The advantages of leasing trailers

Analysts Technavio predict that the global truck rental market will grow at a compound annual growth rate of 3% between 2018 and 2022. At TIP Trailer Services, we also see growth in trailer leasing across Europe and Canada with customers drawn to leasing by a wide range of advantages.

TIP and trailer leasing

TIP is one of the leading trailer leasing companies in Europe and Canada with a fleet of approximately 70,000 units available for leasing or rental. In 2018, leasing trailers represented over 44% of our turnover with trailer rental an additional 23%. There has been “solid ongoing demand for operating leases supported by a rising interest environment as customers look to deploy capital in other investment opportunities”. The trailer operating lease penetration rate for new trailers has remained relatively stable over time at 20% with finance leasing at 15-20% and ownership / purchase at 60-65%. (source: TIP Annual Report 2018)

Leasing rate by geography

The area with the highest operating lease rate by geography is the Nordics with 37% followed by the UK and Canada, both at 28% and then the Benelux at 17%, Germany at 16% with France at 12%. (source: TIP Annual Report 2018)

Leasing advantages

Leasing is a powerful, flexible and cost-effective way for fleet managers to control their fluctuating medium to long term trailer fleet requirements. TIP trailer leasing provides our customers with many attractive advantages including:

• Efficient capital deployment
By leasing a trailer, you don’t have to invest a high upfront sum in the full value of a trailer nor do you have to find the costs of overheads including maintenance. This enables you to deploy your capital in core areas of your business where you can add greater value be that in customer service, automated warehousing or other areas.

• Flexible financing options
At TIP, we lease a wide range of trailers with flexible financing. These include “operating leases”, which are the most common form of leasing, “finance leases" and "sale and leaseback structures”.

Operating lease – This is off balance sheet leasing with flexible terms. Operating leases are well-suited to high-value assets such as trailers needed to complete a specific contract. Leasing rates are based on the value of the asset over the period you require it. As such, you can link the leasing rates directly to the revenue your asset generates. For tax purposes, you are considered a lessee and can therefore deduct interest from tax payments. At the end of the contract you can either buy the vehicle from TIP or return it.

Finance lease – A finance lease allows you to acquire an asset over time rather than paying for it upfront. The lease rates are calculated over an agreed term. Any trailers leased under a finance lease are an asset on your balance sheet. Your lease payments cover interest which are tax-deductible and depreciation, which you can benefit from on your balance sheet. At the end of the lease, you become the legal owner of the asset.

Sale and leaseback – With this type of leasing, we buy your assets at a fair market price and lease these assets back to you for a fixed monthly fee. With this option, you don’t necessarily have to own the trailer already. We can buy it for you as part of the sale and leaseback agreement.

• Access the latest trailer models
Through leasing, you can access the latest trailer models with the latest technology. As leaders in trailer leasing, we enjoy economies of scale and favourable terms when purchasing trailers from major manufacturers. In turn, we pass on cost savings to you in the form of trailers at a lower cost than you can obtain as an individual trailer fleet. This enables you to add newer trailer models and technology than you might have afforded had you ordered directly from manufacturers.

We can lease you a range of trailer types including semi-trailers, flatbeds, curtainsiders, box trailers, tankers and reefers to add to your fleet.

• Trailer maintenance
Through TIP’s leasing contracts, you automatically benefit from our maintenance and repair services. This saves you the investment required to run your own maintenance bay, a team of highly specialised technicians and a spare parts inventory. Our maintenance and repair services include MOT inspections, regular equipment inspections for items such as brakes, axles and trailer bodywork, the management of maintenance and repairs, tyre maintenance and damage repair management.

• European roadside assistance
By leasing, you automatically become a member of TIP’s European roadside assistance programme. This network is a mix of workshops wholly owned by TIP and local partners across Europe. They operate in 16 countries across Europe, round the clock and 365 days per year. This network consists of over 5,000 workshops including over 200 mobile service vans.

• Fleet management
There are other value-added services which you can benefit from:

TIP fleet management – We provide you with analytics on your trailers through use of KPI reports. This ensures that all trailers are regularly maintained and roadworthy. Through the online TIP Customer Portal included in your leasing package, you can access information about your account including a digital end-to-end workshop management process.

TIP fleet consult service – Our team of TIP fleet management consultants can work with you and your team to analyse the management of your fleet and identify ways in which you could further improve performance and reduce the total cost of ownership of your fleet. After conducting due diligence with you, our fleet management consultants draw up a full report including key findings, recommendations and a plan, which TIP can help you implement.

Telematics – To support you in fleet management, we can supply, install and help you run telematics technology on your vehicles. Through telematics you can monitor your fleet and use remote vehicle diagnostics to optimise fleet performance. Applications include job dispatch, driver communications, on-time maintenance, asset-tracking and security.