Better days may be ahead very soon for the truck leasing industry for two reasons: emission regulations that are driving up truck sticker prices make leasing more attractive to truck fleets and fleets are still seeking ways to prolong the life of their equipment, which is boosting demand for contract maintenance.
“There are a lot of positives in the mix for the leasing business, though of course it all depends on how the economy behaves next year,” Thomas James, the new president & CEO of the Truck Renting and Leasing Assn. (TRALA), told FleetOwner.
“Yet the advantages are there,” he continued. “As credit remains tight and new trucks get more expensive, leasing offers fleets a way to obtain new equipment without straining their bottom line. And for those trying to keep their current trucks longer yet reduce their maintenance operations to cut costs, they can tap into the contract maintenance services leasing companies offer. And I think contract maintenance will provide an excellent introduction to new customers into the range of services leasing firms offer.”
The continued tightness in credit markets is also viewed as an advantage of sorts, though it poses difficulties for leasing firms and fleets alike. “Credit remains tight and that’s difficult for everyone,” said James. But it’s an issue the truck renting and leasing industry is used to-- as it’s responsible for approximately 35% of all new Class 3 through 8 commercial truck registrations.
“In terms of leasing equipment, that credit issue puts more pressure on the leasing company rather than the fleet – and the fleet gets a fixed transportation cost as a result,” James pointed out.
The growth in credit availability remains a major concern in the business community as a whole and there are still some strong headwinds as far as the financial sector is concerned, added Chris Kuehl, chief economist for the National Association of Credit Management (NACM)
“Access to credit remains a limiting factor for many businesses but there is evidence of the logjam loosening,” he said. “In conversations with credit managers … there is a sense that there are growing opportunities for the best customers and a willingness to get engaged with those showing a plan and some progress.”
Also, some the fundamentals supporting the truck leasing business are starting to improve as 2009 draws to a close, though they still remain far from ideal.
“Our performance for the third quarter was somewhat stronger than expected, particularly in our Supply Chain Solutions automotive industry business, and Fleet Management Solutions (FMS) used vehicle sales business,” said Greg Swienton, chairman & CEO of Ryder Inc., which rents and leases equipment and offers contract maintenance service through its FMS division.
