Fleet solutions: Leasing, maintenance outsourcing can offer cost-effective alternatives

March 1, 2009
With the combination of today's challenging business conditions and the increasing complexity of trucks, more refrigerated fleets are looking at outsourcing

With the combination of today's challenging business conditions and the increasing complexity of trucks, more refrigerated fleets are looking at outsourcing their equipment, or at least outsourcing vehicle maintenance, as a way to help them more effectively operate. To learn how and why leasing might be an advantageous operating strategy, Refrigerated Transporter's editor-in-chief David A Kolman spoke with Gene Scoggins, newly named president of NationaLease.

One of the largest full-service truck leasing organizations in North America, NationaLease has more than 600 full-service locations throughout the US and Canada. Most recently, Scoggins, who began his career in the transportation industry more than 30 years ago, was the organization's vice-president of sales.

Q: Vehicle leasing and ownership each offer certain advantages and benefits. In what instances would leasing make sense?

A: A chief reason is: leasing is a one-stop service. A customer not only has the ability to benefit from the buying power of a lessor like NationaLease, but can also pretty much have a guaranteed, fixed budget for the life of a truck.

On the other hand, with ownership, a fleet doesn't always know what its costs are, may pay too much for the equipment, or may not get the warranties that it needs.

Q: What are some of the key concerns that should be addressed when considering a truck lease versus a buy decision?

A: A lot of things determine whether to own or lease. Among them: what is the fleet's operation, the need of service, miles per year, will the trucks run high mileage or just run locally, and what has been the business' experiences in leasing and ownership in the past.

It's also important to consider whether the fleet offers priority service, is running above-average mileage for its type of operation, wants to turn the equipment often to maintain a certain image, and if there are any special transportation requirements.

With the full-service lease concept, one company takes care of everything. When a company owns its equipment, someone has to go out and price the equipment, make sure the specifications are correct, find financing, and then be concerned with who will maintain the vehicles or handle breakdowns. The paperwork alone involved with all this can occupy someone fulltime.

All of those worries go away with leasing. As I mentioned before, leasing is a one-stop shop.

Q: What about finance lease packages? When might a company consider this option?

A: A finance lease, also known as a capital lease, allows a firm to finance the purchase of an asset, even if, strictly speaking, the firm never acquires the asset.

Typically, a finance lease will give the lessee control over an asset for a large portion of the asset's useful life, providing the benefits and risks of ownership.

There are tax advantages with a good finance lease package. If a fleet can put the right package together where a residual is guaranteed, it can be very beneficial.

Q: For a company considering contract maintenance, what are some of the foremost areas to concentrate on?

A: These can include hours of service of the provider; whether it's a 7-day 24-hour operation. A fleet also will want readily available fuel and to know that the technicians are ASE (Automotive Service Excellence)-trained.

Another consideration is whether the contract maintenance provider is familiar with the truck brands, engines, and major components of a fleet. That is key for maintaining warranties, technician training, and having the correct diagnostic equipment.

Q: What trends have been occurring within the leasing and contract maintenance industry?

A: For the past few years, leasing companies have been adding solutions-based transportation management programs to help fleets utilize resources more effectively to reduce costs and improve customer service. These have included GPS fleet location and tracking and vehicle performance management systems.

This will continue because fleets are demanding better ways to collect and use fleet data to run operations more efficiently, and to maximize productivity through the longest productive life of equipment.

Q: NationaLease is celebrating its 65th Anniversary this year. What distinguishes it from other such operations?

A: When you deal with NationaLease, you're dealing with the boss. We have national connections and local ownership, which eliminates red tape and bureaucracy by putting customers in touch directly with a local business owner and loyal employees.

For example, consider Tom Brown, owner of Brown NationaLease, headquartered in Des Moines, Iowa. The company, one of the “founding fathers” of NationaLease, boasts an average employee tenure of 25 years.

NationaLease is comprised of more than 175 independent businesses united with a central mission: to provide customers with a flexible, quick response to their transportation needs.

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