By Jaksa Panic
Attitudes toward renting equipment or assets are evolving. Where renting a truck was once typically viewed as unorthodox or a last solution, businesses are now gaining a better understanding of how asset rentals can provide advantages when it comes to financial flexibility, total cost of ownership, growth opportunities, equipment availability and – perhaps most importantly – fleet management.
In our roles with Big Truck Rental, we offer clients a number of compelling arguments for renting within each of these factors that most rental versus purchase calculators simply do not consider. Moreover, they apply to virtually all professional haulers, be they public or private, big or small.
- Financial Flexibility
Renting gives companies the ability to save capital dollars while benefiting from the immediate use of a piece of equipment. Rentals can stretch over a long period of time or be used as a bridge into a new fiscal year. This provides companies with predictable costs, since renting is a consistent month-to-month expense and contributes to smaller maintenance costs as the rental company is responsible for any major maintenance items related to warranty.
- Total Cost of Ownership
Renting provides the opportunity to perform minimal maintenance without the burden of large out-of-pocket expenses for replacing major maintenance items such as engines, transmission, and the labor or outsourcing expenses that go along with material costs.
When factoring how rentals may be able to provide a lower total cost of ownership, the equation needs to factor in fleet age, fleet purchasing costs, maintenance costs, financing costs, downtime, lost opportunity, and many other factors. Leaders in the courier market such as UPS and FedEx have done the math themselves and, as a result, embraced renting as part of their business strategy.
- Growth Opportunities
It’s common for businesses to pass on a bid when the contract begins sooner than new equipment can be acquired. Contracts under five years can also make purchasing capital equipment burdensome to an organization, especially since there is the risk of being left with owning equipment if the business is lost. Similarly, opportunities for seasonal work or storm relief can be cost prohibitive because the equipment may only be used for a short period of time, thus forcing many waste haulers to forego these opportunities.
Renting assets until equipment can be received can provide the bridge needed to capitalize on these otherwise difficult opportunities. Additionally, it can provide an option to add an asset without the risk since haulers can work to maximize and expand routes before making the purchasing decision.
- Equipment Availability
The growing industry is placing immense pressure and demand on the manufacturers of both refuse bodies and chassis. This is pushing truck delivery lead times in the marketplace out by months, therefore limiting businesses’ ability to access new equipment in a timeframe that either supports growth or maintains a fleet replacement strategy. Renting can help mitigate these equipment delivery wait times.
- Fleet Management
The management and ownership of a truck fleet within the waste industry typically occur over a 10-year period with a 10-1 spare ratio. The challenges to this standard include increases to ongoing maintenance costs, downtime, and spikes in capital needs as refuse fleet age within the public and private sectors.
Also, refuse trucks that are removed from the active fleet to become used as “spares” are usually relocated for reasons related to age and reliability. Spare trucks present a very costly expense to most organizations (e.g., licensing, higher than typical maintenance costs, taxes, etc.) and, therefore, stand as less-than-ideal options for fleet replacements. Renting can help reduce the spare ratio size and ensure uptime and customer service expectations are met when the need arises.
Lastly, double-timing newer trucks can be common, causing long-term maintenance challenges and driving the fleet to age at an even quicker pace, which may lead to more capital needs earlier than expected. The use of rental trucks can help relieve this bottleneck and even be used to allow all trucks to get their proper preventative maintenance to keep the fleet up and running.
To each their own strategy
A business’s asset management strategy will ultimately be led by its individual market and customers. And surely, part of our job with Big Truck Rental is to work with clients to understand their unique circumstances and possible solutions. Nevertheless, there is value in recognizing how these five factors come into play and how attitudes toward fleet rentals are changing for the better.
Jaksa Panic is Director of Sales with Big Truck Rental. To learn more about the benefits of renting, and to find a solution that fits, visit www.bigtruckrental.com or email BTRSales@bigtruckrental.com.
