When you read about Volvo’s prototype self-driving electric truck with no cab on Reuters or about start-up Nikola Motors’ forthcoming hydrogen-powered electric semi-truck on Techcrunch, did you think about replacing trailers and trucks in your fleet with new ones? If your answer is “yes” then consider the advantages of leasing these assets instead of buying them.
Lease and/or purchase – a strategic decision
The decision on whether to lease or buy trailers is a strategic decision for fleet managers, influenced by their companies’ business objectives, organisational infrastructures and cultures. Some fleets opt for a blend of leasing and purchasing.
In relation to what he perceives to be an unsettled economic climate in Europe, Shaun Sadlier, Head of Consulting at leasing business Arval, told Fleet News that “There has, of course, been a long term shift towards leasing over many years but this has not been uniform and, in periods of economic uncertainty, there have been noticeable jumps.
“It could be that we are at another of those moments.”
There are several compelling reasons for leasing your trailers and trucks.
Decrease total cost of ownership
Matt Svancara, executive vice president at Aim Leasing Company (USA) recently explained a concept in American Trucker that is equally valid for European trailer fleets.“Leasing helps lessen monthly payments because the leasing company takes on the risk of the residual value. The customer doesn’t pay for 100% of the truck. Most bank loans require a portion of the cost down and 100% financing of the remaining balance. In addition, leases typically have longer terms than a typical bank loan on a purchased asset.”
Logically, shorter leases require higher monthly payments than longer leases and offer more flexible terms than the latter. In addition, the total financing charges that the customer pays will be greater over a longer lease period than a short one.
A leasing company should be able to pass on to its customers the benefits of the economies of scale which it negotiates by purchasing large numbers of trailer assets from manufacturers. Consequently, customers use better trailers and trucks at a lower cost than had they bought assets outright themselves with a loan.
Surf the wave of disruptive technology
Technologies like artificial intelligence, machine/predictive learning and the Internet of Things (IoT) are rapidly disrupting the world of transport and logistics. Fleet managers also need to equip their trailers and trucks with the latest telematics, IoT and predictive technologies.
Retailers and manufacturers aim to deliver ever more quickly and more efficiently in response to e-commerce and higher customer expectations along the supply chain.
A flexible lease arrangement gives access to the latest technology by swapping old trailers and trucks for new ones without the burdens of having to finance the purchase of new vehicles outright and sell old ones with outdated technology.
With many leasing agreements, leasing companies provide maintenance and repair services. This saves fleet managers from investing in and running their own workshop facilities. This consumes significant capital because workshops require a sophisticated workshop and diagnostic equipment and tools as well as an inventory of spare parts.
Workshops also require skilled technicians that the fleet manager needs to recruit, remunerate and retain. Keeping up to date with the latest technology can be challenging. It is not enough for a technician to have a good eye for repairs and be a wizard with manual tools. Today’s technology also requires computer excellence. To add value, technicians must undergo extensive and significant training. For large fleets which enjoy economies of scale, running workshops can make sense but for many fleets outsourcing maintenance and repair to specialists such as TIP and its extensive pan-European network of workshops and mobile service, vans are the best business solution.
Leasing frees up capital for fleet managers to use in the areas of their businesses where they add the most value.
Selling your old trailer assets
When a trailer fleet enters a leasing agreement with a company such as TIP, TIP can take in its old trailers and sell them on its behalf. TIP’s Remarketing team sells used trailers and trucks to customers in 17 countries across Europe. TIP typically sells around 7,000 assets per year.
TIP leasing and rental
TIP specialises in providing trailer leasing and rental solutions which are compatible with the different leasing regulations across Europe. With a transport fleet of over 68,000 units, TIP is one of Europe’s leading transport equipment leasing companies. TIP can purchase assets specifically for you.
We offer a range of trailers on a leasing basis in all forms including semi-trailers, flatbed, curtainsider, box trailers, tankers and reefers to fill gaps in your fleet.
TIP leasing options
For fleet managers looking for a flexible and cost-effective way to manage their medium to long term trailer fleet requirements, TIP provides several leasing options including an:
- An operating lease which is off- balance sheet leasing with flexible terms.
- A finance lease which allows you to acquire an asset over time rather than paying for it upfront.
- Sale and lease back in which we will buy your assets at a fair market price and lease these assets back to you for a fixed monthly fee.
We also provide further value-added services across all our leasing solutions including replacement vehicles during servicing, roadside assistance, fleet and tyre management and telematics for your fleet. We can resell your used trucks and trailers. For more information about TIP trailer leasing and rental, we invite you to contact TIP Trailer Service using this form
Sign up for TIP Newsletter
If you wish to receive the latest industry news on a quarterly basis, please use the sign-up button below.