According to forecasts, the European economy continues to grow and offer road freight transport operators additional opportunities for business. To meet increased demand, fleet operators need to consider how they develop their fleets. For many fleet managers, truck and trailer rental or leasing are very attractive and flexible solutions.
The CNR (Comité National Routier), the French road freight transport economic committee, reported in November 2017 that the global economy will continue to grow at between 3.5 and 3.7% per year through to 2019. Meanwhile, it expects growth in the Eurozone economies to slow down to 1.9% in 2018. The road transport industry has benefitted. France, for example, saw a 10% rise in tonnes per kilometre transported in the year to the end of June 2017.
Growth in truck rental and leasing
Many operators are adopting flexible ways of running their fleets to meet the peaks and troughs of fluctuating demand for deliveries driven by e-commerce as well as economic uncertainty.
The truck and trailer rental and leasing industry have been a beneficiary. According to market researchers IBISWorld, this industry in the UK, for example, has grown at an annual compound rate of 3.7% over the last five years.
Trailer rental and leasing – advantages
Trailer rental and leasing should be on the radar screens of fleet managers seeking more flexibility in terms of when to increase or decrease their numbers of trailers, having access to the latest technology and how to finance their fleet. One advantage of having access to trailers through a rental or leasing arrangement is that it does not tie up all your capital as it would do through an outright purchase.
Meeting fluctuating demand
Through rental and leasing, fleet managers can add trailers to their fleets to handle surges in demand and hand them back during slowdowns in demand at short notice, with ease and without having to bear the fixed costs of ownership.
Thanks to the savings passed on by leasors through the economies of scale that they enjoy with the manufacturers, fleet managers can benefit from competitive rental or leasing rates for trucks and trailers. In some cases, this may provide fleet managers with higher specification vehicles than through their own purchasing power.
Ease of upgrade
Unlike a loan, it also gives fleet managers the opportunity to upgrade their trailers with ease without having to worry about the time needed to sell a used asset and its resale value. In the US, for example, according to Price Digests, used truck values fell 7.3% between May 2016 and May 2017, due to oversupply [Source: JPMorganChase]. This situation has parallels in Europe.
Leasing, newer trucks
The average age of leased trucks over 3.5t tends to be significantly less than owned trucks. For example, in Belgium leased trucks are on average 3.2 years old compared to 7.9 years old for owned trucks. [source: LeaseEurope]
Latest technology, sooner
The ease of upgrading through rental and leasing agreements enables fleet managers to move sooner to trucks with the most recent technology. This is an important consideration for fuel-saving technology since fuel consumption accounts for around 70 percent of a fleet’s annual operating costs [Source: JPMorganChase]. This will also contribute to fleets meeting ever more stringent EU CO2 emissions standards. Research company IBISWorld believes that operators that update their fleets with trucks that include the latest technologies are likely to outperform their rivals.
As part of a rental or leasing contract, a fleet manager can outsource the maintenance, serving and repairs for their trailer fleet to the leasor or rental company. Time and resources saved can help the fleet manager focus on core parts of his business. It eliminates the need for the fleet manager to recruit, train and retain specialised trailer mechanics and to have warehouse space to store an inventory of spare parts alongside the fixed overheads of doing so.
TIP leasing and rental
TIP offers a wide range of rental and leasing solutions and can advise on the different leasing 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.
TIP rental options
We offer trailers on a rental basis in all forms including flatbed, curtainsiders, box trailers, tankers and reefers to fill short-term gaps in your fleet. This is an extremely useful option for fleet managers needing to fulfill a last-minute customer delivery request.
TIP leasing options
For fleet managers looking for a flexible and cost-effective way to manage their fluctuating medium to long-term trailer fleet requirements, TIP provides several leasing options:
- Operating lease – This is off-balance sheet leasing with flexible terms. Operating leases are particularly attractive for high-value assets such as trucks and trailers which are needed to fulfill a specific contract. Lease rates are based on the value of the asset over the period you require it. As a result, you can link lease rates directly to the revenue your asset generates.
- Finance lease – A finance lease allows you to acquire an asset over time rather than paying for it upfront. The lease rates are calculated over an agreed term.
- Sale and leaseback – Under this form of leasing, we will buy your assets at a fair market price and lease these assets back to you for a fixed monthly fee, thereby freeing up your capital for other uses.
- Additional value-added services available across all our leasing solutions – We can offer replacement vehicles during repairs, maintenance, roadside assistance, fleet and tyre management and telematics for your fleet. We remarket trucks and trailers that are no longer needed.
For more information about TIP trailer rental and leasing, please contact TIP using this form.