Does it make sense to unbundle your lease?

There has been a lot of talk lately about lease unbundling. Proponents of unbundling say they can save you money on certain items that have been bundled together in your lease.

For example, a non-asset-based maintenance provider may tell a fleet that it will cost them less to separate their maintenance from a full-service lease that includes the cost of equipment, maintenance, insurance, fuel, licenses and other items. which are usually included in a full service lease.

A commercial equipment lender may approach a fleet to finance only the cost of the equipment. They will tell the fleet that it will cost them less money to do it, but I argue that these companies tend to minimize the maintenance and operating costs that come with a truck. These commercial equipment lenders will tell a fleet that halfway through the lease – usually around three years – they will replace existing equipment with new units, claiming that the fleet will then avoid higher maintenance costs. usually associated with older vehicles.

At a very rudimentary level, this may seem logical. But the mistake is that they often remain silent about the increased cost of new equipment. Also, they cannot predict the borrowing environment three years from now and what interest rates will be.

A full-service lease takes the burden of transportation off a company and puts it on someone who has the know-how, tools, and technology to operate the fleet more efficiently. The full-service lessor also has the human resources experience necessary to hire and retain technicians and to handle administrative work related to security, tax reporting, and more.

Especially for private fleets whose core competencies are manufacturing and not trucking, full-service leasing is a solution that allows them to deliver value to their customers while relying on a third party to acquire the assets. needed and provide maintenance and administrative services.

The full-service rental model has been a staple of the commercial transportation industry for nearly a century. It generally includes a fixed monthly rental rate that includes the provisioning of the asset and its disposal at the end of the term, depreciation, interest, legalization, insurance of the replacement vehicle and other administrative costs. exploitation. The variable portion of the lease will be based on scheduled preventative maintenance services as well as scheduled replacement items including tires, brakes, lubricants, etc.

Leveraging third-party expertise to manage non-core functions allows companies to reallocate time and resources to their core competencies. Unbundling elements of a full-service rental will not necessarily result in cost savings and may, in fact, end up costing the fleet more in dollars and aggravation.

Joe Gallick, Senior Vice President of Sales, NationaLease is an experienced supply chain executive and spokesperson in the logistics provider industry. Prior to joining NationaLease, Gallick served as Senior Vice President of Penske Logistics for 13 years, following four years as Vice President of National Accounts for Penske Truck Leasing. He is a graduate of Montclair State University and currently liaises with the Penn State University Center for Supply Chain Research. He was the 2010 recipient of the Robert D. Pashek Award from Penn State University for his contributions to the fields of logistics and transportation, as well as the 2015 Pros to Know recipient in the publication Supply and Demand Chain Executive. He is also a member of the Supply Chain Management Professionals Council, the Truck Rental and Leasing Association, as well as various industry professional organizations.

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