The trucking industry is facing many challenges. New truck prices are rising, yet inventories are declining. Interest rates, fuel prices, and maintenance and material costs are skyrocketing, as are costs for used trucks. Also consider the arrival of battery-electric vehicles and emissions standards for model-year 2027 and later vehicles.
With many moving parts in the economy and the industry, now is not the time to make radical changes to your business model. I’ve seen some fleets take a reactionary approach to fleet planning and switch their asset-acquisition model. As a result, they leave leasing and move to ownership-based on a lease instead of a buy model—not considering the highs and lows of the used tractor market.
See also: FMCSA seeks Truck Leasing Task Force applicants
What’s needed in times like this is flexibility. We need to give ourselves the ability to manage asset lifecycles based on the comparison between a current asset and the total cost of ownership (TCO) of a new asset. All the market influencers need to be considered when calculating TCO.
Rising interest rates are another reason why leasing is a smart decision. Leasing leaves you with locked-in interest rates and cash on hand that can be spent on other capital equipment or operating costs if interest rates go even higher.
During these challenging times, every mile you run is critical. Now is the time to leverage technology to help you improve efficiency and contain maintenance and fuel costs. Work with your technology providers to maximize operating efficiencies and optimize routes and driver behavior.
Transportation costs are skyrocketing, and inflation rates are at their highest since the late 1970s to early 1980s. It is critical that we build flexibility into our fleet planning that allows us to be prepared for more challenges in the future. As the trucking industry grapples with rising costs and lack of available equipment, using properly structured operating leases for equipment financing is one way to manage your expenses and optimize your current business model.
Patrick Gaskins, SVP of Corcentric Fleet Solutions, oversees both sales and operations for the company's fleet offerings. Gaskins joined the company in 2010, bringing more than 30 years of experience as a financial services professional in the transportation industry. He leads a team that works with a supply base of more than 160 manufacturers to help the country’s largest fleets manage all aspects of their fleet operations and fleet-related spend.
