Based on the results of the pilot project, Patrick planned on a three-phase implementation schedule. The start-up phase would involve one train per week carrying 200 FEU containers. Phase 2 would double the volume with two shipments per week. When the project was running at full volume in the third phase, Patrick expected Cache Creek to operate six days per week, with one shipment of 200 FEU containers to the port each day. The new trans-load operation would require 5 acres of land at Cache Creek.

Canaan would need to commit resources to support container-handling operations, scheduling, and administration. A yard manager and administrative staff for the trans-loading operation at Cache Creek needed to be hired. Canaan would also need to purchase office equipment and put in a computer system. The yard would require container-handling equipment, which could be leased, and a new pad for container storage would need to be installed. The material handling equipment would include two container stackers, each with capacity of 20 moves per hour for both unloading empty containers and loading full containers. Patrick estimated that fixed overhead costs for administrative costs, including salaries, administrative expenses, and lease payments would be $75,000 per month. The number of material handling operators in the yard would be driven by container volume, and labour costs would be recovered through fees charged to the shipper (e.g., the $400 container stuffing fee; see Exhibit 5). Initial capital costs were expected to be $200,000.

EXHIBIT 5: FINANCIAL ANALYSIS OF VARIABLE COSTS

2016,

	Current	Cache Creek Model
1. Empty container shipped from Eastern Canada and repositioned at Vancouver rail yard	$ 500	$ 500
2. Truck lumber to trans-load yard	1,050	250
3a. Truck empty container from rail yard to trans-load yard	140
3b. Internal rail movements		75
4. Container stuffed at trans-load yard	400	400
5. Container delivered to dock	140	400
6. Dock charges and reservation fees	100	100
7. Dock demurrage and 3PL storage fees (average)	50
Total	$ 2,380	$ 1,725

Note: 3PL = third-party logistics supplier Source: Company files.

a. the container volume per week is: __200_________

b. If there are 50 weeks in a year, container volume per year is:______

2. Monthly fixed/overhead cost is:______

a. Annual (12 months) fixed or overhead cost is (exclude capital cost): _____

3. Lease cost

per month and per acre lease cost is:_______

Number of acres for lease :_______