Motoring Management – Fleet Execs Look Beyond Leasing

With costs rising and lingering supply-chain headaches, fleet operators with linen, uniform and facility services companies across North America are taking a hard look at phasing out leasing in favor of company-owned fleet vehicles, according to recent interviews conducted by TRSA editorial staff.

That was the upshot of an article that appears in the current issue of Textile Services magazine. In the piece titled “Operators Tap Brakes on Leasing Amid Inflation, Supply-Chain Woes,” (pg. 46), several fleet managers shared their concerns that despite the end of the COVID-19 pandemic, managing delivery trucks is by no means back to normal.

Halifax Linen COO Ernest Addington, Roanoke Rapids, NC, said that economic conditions have made lease programs costlier and more difficult than they’re worth. “When you’re leasing, it’s ongoing ‘forever’ dollars,” says Addington in the November/December issue of Textile Services. “It’s just a revolving door of revolving spend that you don’t have when you buy your trucks. … You have the initial capital investment to buy the fleet. But if you manage it correctly, then you know whatever parameters you put in place for your fleet, whether it’s mileage caps or ‘years caps’ of ownership, you can make ownership better than leasing to avoid the ongoing costs.”

Another operator with responsibility for fleet management, Alsco Uniforms’

Tim Stuewer, director of operations and engineering for Alsco Uniforms said operators should carefully weigh the pros and cons of leasing vs. buying fleet vehicles. “This is an age-old question, and the answer is grey at best,” said Stuewer, whose company primarily owns its fleet vehicles. “The shoe needs to fit the operating goals and preferences of the organization. Leasing with inclusion of a service program has the benefit of putting all control of the vehicle with the lessor. This approach also has the disadvantage of putting all control with the lessor. If the lessor isn’t providing quality and timely service, the disruption to the business can outweigh any benefits, plus the premium that is usually paid for a full-service lease program.”

One advantage that a company might expect from working with a national leasing chain, such as Ryder or Penske, is that they’d have the buying power to overcome supply-chain issues related to truck availability – as opposed to a laundry operator buying their own fleet vehicles. But Addington and other operators we contacted said that whether you’re leasing or buying, you can expect long waits for new trucks. Stuewer says large fleets like Amazon are dominating the existing supply of fleet vehicles from manufacturers. There’s not much a laundry operator can do about it. “In this supply chain-constrained environment, the larger-vehicle consumers tend to have more leverage in the access to new trucks,” says Stuewer, who’s based in Salt Lake City. “Lead times for tractors, box trucks and step vans can still range from six months to over a year, depending on the vehicle. Leasing companies may have priority access to vehicles, as they typically operate larger fleets. Everyone is standing behind the line of Penske, Ryder, UPS, FedEx and Amazon these days.”

If the supply-chain issue is effectively neutralized in terms of whether you lease or buy vehicles, the decision comes down to costs and convenience. Leasing companies have long pitched their services in terms of “We’re the fleet experts. Let us handle your vehicles, and you can concentrate on your laundry customers.” In today’s era of inflation, it’s not that simple. With that said, operators who opt for owned fleets to save money, should be careful. “If ownership costs are not monitored and managed properly, things such as repair and maintenance expenses can balloon quickly,” said Spencer Fisher, fleet and facilities manager for Miller’s Textile Services, Wapakoneta, OH. “One of the main advantages to owning your own fleet is the ability to have better control over purchasing, maintaining and selling each vehicle,” he says. “The downside is staff have to manage the program effectively. Those that keep abreast of the program get the benefit of greater flexibility to expand or consolidate routes for improved efficiency. Ultimately, owning allows you to take charge of your fleet’s destiny, but it comes with the additional work of purchasing, maintaining and disposing of each truck.”

For more on fleet trends, including the pending move to alternative-fuel vehicles, turn to pg. 46 of  this month’s Textile Services. Or click here to see a PDF version of the full article. Click here for more on Textile Services, including subscription information.