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Should Fleets Own or Lease Trucks?

THIS POST WAS ORIGINALLY PUBLISHED ON THIS SITE Click Here To Read Entire Article

It’s still not for everyone, but more fleets are finding new reasons to consider leasing over owning trucks.

April 2018, TruckingInfo.com – Feature

by David Cullen – Also by this author

Trucking fleets are looking more closely at all their options, from outright ownership to finance leasing to full-service leasing, even opting to own some trucks while leasing others. Photo: Daimler Truck Financial

Opting to acquire power units through a finance or full-service lease in lieu of ownership has long been seen as a financial decision, typically based on how standard a fleet’s trucks specs are and how quickly it cycles out trucks.

Today, however, fleet managers may have other good reasons to consider leasing over owning, namely as a strategy to deal with the galloping arrival of new equipment technologies (everything from electronic logs to advanced emission systems to alternative power) and the ever-growing shortage of qualified technicians.

While leasing historically has been favored by sizable fleets running fairly standard equipment on shorter trade cycles, full-service and finance lessors say such marketing distinctions are not so cut and dried anymore. More fleets are looking more closely at all their options, from outright ownership to finance leasing to full-service leasing, even opting to own some trucks while leasing others.

“Typically, larger fleets, driven by an interest in tax benefits and the company’s cash flow, choose a leasing model,” says Steve Goodale, vice president of Daimler Truck Financial, which provides services for customers of Freightliner, Western Star, and other Daimler Trucks North America brands.

“For example, a larger fleet may not need the depreciation benefit that comes with financing [by loan] and will decide to take advantage of [finance] leasing’s lower payments, which allows them to simply expense the monthly lease payment. This also offers them shorter equipment life cycles and allows them to adopt the newest technology as it becomes available.” In addition, he notes that a finance lessor can offer “customized deal structures, such as seasonal payments, balloon payments, and extended terms that work for the needs of the specific customer.”

On the other hand, Goodale points out that “smaller fleets tend to gravitate toward retail finance because they are more comfortable with the product, want [to outright own] the asset, or have a longer trade cycle planned.” That last element is often a congruent factor for fleets that run specialized truck equipment.

“Full-service leasing from a third-party provider continues to have an advantage over the ownership model for a variety of reasons,” says Jason Leon, group director, product management for Ryder ChoiceLease. He says chief among those are buying power and an expansive, reliable maintenance network.

“Also with leasing, there’s the residual advantage element. Each organization has unique needs, which is why Ryder, for example, offers a flexible leasing solution, ChoiceLease, that lets customers select from three different levels of maintenance.” He adds that with leasing, “it’s never a one-size-fits-all scenario, which is why we provide our customers with the ability to determine the term, financing arrangements, and the service delivery method of their choosing.”

“Full-service leasing is a growth market and has been for quite some time now,” says Joseph Gallick, senior vice president of National Account Sales for NationaLease, an association of independent full-service lessors and sister operation to finance lessor AmeriQuest. “In our case, we see customers that need to do two things at the same time – heighten the efficiency of their drivers and maximize their fleet investment.”

He says the driver turnover/shortage issue is being exacerbated by hours of service constraints and CSA requirements, “so fleets want productive vehicles to

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