“Our customized transportation solutions include programs such as PacTrainer, an online suite of compliance courses to improve operator driving performance; PacTrac, vehicle fleet telematics to improve productivity; PacTax, fuel tax filing and reporting; PacFuel, nationwide fuel discounts and PacToll, road toll management and invoice consolidation,” says Mike Willey, PacLease director of sales.
Willey is seeing the average length of a full-service lease contract is about 60 to 72 months.
“The standard full service lease contract includes full financing with no up-front costs, legalization such as fuel tax reporting, permitting and licensing along with a full maintenance wrap that includes substitute vehicles,” Willey says.
Advantages & Drawbacks
The advantages and disadvantages to leasing versus having an in-house fleet operation are as varied as the companies themselves.
A full-service lease contract typically covers the truck from cradle to grave. The provider is responsible for all maintenance-related items throughout the entire term, thus relieving the customer of any maintenance-related expenses outside of vehicle damage. From a cost perspective, a full-service leasing provider can typically maintain the vehicles cheaper than a private fleet. And the amount of investment in technology and infrastructure the providers have in place allows them to operate with scale; giving them purchasing power and capabilities that most stand-alone companies don’t have with their in-house maintenance operations. These cost savings are passed to the customer, making the full-service lease contract advantageous for the customer.
According to Willey, the advantages to full-service leasing versus buying are two-fold. The first advantage being that a full-service lease agreement allows PacLease’s customers to focus on their core business, which is most often not transportation.
“The customer doesn’t need to source equipment, hire administrative staff to manage the vehicles or worry about servicing or maintaining the vehicles,” Willey says. A full-service lease provides substitute vehicles when trucks are inoperable, thus ensuring that the customer maximizes uptime, which allows them to deliver their products.
The second advantage is the customer doesn’t have any up-front costs associated with a full-service lease, allowing them to invest in other aspects of their business.
“Full-service leasing is typically ideal for private fleets that are not ‘for hire’—although there are several large ‘for hire’ fleets that use full service leasing,” Willey says. “Companies that can’t or don’t have a desire to run their own shop or build a transportation department are ideal candidates for full-service leasing.”
Using full-service lease and rentals also can strategically help address capacity (both up and down), new business awards, and other business challenges including driver retention, new product trials, acquisitions, residual risk, etc.
Based on the business, certain aspects of the full-service lease product mix will be more appealing.
“If you are a for-hire carrier, rentals units may be a way to help cover for equipment shortages and surge capacity,” Willey says. “If you’re a private fleet who generates revenues from things other than per mile charges such as a bulk hauler, manufacturing support, etc., a full-service lease can help lower the cost of ownership and compliance by leaving the fleet management to a leasing provider who can bring you the benefits of scale by being part of a larger local fleet.”
So for whom are full-service lease options not appropriate? Companies with extremely large fleets who rely on the trucks to generate revenue typically invest a lot of money to maintain their vehicles. In this case, the trucks are their core business. These companies typically have sophisticated in-house maintenance operations and employ experienced transportation professionals to run their business.
A Growing Trend
Barlow also is seeing trends strengthening with regard to leasing fleet vehicles, which has led to an uptick in outsourcing. Some of the most important trends fueling this are the increasing cost of equipment and the increasing complexity of technology.
As Barlow explains, the benefits of a Ryder’s maintenance solutions deliver advantages to fleets such as minimizing fleet downtime, maintaining consistent levels of maintenance and repair, automated billing, reporting and control with predictable monthly expenses. What’s more, the technician shortage and resources required to train technicians on advancing technologies also make outsourcing an attractive option.
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