Looking at the Rental Option

In 2017, the attitude in the trucking industry with regard to truck leasing is improving; many operators are now looking at the rental option.

When Penske Truck Rental came into the Australian market a few years back the image of this part of the industry did not have the best reputation. However, according to Penske Truck Rental boss Adrian Beach, the market has improved and the offering to operators has improved accordingly.

In the past, rental trucks were a last-ditch option when all else had failed. Now, an improved image and improved rental fleet around the country means operators are looking seriously at truck rental as an option.

“A couple of companies who have, like ourselves, entered the market have brought in a little more professional attitude and culture around it,” says Adrian. “The daily hire trucks you see going down the road with the blue stripes on, that’s not really a good long-term solution. Initially, most of our customers rented for a day or two when their truck was in the workshop.

“Then it turned into situations like when the operator takes on a new driver and wants to see if they are any good before committing to a new truck. Our customers just seemed to find more and more reasons to use the hire fleet. We have some customers who deal with a large company like Woolworths, where they don’t have a long-term commitment on their contract; it could end at any day. They will run a rental truck until their customer gives a long-term commitment.

“When I look at our rental fleet now, I would say 50 per cent is on rental contracts of four months or longer and the rest of the rental fleet gets in-and-out action. One day here, two days there, it comes in, gets cleaned, undergoes a safety check and then goes back out there on the rental line.”

Some of the longer rentals are coming at peak seasons in areas where products like grain or sugar cane are being hauled for set periods. Christmas and Easter also create increased hire demand. Three- or six-month contracts are becoming popular for short-term tasks.

“We talk to a lot of customers who, when refreshing their fleet, would order new equipment and purchase it before their busy season, run with the full fleet, and then when that died out, sell off the oldest ones,” says Adrian. “At their busiest season, when their customers are most reliant upon their service, they have the oldest trucks in their fleet breaking down. Now, they don’t have to do that, The truck is sold when it needs to be and they pick up rentals trucks for their peak season needs.”

“With the daily rental, you are paying for that as a bit of a luxury,” says Adrian. “It includes registration, tyres, servicing, all of that. However, we do a lot of long-term fully maintained operating leases. If someone has a lot of trucks and wants to introduce this to their fleet, we will look at the application and put together a specific truck. We can customise it, it can be plain white or in full livery. Then we look at how many kilometres a year it will do, its maintenance, structure, its whole financing. We put together a lease term so by the time we are terminating the lease, it’s still a good truck and we can sell it for a good price. It looks better than other trucks on the market.

“In those situations, we can make it more cost effective than owning, because I am going to be able to buy that truck for less than a six- or seven-truck fleet owner is going to pay. I will have a plan to get out of that truck at just the right time and I have got in-house expertise to help me get the most out that truck.

“The deal puts our needs and operators needs in line. In normal ownership, when you go to the dealership, the dealer is happy when the truck rolls into his workshop, because he knows he’s going to make some money. We are the opposite, maintenance costs are built into a monthly payment, so it behooves me do as good a job as I can on preventative maintenance. The truck is best for me when it’s out on the road working.”

All of the trucks in the fleet are fitted with telematics and when the truck is out working, the maintenance schedule is fine tuned to cater for the actual work the truck is doing. Intervals can be extended or reduced to ensure consistent performance and minimise downtime. The more data you have the better the preventative maintenance will be.