Lease or Buy?
Most leasing companies can assist you if you would like to accomplish a similar analysis on the ROI your company would experience if it leases or purchases equipment.
2. Is transportation your core competency?
Companies must ask themselves: are we a trucking outfit or are we in another line of business?
Many organizations have determined that by leasing their trucks and assigning their maintenance, roadside service, fuel tax reporting, and other administrative headaches to leasing companies, they can focus their employees’ and managers’ energies on activities central to their business. When employees and managers concentrate on delivering products, they can provide top-notch service and on-time performance to their customers. They also have time for activities that help the company gain new business.
For many companies, investing time and resources in trucking-related activity can be a slippery slope. Specifying the right equipment for trucks and handling maintenance require the right knowledge. Transportation managers must keep up with the latest developments in trucking technology. Maintenance facilities must be properly equipped and staffed with well-trained technicians.
By outsourcing non-core functions related to trucking through a full-service lease, companies can fill the driver seats with their own people, while taking advantage of their leasing provider’s equipment know-how plus equipment buying power and expertise.
Leasing companies, due to their sheer size, can negotiate the best pricing on equipment, maintenance items, and expendables and pass those economies of scale on to their lease customers. Without that benefit, a smaller fleet with fewer than 50 units can expect to pay a sizeable premium on parts, tires, outside repairs, and other truck-related expenses due to economies of scale.
Leasing companies, which have the capability of customizing quality trucks with specialized equipment to meet their clients’ individual needs, can help you realize operational efficiencies such as better fuel economy, greater productivity, and improved driver satisfaction. Plus, the trucks, trailers, and van bodies can be painted and illustrated with graphics that help you create or reinforce brand awareness among your customers.
3. Do you know what the true cost of ownership represents?
More specifically, do you know what your equipment’s maintenance costs are?
Most organizations have a good handle on their financing costs. Typically, equipment financing is a fixed known quantity. Unfortunately, the cost of maintenance is often not well-known or understood. But it should be.
Large fleets that run a tight accounting ship can tell you down to the penny, on a unit-by-unit basis, how much they spend on labor, parts, tires, and outside repairs for their trucks. They can also tell you how those expenses are trending compared to their annual budgets. Think of this as a profit-and-loss statement on each truck. Those companies can also track trends that indicate poorly running units and units that experience repeat repairs. These types of trends influence future component purchasing and maintenance practices. Trends also help guide organizations to make replacement-cycle decisions. By having a handle on these types of trends, organizations can fine-tune their trade cycles and optimize their operating costs.
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