Economy powers growth

Aug. 1, 2011
Uncertainty in the economy, the subsequent need to preserve cash, and changes in emissions technology have come together at the right time to make leasing a more desirable option for truck fleets. It's a perfect storm, says Tom James, president & CEO of the Truck Renting and Leasing Assn. There's never been a better time for leasing as tonnage is picking up. He notes that with a lot of ambiguity still

Uncertainty in the economy, the subsequent need to preserve cash, and changes in emissions technology have come together at the right time to make leasing a more desirable option for truck fleets. “It's a perfect storm,” says Tom James, president & CEO of the Truck Renting and Leasing Assn. “There's never been a better time for leasing as tonnage is picking up.”

He notes that with a lot of ambiguity still in the economy, buying a truck that is more expensive than in past years may not be a good use of capital for some fleets. “A lot of private motor carriers, like grocery fleets, are saying, ‘I want a transportation partner, someone who is going to do everything — the truck, the service, the maintenance — all wrapped up in one rate,’” he says.

Except for fuel, a carrier knows with leasing what monthly transportation costs will be and that is reassuring, says James. Also comforting is that there's no downtime due to repairs. “The increase in leasing is also good news for manufacturers. One company told me that sales to leasing companies are up 30%.”

“The business has been healthy for a while and getting even better,” says John Deris, senior vice president, national sales for Ryder System Inc. He notes that with so many fleets resisting buying trucks during the economic downturn, but with freight volume now increasing, leasing is a viable alternative even for larger fleets that had never before considered leasing. He adds that although the economy is improving, fleets are still feeling uncertain about business and want to keep money in reserve. “Cash is king,” he says. “Companies want to preserve capital.”

Some fleets look to leasing as a way to keep focused on their core business and not worry about maintaining trucks. “The real value is not in owning the truck but using it as an asset,” notes Chris Maccio, director of sales-East, for Paccar. “Leasing allows fleets to pay for assets that allow them to focus on their business, if it's a full-service lease.”

Maccio also says that with rapidly changing technology, especially with emissions, it can be tough for fleets to keep pace. “Technology changes so quickly, but we focus on it so the fleet doesn't have to,” he says.

For some customers, the decision to lease is very simple. “Customers simply don't want to drop a lot of money on a depreciating asset,” says Maccio.

About the Author

Larry Kahaner

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