Are Used Buses Really Saving Money?

For years, Saskatoon Transit has been purchasing used buses as a means of replacing or adding vehicles in a cost effective way. But is purchasing and refurbishing used buses really saving money?

On the agenda of the recent meeting of the City of Saskatoon’s Standing Policy Committee on Transportation is the recommendation to Council that a tender for the structural refurbishment of five (yes, five. Remember that number) articulated buses be awarded at a cost of $660,000. That’s just structural, not engines, drive-train, or interiors.

While I am sure these buses do need to be refurbished if they are to continue service, we are now starting to see the true cost of the “Buy Used” strategy that has been in place at Saskatoon Transit for many years. The report to council section on “replacement versus refurbishment cost comparison” only compares the cost of replacement or refurbishment, with no mention of the acquisition or operating costs to date, or total cost of ownership for the life of the vehicles.

The buses to be refurbished were originally acquired by Saskatoon Transit in early 2012 after being withdrawn from service by their original owner, Ottawa. These articulated D60LF buses manufactured by New Flyer Industries were originally in service with OC Transpo and quickly gained a reputation for being mechanically troublesome and under-powered, not just in Ottawa, but in every city that purchased them.

In New Flyer was facing the potential of significant layoffs after a large US customer (Chicago) deferred a major order in 2009 as a result of delays in getting state funding. By August of 2009, New Flyer was planning to layoff 13% of its workforce and planned to shut down for six full production days. OC Transpo made the decision:

“…to renew the articulated bus fleet by purchasing 306 new articulated buses.  This allowed the retirement of 226 inefficient and problematic older articulated buses, creating substantial improvements in reliability and fuel economy.  This renewal moved forward the planned date of replacement of those buses and changed the fleet plan by eliminating the need for refurbishment of many older buses.”

and

“The acquisition of these buses has resulted in significant financial savings already incorporated in Budget 2011.  The cost of financing these new buses has been more than offset by associated savings in fuel and maintenance of more than $9 million a year.”

In April 2010 Ottawa City Council decided to replace 226 articulated buses after New Flyer offered them a juicy deal. Ultimately OC Transpo ended up with 306 brand new buses with full five year bumper to bumper warranty, lower fuel costs, maintenance costs, and reduced emissions,

“…for the same cost as it would take to keep the older buses on the road, while improving customer service.”

Interestingly, Ottawa was expecting to spend $66 million refurbishing 226 buses, or just shy of $300,000 each. As far as I know, Winnipeg was the only other city to purchase any of these used buses, for $53,000 a piece for 20 buses, ultimately spending $2.2 million to purchase and make them road worthy. So another $57,000 each, to get them operational.

In 2012 Saskatoon bought six buses (p 30) for $235,000 and expected to spend up to $90,000 (total) to get them on the road. Significantly less than Winnipeg. Had these vehicles been reliable, this might not be a bad idea. But according to the Canadian public transit discussion board, these six articulated buses spent a total of 17 bus months (6 buses x 12 months = 72 bus months) out of service in 2014 alone. That means on average these buses are out of service at least 24% of the time, and one is still off the road and isn’t included in the refurbishment.

If an articulated bus is out of service, the only way to replace that level of service and rider capacity is to replace it with two regular buses. Double the fuel, twice the labour cost. But let’s say that one regular bus replaced one articulated, and Saskatoon Transit only needed to add a second bus during peak times, say a total of 6 hours of operating time per weekday.

OC Transpo expected to see a reduction in fuel consumption of 26% and a 15% reduction in maintenance costs with the new buses they purchased, about $6 million a year for 226 buses. Proportionally the incremental fuel and maintenance cost to Saskatoon Transit operating these used D60LF’s would be just shy of $27,000 more a year than what new buses would have cost to fuel and maintain.

 

New vs. old buses, estimated total cost of ownership to date

New vs. old buses, estimated total cost of ownership to date

 

Now if my math is right, once this refurbishment is completed, the City will have spent well over $300,000 per bus in acquisition costs, refurbishment, of out-of-service time, and incremental difference in fuel and maintenance expenses. The City could have purchased new buses at the time for about $600,000 each, which probably would have been delivered and operational by early to mid-2013, and due for major refurbishment in 2023.

So to date, the City has paid just over 56% of the cost of six new vs. six five old buses that they expect to last no more than 4 to 5 years (including this refurbishment) that will have spewed an additional 46,000 kilograms of Nitrogen oxide (NOX) and over 1,200 kilograms of particulate pollution into the air (compared to new) by the time the five remaining buses are finally retired in 2020, 3 years before six new buses would be looking at their first refurbishment.

How much of that “savings” will be eaten up in the next four to five years in increased operating costs, repairs, maintenance, down-time and so on? Maybe Saskatoon City Council and Saskatoon Transit need to ask their grandmothers to explain to them the meaning of “penny-wise, pound-foolish”.

 

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