The European economy is growing, albeit more slowly than previously. Continued strong consumer consumption will provide road freight companies with attractive business opportunities. There are several statistics that may lead you, as a fleet manager, to consider leasing your trucks and trailers rather than buying them.
In its autumn 2018 economic report, the European Commission (EC) said that “growth in the euro area is forecast to ease from a 10-year high of 2.4% in 2017 to 2.1% in 2018 before moderating further to 1.9% in 2019 and 1.7% in 2020. The same pattern is expected for the EU27, with growth forecast at 2.1% in 2018, 2.0% in 2019 and 1.9% in 2020.” The European Commission expects economic growth to continue in the EU with the help of strong consumer consumption and investment.
To easily benefit from the opportunities available due to economic growth, why not choose trailer flexibility through leasing or rental? You can simply choose when you add trailers, adding them for a short period and/or returning them when no longer needed. All without having to raise the capital needed to buy the assets outright and bear the full cost of ownership.
Leasing is an increasingly popular form of financing and is already very popular across Europe. Take Germany, for example. A recent report by the Federal Association of German Leasing Companies (BDL) stated that new business had risen from €63 billion in 2016 to €67 billion in 2017, a 6% growth. The market share of leasing as a financing tool was 16.1% of the country’s total macroeconomic investment, the highest percentage since 2012. According to the BDL, over half the leasing volume in 2017 came from vehicles, with 17% of the leases signed by companies and private individuals for commercial road transport vehicles such as trucks, trailers, buses, and vans. (source: MarketundMittelstand)
For many fleet operators, leasing is a longstanding financing option. Testimony to the enduring value of trailer leasing is TIP. In 2018, TIP celebrated its 50thanniversary and has provided its clients with rental and leased trailers for many years.
In the Markt und Mittelstand article, Horst Fittler, General Manager of the BDL, attributed part of the popularity of vehicle leasing down to the “supplementary services provided by leasing companies such as maintenance, inspection and damage management.”
With rental or leasing contracts, the lessor or rental company provides an outsourced maintenance and repair service for their trailer. Under this type of agreement, the fleet manager avoids the high capital investment and management time required to run a state-of-the-art workshop. A workshop needs vehicle diagnostic technology, workshop tools, a supply of spare parts and a team of specialist trailer mechanics. A fleet manager has to recruit, retain and train mechanics. Mechanics must be up to date with the latest technologies and specifications from the manufacturers whose trailers and trucks you use. If running a workshop does not play to your strengths, it is often easier to outsource your trailer servicing to an expert such as TIP.
Many fleet managers aspire to upgrade to trailers or trucks with the latest technologies when considering whether to lease or buy. However, not everyone wants to be an early adapter and buy expensive and unproven new technologies. Nevertheless, you don’t want to be left with a devalued fleet of older vehicles and technology when all your competitors have upgraded to the latest.
The risks of buying the wrong trailer when branching out into a new area of business are considerable. Some fleet managers might unknowingly buy trailers with the wrong dimensions for actual future revenues or specialist trailers for which demand may be less than predicted.
Trailer leasing removes these risks of choosing wrongly. New trailers and technology are available with specifications above and at a price point below the levels an individual fleet can enjoy, thanks to the economies of scale leasing companies command. Leasing contracts allow customers to change models on a more frequent basis than if they had purchased the asset outright. With a rental contract, you can quickly find a trailer to fulfil a short-term job and return the keys on completion.
Trailer leasing and rental is our great strength, representing 65% of our turnover in 2017 (source: TIP Annual Report 2017) TIP offers a wide range of leasing and rental solutions and can advise on the financial and tax advantages of leasing and the different regulations across Europe. With a transport fleet of over 70,000 units, TIP is one of Europe’s largest transport equipment leasing companies. It can also purchase each asset specifically for you.
We offer trailers on a rental basis in all forms including semi-trailers, flatbeds, curtainsiders, box trailers, tankers and reefers to fill short term gaps in your fleet. This is a valuable option for fleet managers needing to fulfil a last-minute customer delivery request.
For fleet managers looking for a flexible and cost-effective way to manage their fluctuating short to long term trailer fleet requirements, TIP provides several trailer rental and trailer leasing options.
For more information about TIP trailer rental and leasing, please contact us.
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