New lease on life

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Kenworth’s T800 model can be spec’d in a variety of configurations, helping fuel oil dealers optimize their trucks’ maneuverability and weight distribution.

Fleets operators are learning that leasing is a suitable alternative to truck ownership

Several years ago, many fleets thought owning their own trucks made the most financial sense. But numerous changes, including the increasing complexity of both heavy- and medium-duty trucks and tractors; stricter government regulations; and the need for financial flexibility have brought full-service leasing to the forefront.

According to the National Private Truck Council, a trade association representing the private corporate trucking industry, around 50 percent of private fleets use some form of truck leasing. An annual survey conducted by the council shows an increase in the number of trucks being leased each year.

Today, the profile of the leasing customer is evolving beyond manufacturers and distributors, said Bob Southern, president of PACCAR Leasing Company. ‘In the past, customers were typically small- to medium-sized private fleets,” he said. ‘But today, all types of fleets are discovering the benefits of full-service leasing. More and more companies are considering leasing as a means to attract and keep good drivers and to deal with the shortage of qualified technicians. Operating a fleet of leased trucks helps companies get their product to market in a timely, reliable and cost-effective way, while leaving the maintenance of the vehicles to trusted experts.”

The trend to full-service leasing is expected to accelerate even faster in the next few years as the complexity of trucks continues to evolve. It’s going to make maintenance and technician training an even higher priority.

‘With those influencers, more and more fleets will enter into a full-service leasing agreement,” predicted Southern. ‘If you’re running fewer than 50 trucks, it’s going to be increasingly difficult to justify your own shop. Bottom line, with new technology in trucks, full-service leasing allows you to off-load maintenance to a trusted partner. It’s the leasing company’s job to make sure equipment is well maintained and running properly. You insulate yourself from unpredictable or erratic maintenance costs. That burden is shouldered by the leasing company.”

Fleets owning and maintaining trucks must deal with a growing shortage of qualified technicians (it’s predicted that 38,000 more technicians will be needed each year through 2010).

‘The shortage isn’t going away; if anything it’s going to get worse,” said Don Porthan, PACCAR Leasing’s manager of maintenance. ‘Fewer and fewer people have entered this field. It’s no longer a wrench-turning business. It now requires trained professionals using computers and electronic diagnostic tools.”

For leasing companies, the cost of hiring and training technicians is spread over a larger number of trucks. Efficiency is in the numbers.

‘With mandated and ongoing education and training programs, technicians working for leasing companies are among the best in the business,” Porthan contended. ‘By leaving truck maintenance to a leasing company, customers enjoy well-maintained equipment without the expense and liability of operating their own shop.”

In the world of just-in-time deliveries, few fleets can afford to have a truck sitting on the side of the road for an extended period of time, particularly if it is loaded. Leasing helps eliminate this risk by increasing uptime. Many leasing contracts have a substitute vehicle feature that provides a replacement vehicle when it’s needed.

‘At PacLease, for example, if there is a down vehicle, we determine the nature of the problem and prescribe the best course of action to maximize uptime,” said Southern. ‘Typically, the quickest solution is having the truck repaired at the roadside or taken to one of our more than 50,000 service points. When it comes down to it, leasing is not only about providing a truck, it’s about providing an efficient method for deliveries. Our customers are looking for a solution that assures an exceptional level of transportation service. PacLease focuses on preventive maintenance to avoid unplanned downtime and leases only the highest-quality, award-winning Kenworth and Peterbilt trucks.”

Peterbilt’s hybrid Class 7 Model 335 features new technology that makes it a candidate to be leased. Leasing instead of buying is an option for many looking for a new truck since the lease comes with a maintenance program that makes the new technology more affordable and productive.

The work of technicians is more critical today than ever, but just as important is their understanding and training in dealing with government-mandated environmental regulations. And with every passing year, these regulations continue to grow in size, scope and complexity. Today’s truck fleet manager is faced with numerous compliance activities that can easily command several hours a day.

‘This is time that could be better used elsewhere,” said Southern. ‘The outsourcing of maintenance, fuel tax reporting and other activities frees a manager’s time for his or her primary business. And, don’t forget the time involved in working with regulators. Are you sure that you’re up to date on the criteria for each of the states in which you operate? Are you confident that the practices in your shop are in compliance with federal, state and local regulations? More and more companies are concluding that shifting these responsibilities to a third party may be a sound business decision for their company.”

One last thing to consider: the crystal ball. Owning trucks is a bit like timing the stock market. Hit it right when it comes time to sell, and you’ll reap high residual values. If your timing is wrong, the value of your equipment may be too low to make a much-needed move to new trucks.

‘Right now, the used-truck market is strong with prices reflective of market demands,” said Southern. ‘But, will that be the climate in three or four years from now? You don’t have to have a long memory to recall the oversupply of used trucks on the market several years ago. It left many fleets upside down on the value of their trucks. Today, we’re seeing fleets are more concerned about preserving the value of their investments. Leasing is an ideal way to remove the uncertainty of the used-truck market from the equation. Plus, a leased truck has a greater chance of holding its value because of its maintenance record.”

Given these changing times, you must evaluate all aspects of your business, including transportation. A lease/ownership analysis helps determine the best fleet strategy for your specific needs. ‘From our perspective, there has never been a better time to lease vehicles,” concluded Southern. ‘We take the risk out of operating a fleet of trucks and that’s a comforting notion for our customers.”

Taking the bite out of technology

As 2007 brings new engine and truck technology to the forefront, full-service leasing companies are prepared with lease and maintenance programs to make the technology more affordable and productive.

‘Leasing really makes sense any time new technology is introduced to the trucking industry,” said Olen Hunter, PACCAR Leasing’s director of sales. ‘Our full-service lease programs insulate you from the uncertainty that goes along with any new technology and truck ownership. We also have the trained technicians who know the ins and outs of the new engines, which will help ensure maximum uptime.”

According to Hunter, new products from Peterbilt and Kenworth, the two truck brands offered through PacLease, can help customers lower their overall operational costs.

‘There has been a lot of talk about new engines, but don’t overlook all the new technology available and truck models that improve productivity. For example, Peterbilt recently introduced the Class 7 Model 340. The Model 340 is available in 33,000 pound and higher GVW ratings and is well-suited to fuel oil dealers,” Hunter said. ‘Peterbilt will also be coming out this year with limited productions of a new hybrid Class 7 Peterbilt Model 335, which are perfect for customers who want the bottom-line benefit of reduced fuel use, as well as the satisfaction of doing something responsible for the environment.

‘Kenworth offers its award-winning Class 7 Kenworth T300, which provides fuel oil dealers a combination of versatility, visibility and maneuverability,” Hunter added. ‘Its 20-degree sloped hood, 50-degree wheel cut, one-piece windshield and Daylite doors make the T300 ideal for deliveries requiring high visibility and maneuverability.”

For those customers needing a Class 8 truck, the Kenworth T800, the Kenworth W900 and the aerodynamic Peterbilt Model 384, replacing the Peterbilt Model 385 this year, can be spec’d in a variety of different configurations and front and rear axle combinations. This can help fuel oil dealers optimize their trucks’ maneuverability and weight distribution.

‘Lightweight specs are of paramount importance to fuel oil dealers since the less their trucks weigh, the more product they can deliver,” Hunter added. ‘PacLease representatives can help them develop lightweight specs for their fuel oil truck components, which can offer them a competitive advantage. We have an acute ability in helping customers spec a low tare weight truck.”

Now PacLease also offers PacTrac powered by PeopleNet. ‘It’s a fleet-management tool, which improves fleet productivity and service levels for our customers,” said Hunter. ‘Telematics allow fuel oil dealers to optimize delivery routes, automate fuel tax reporting and other paper-intensive processes, and encourage closer contact among drivers, dispatchers and customers without costly cell-phone calls.

‘It’s also a matter of security for fuel oil dealers,” he added. ‘In this day and age of security concerns, fuel oil dealers need to be able to track their vehicles because of the hazardous nature of the products they’re delivering. We can also give dealers the capability to develop fuel reward programs for their drivers to reduce out-of-route miles and reward drivers for improved fuel economy. It’s really all about helping our customers help themselves develop more efficient operations.

‘This year, the changing dynamics present a great opportunity to evaluate a full-service lease,” concluded Hunter. ‘With new equipment, leasing is an affordable way to get into new vehicles and utilize technology that pays in enhanced productivity. Full-service leasing allows you to focus on your core business and leave the complexities of maintenance to your leasing partner.”

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