE AXLE SEMI VAN CONFIGURATION: Interior post insulated van, 1 1/8” - 1 ½” insulation, double doors at rear with 5 hinges per door, anti - rack door locks, vents front and back, air ride suspension, steel disk wheels, hardwood floors, undercoated, rear gear black finish, aluminium panels, prefinished white, 2 rows of cargo E-track. Trailer Tare Weight: 6,418 kg • FIVE AXLE SEMI FLAT DECK CONFIGURATION: Outside rail construction with stake pockets and rub rail, load winches at 3’-0” centres, air suspension, steel disc wheels, hardwood floor, 1 colour epoxy finish. Trailer Tare Weight: 5,897 kg • FIVE AXLE BULK LIQUID TANKER (MC307) 6000 Imperial gallons, type 316L Stainless Steel 2 B finish, bright annealed jacketing, 5” insulation compressed to 4”, dimple style hot wall, 20” manway, fort vale super vent, 1” pressurization package, 2 x 20’ - 0” S.S. hose trays, spring suspension, steel disk wheels, 1 colour epoxy finish, walkaround spill dam, curbside ladders, stainless steel fenders, aluminium catwalk, single compartment. Trailer Tare Weight: 5,942 kg • FIVE AXLE BULK DRY TANKER CONFIGURATION: Aluminium dry bulk, solimar aerators (3 per hopper), 4” hot air discharge line, 6” discharge valves, 3” top air line, 20” fill covers, hot air hose (4”) spring air suspension combination, steel disk wheels, 2 x 20’-0” hose trays, 2200 cu ft, radial tires. Trailer Tare Weight: 9,616 kg • SIX AXLE TRIAXLE VAN SPECIFICATION: Interior post insulated van, 1 1/8” - 1 ½” insulation, double doors at rear with 5 hinges per door, anti-rack door locks, vents front and back, air suspension, steel disk wheels, hardwood floors, undercoated, rear gear black finish, aluminium panels prefinished white, 2 rows cargo E-track. Trailer Tare Weight: 8006 kg • SIX AXLE TRIAXLE FLAT DECK SPECIFICATION: Outside rail construction with stake pockets and rub rail, load winches at 3’ 0” centres, air suspension, steel disk wheels, hardwood floor, 1 colour epoxy finish. Trailer Tare Weight: 6804 kg • EIGHT AXLE SUPER B VAN SPECIFICATION: Interior post insulated van, 1 1/8” - 1 ½” insulation, double doors at rear with 5 hinges per door, anti - rack door locks, vents front and back, air suspension, steel disk wheels, hardwood Floors, undercoated, rear gear black finish, aluminium panels prefinished white, 2 rows cargo E-track. Trailer Tare Weight: 12,247 kg • EIGHT AXLE SUPER B FLAT DECK SPECIFICATION: Outside rail construction with stake pockets and rub rail, load winches at 3’ 0” centres, air suspension, steel disc wheels, hardwood floor, 1 colour epoxy finish. Trailer Tare Weight: 8845 kg • EIGHT AXLE SUPER B LIQUID TANK (MC 306) SPECIFICATION: Aluminium petroleum RTAC B-train, 4 compartment, double bulkheads, 20” fill covers, 4” air internal valves, 4” openable bottomload adapters, 63,500 litre capacity, four 20’-0” hose trays, prepared for vapour recovery, optic overfill sensors, 36”x30”x28” fitting box (aluminium). Trailer Tare Weight: 10659 kg • EIGHT AXLE SUPER B DRY BULK SPECIFICATION: Aluminium dry bulk, solimar aerators (3 per hopper), 4” hot air/discharge line, 8” discharge valves, 2” top air line, 20” fill covers, hot air hose (4”), spring suspension, steel disc wheels, 2 x 20’-0” hose trays, radial tires. Trailer Tare Weight: 9980 kg • TWO AXLE STRAIGHT TRUCK (VAN) SPECIFICATION: 2 Axle Diesel Powered Straight Truck Cab and Chassis, 24 Foot Insulated Van Box. No Reefer, Rear Doors, GVW approx. 14,600 kg Equipment Life Cycle Whether a fleet operator buys a new or used vehicle, and how long it is retained, is a business decision reflecting the owner's business strategy and the trucking market segment served. For example, an agricultural producer often purchases older used equipment and retains it for many years -- reflecting low average annual mileage characteristics of this hauling, the fact that hauling is very "local" to the home base, etc. For most for-hire line haul trucking operations, the "standard" life cycle management strategy is as follows: • For median utilization of 100,000 miles per year (160,000 km), operators will purchase new power units and retain them in line haul trucking service for 5 years. After 500,000 to 750,000 miles, (or 800,000 to 1.2 million km) the power unit will either be sold, or "retired" for use as an urban pick up and delivery unit, or a yard tractor. • Under the same utilization scenario, trailers will be purchased new and operated for an average of 8 years. 3.3 AssumptionsThe presented case studies give annual costs to operate a single vehicle; however the costs were developed assuming the vehicle is part of a medium sized trucking fleet. For this reason, indirect costs for administration, interest, insurance and operator margin have been allocated to the single vehicle based on normal percentages for these cost components within trucking businesses in Canada and the US. Terminalling Productivity Assumptions For developing truck operating costs as impacted by terminalling (load-unload) productivity, truck equipment ownership costs during wait time are excluded from analysis for the reason that the basic equipment utilization criteria, namely total kilometres traveled annually, implicitly already accounts for these costs. In other words, it is less feasible for an operator to realize a high number of kilometres annually as the proportion of equipment time spent loading and unloading increases. Terminal productivity does directly influence driver wages and burden costs because whether the drivers are physically involved in commodity handling, they must be paid the representative hourly rate during the time involved for waiting to be loaded or unloaded. For this study, terminal handling performance is based on: • Dry Freight in Combination Units: One origin-destination per trip is assumed, which reduces the time required to handle one payload. Realistically, the rate of loading-unloading varies with consignment type; however observation indicates that 4,500 kg per man-hour is representative of dry freight loading/unloading performance. Assuming an adequate availability of manpower, a handling time criteria of three hours for 27,270 kg has been applied to all applicable cases. That is, the driver will be on the job, but not driving, three hours for a 27,270 kg dry freight payload. • Bulk Commodities: A study of various bulk operations indicates that the following load/unload rates reflect a good average for bulk commodities: 40,900 kg in 1 hour and 15 minutes; 22,700 kg in 45 minutes; 9,100 kg in 15 minutes. • Dry Freight in Van Straight Trucks The time spent loading and unloading freight was assumed to be 1 man hour per 1600 kg of consignment. The above mentioned handling performances are used in the analysis to estimate the total time necessary during the operations to handle the commodities. During this time the driver is paid on an hourly rate basis. The same handling performances have been applied throughout. We are also assuming that the only handling cost to the truck operator is the wages and burden he must pay to the driver on duty during loading and unloading. The handling facilities and manpower are considered not to be under the trucker's management, or if so, that the costs for this operation are recovered against a “handling charge” and not included in the trucking cost. Truck Operations Productivity and Cost Factors • Intra Regional Base Case Trip Distances: The combination units are assigned a round trip distance of 320 kilometres since they are assumed to be involved in predominantly "terminal-to-terminal" highway service. Urban two axle units are assigned a trip distance of 100 kms. These common trip distances tend to reflect average common operational factors within the industry -- recognizing there are shorter and longer distance market segments, for specific operations. • Longer Distance Canada East-West Corridors & Canada-US International Corridor Distances: Optionally, costs are compared for trips of 160km, 400 km, 800 km, 1600 km and 3200 km in length. These corridor operations are applied to the line haul combination units and not to straight truck applications. • Annual Operating Distance: Annual operating distance is a convenient efficiency index that reflects factors such as seasonality, hauling distance, traffic congestion, or urban / inter-urban operation. This factor is also readily monitored and understood by fleet operators. For this study, three annual utilization scenarios were undertaken -- designed to reflect Low, Median, and High annual utilization. For line haul combination trucks, the scenarios reflect: • Low Annual Utilization (80,000 km per year, or 50,000 miles per year) • Median Annual Utilization (160,000 km per year, or 100,000 miles per year) • High Annual Utilization (240,000 km per year, or 150,000 miles per year) • In the case of the urban two axle trucks, the utilization levels were 40,000 km; 80,000 km and 120,000 km annually for Low, Median and High cases. • For longer distance corridors, annual kilometre utilization reflects available hours and the use of long distance sleeper team operations. • Base scenarios evaluated in this study reflect paved road operations, with adjustment factors discussed for gravel road operations. • Scenarios reflect annual average seasonal hauling conditions, with discussion of predominantly winter operating costs handled through adjustment factors. • Average payload size was determined by applying the general density characteristics of the commodity type to the gross vehicle weight and with regard to the vehicle tare weight. • Main population centres of each region were assumed as the base of operation for assessing local costs such as fuel, wages, etc.
• The life cycle policies discussed in Section 3.2 were used to assess equipment performance and maintenance cost levels -- to make the scenarios representative of the average vehicle in an actual fleet. Hence maintenance costs reflect averages for tractors in the first five years of their life and trailers in their first eight years. • For assessing vehicle write off costs, depreciation was related to purchasing new equipment and depreciating power over 5 years and trailers over 8 years. 3.4 Cost ComponentsA unit cost review was undertaken by Logistics Solution Builders, to update all unit cost components for this project to 2005 average cost levels. As noted previously, this update of Operating Costs of Trucks In Canada is built partially upon the regularity of updates -- hence the study was commenced using the data base of unit cost information compiled over the years, in previous studies, as a starting point of inquiry. This permitted us to seek information concerning absolute levels of cost, but also to understand changes over the past two years -- down to the regional and specific equipment configuration level of inquiry. Data sources consulted for these efforts included review of published literature and web based information concerning the trucking industry, contact with trucking associations, discussions with approximately thirty for-hire trucking businesses and contact with trailer manufacturers and dealers, power unit suppliers, tire suppliers and a major oil company's national fleet sales department. 3.4.1 Driver CostsSamples of 2005 hourly and distance base wage rates for drivers in regions were obtained from: • Discussions with fleet operators in all the regions. • Reference to available collective bargaining results published in internet references and trade publications. • Review of corporate web-sites, many of which publish driver compensation information. • Review of newspaper classified advertisements and web-based driver recruitment sites for carriers and driver pools. • Review of transportation and other wage statistics from Statistics Canada, the US Department of Labor, Published Teamsters Wage Rates, and US County and State Wage Survey Statistics. Considering these sources, and in light of the driver wage database from the prior study, Logistics Solution Builders developed our best estimate for average driver wages applicable for the hauling cases in our study. The 2005 base wage costs used were as follows:
Costs For Driving Activity Driving costs are influenced by distance, hours and tonnage associated with a haul. Larger highway vehicles are costed on the basis of calculating driver wages on either a per-kilometre rate, or an hourly rate -- whichever is highest. This is standard procedure and results in most cases in line-haul pavement kilometres being rated on a distance basis and urban and gravel kilometres paid on an hourly basis, due to slower vehicle speed. Urban straight truck operations are costed on an hourly pay basis. Costs For Loading and Unloading Time Cost for driver time resulting from loading and unloading of payloads is included using the appropriate hourly rate. Wage Burden Costs In addition to paying base hourly and mileage wages for driving and loading / unloading work performed, a wage burden percentage is applied to cover costs associated with non worked paid time (eg. Vacation and Statutory Holidays), driver benefits such as pensions, medical premiums, etc. that are provided by the employer. Burden percents used have been developed from analysis and consultation with fleet operators. 3.4.2 Fuel CostsFuel costs are a result of the influence of distance traveled, vehicle fuel consumption, and of course fuel prices. To support Operating Costs of Trucks In Canada, Logistics Solution Builders maintains a database of realistic fuel consumption rates for each case study hauling scenario. These are based on, and updated with, consultation of fleet operators, discussions with distributors of power units to the industry and review of published literature on fleet energy management benchmarks and targets. In relation to pricing, we reviewed average annual 2005 fleet discounted fuel pricing in the most heavily populated areas of each region. Costs included provincial and state tax as well as Canadian excise tax on fuels.
Note US costs have been expressed in equivalent Canadian dollars based on the average exchange rate, previously discussed. 3.4.3 Repair CostsRepair costs used in our study represent expected costs of parts, lubricants, oil, and labour associated with the maintenance and repair of the particular equipment type. Our database on repair costs was updated in consultation with equipment dealerships, fleet managers, and reference to US Bureau of Commerce and Statistics Canada Industrial Price Indices. We have assumed that repairs were undertaken under efficient shop management and that a prudent preventive maintenance system was employed that was compatible with equipment manufacturer recommended service intervals, warranties and other best practices. 3.4.4 Cleaning CostsThe cost of cleaning tractors, flatdeck trailers and van freight trailers has minimal effect on total operating costs. Annual costs of cleaning bulk tanks vary with the type of commodity carried and the quantity of different bulk commodities transported during the year. An average of tank trailer cleaning costs was developed from discussions with various bulk tank truck carriers as well as a review of prices charged at commercial tank cleaning facilities. 3.4.5 Transport CostsThe transport cost category is a miscellaneous category to reflect all those factors that may be attributed to extra equipment that are not normally viewed as part of a vehicle's standard configuration. This may represent special pumps, hoses, safety equipment, dunnage, small tools, chains, tarping, heaters* or refrigeration* equipment. These costs will vary with area of operation and also with the specific type of product hauled. *Note: Starred items are not included for this analysis, but such items would normally be included in the category “transport costs”, when evaluating these specialized trucking applications. 3.4.6 Tire CostsTire unit costs in our database were updated by Logistics Solution Builders through consultation with suppliers of tires, our knowledge base from prior related fleet studies, and reference to industrial price indices published by Statistics Canada and the US Bureau of Commerce. Actual in-service costs for trucking tires are a reflection of the following factors: • Number of tires for the particular vehicle and cost of new tires purchased in each region. • Life of a tire in each service application, considering road surface conditions. • Cost of retreading, when retreading is desirable, and life of a retread tire for each region. 3.4.7 Depreciation Costs"Normal" depreciation is used based on the 2005 equipment purchase cost obtained from dealer quotations. That is, one percent a month for trailers over a trailer life of eight years and 79.2 percent for tractors over a tractor life of five years. This assumption relates equipment write-off to current replacement cost rather than an arbitrary "book value" determination. Equipment values used for this study, inclusive of applicable provincial and state sales taxes, are tabulated below: Power Units
Trailer Units
GST has been excluded since fleet operators will claim offsetting GST credits. 3.4.8 License CostsCanadian license costs reflect the provincial or territorial charges for licensing the vehicle configurations studied as found in the Truck License & Tax Manual: A Guide to Canadian Regulations, 2005 edition published by J.J. Keller and Associates. US license costs are based on registration of a Five Axle Tractor Semitrailer Combination to the accepted interstate highway standard of 80,000 lbs (36,364 kg) gross vehicle weight. The registration costs are based on selected state jurisdictions, within each region, and applicable charges were secured from Trucking Permit Guide, 2005 edition published by J.J. Keller and Associates. Two axle tractors were assumed licensed at 14,600 kg in all jurisdictions. Resulting annual license costs for our case studies were as follows:
3.4.9 Indirect Costs: Administration, Interest, and InsuranceAdministration and interest on working capital costs have been applied to the hauling cases based on average industry levels for fleets and taking account of normal interest charges applicable to trucking businesses in Canada and the US during 2005. The applicable percentage amounted to 12.5% of revenue for Canadian trucking businesses and 13% of revenue for US based trucking businesses. The Canada / US interest rate difference reflects information gained from the Bank of Canada Internet site concerning Chartered Bank Prime Interest Rates and US Prime Rates Charged by Banks during 2005 -- with borrowing rates adjusted to reflect expected credit treatment of reasonably creditworthy trucking enterprises having clean financial performance abstracts. Interest costs for financing equipment purchase reflects an assumed borrowing cost of 5.25% in Canada (7.75% in the US), loan payback period equivalent to equipment life, and an assumed 75% of equipment purchase costs financed (25% down payment required). Insurance rates, as a percent of revenue, reflect recent risk and claims performance of the trucking industry, historically a value between 3% and 3.5% of revenue. The following table summarizes these indirect cost factors for the 2005 study.
3.4.10 Operator Profit MarginEarly editions of Operating Costs of Trucks In Canada, provided for operator profit margin at the (then normal) level of 10 percent of revenue. Since Canadian trucking industry entry deregulation in the 1980's, profit levels have eroded and it is very common for well managed trucking enterprises to earn margins between 2.5% and 5% of business revenue. Specialized fleets can still earn higher levels of margin (for example time sensitive express operations such as the land based trucking divisions of international courier / freight forwarding businesses, but these are arguably not strictly trucking "pure plays", and their financial returns are certainly exceptional). To aid in applying the case studies investigated to specific business circumstances, Operating Costs of Trucks In Canada now calculates over-all trucking costs using three alternative levels of margin: 10%, 5% and 2.5% of revenue. For readers who are uncertain of which margin to assume for a specific hauling situation, a median approach is recommended -- basing evaluations using the 5% margin cases provided. For each of the three alternate levels of profitability, the expected internal rate of return on investment that the trucking fleet generates is computed, as follows. Internal Rate of Return on Investment Calculation The calculation used to estimate this internal rate of return is to evaluate the equivalent interest earned from a cash flow series as follows:
The resulting calculation is a computation of the “cash flows” (since depreciation accrual is a “non cash item” in any given year) associated with the investment and is independent of borrowed money -- hence representing a measure of the “internal rate of return” for investing money in the trucking asset. A reader might be tempted to look at the calculated “rates of return” in this report and feel that these rates are quite high. It must be remembered, however, that the “rate of return” that is appropriate for an investment of capital also reflects the “risk factor” in owning the asset. Trucking has been historically viewed as a higher risk investment than owning shares in enterprises such as “utilities” or “bonds” -- reflecting what is usually a very competitive market situation in the trucking industry. As a result, the rates of return displayed by the model are generally appropriate for investment in trucking as viewed by the financial community. It is also appropriate to consider the specialization or competitive factors that apply to given trucking markets (availability of capital). Many non specialized sectors (eg. Flatdeck hauling, Agricultural trucking) may provide a lower rate of return on investment than more specialized trucking equipment due to the low degree of specialization of the investment in trailer equipment and competitive factors associated with having many suppliers of these services. On the other hand, very specialized trucking services that involve expensive (single purpose) equipment (eg. A trailer for compressed gases such as anhydrous ammonia or N.G.L.’s) may dictate a higher rate of return to attract capital investment in the enterprise.
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