This fleet manager knows it’s important to do his homework when it’s time to request proposals from his lessors. Safety, vehicle accessibility and maintenance schedules are all in the RFP.
When it comes to leasing fleet vehicles, Greg Manfredini says, “Everything’s negotiable,” and his leasing company’s representative is comfortable with that position.
Manfredini is the transportation manager for K.A. Steel Chemicals based in Lemont, Ill. Clearly, they both understand their respective businesses and what it takes to maintain a win/win relationship.
K.A. Steel Chemicals is a distributor and producer of industrial chemicals. Its primary activities are the production and distribution of bleach and the distribution of caustic soda. It also operates as a for-hire carrier of other bulk chemical products.
“Our business is ‘same day/next day,’” Manfredini says. “Ever since I joined the company, I’ve been told any of the main players in the chemical industry can sell caustic. We, however, look upon transportation as an added service to our customers. We may get a call at noon with an order for delivery at 3 that afternoon. We’ll find a way to make that delivery. Our company is completely customer focused.”
This claim is something that many businesses make in today’s competitive economic environment, but often it is “talk the talk.” Others, like K. A. Steel Chemicals, “walk the walk.”
Manfredini does his homework before contacting truck-leasing companies to submit bids. Prior to bids, he gets input from his fleet finance people, his drivers and people he counts on for advice on maintenance issues. Only then does he put together a request for proposal (RFP), which he sends to suppliers.
More than trucks
The most recent RFP went to both PacLease and IdeaLease for bids on a full-service lease, which offers the solution Manfredini needs.
A full-service lease can help improve cash flow and increase productivity for companies that operate motor vehicles, according to IdeaLease. Its customers choose to full- service lease their vehicles for a variety of reasons.
One of the most obvious benefits of full-service leasing is the ability for companies to focus on their core competencies while somebody else manages truck maintenance issues. At the end of the term, full-service lease customers can walk away from the vehicle without any concerns.
It’s important, however, for a fleet that uses the services of a leasing company, or is looking into the possibility of leasing some equipment, to know that they have an extensive menu of services available to them in addition to vehicles.
Many fleets, for example, do not have the in-house expertise to correctly spec a new vehicle whether it’s an over-the-road Class 8 tractor with a full sleeper for a team operation or a Class 5 work truck that needs built-in hydraulic power for an integral bucket and most of those fleets have no interest in acquiring such expertise. Some companies are manufacturers that choose to have their own fleet of trucks to serve their customers, but don’t want to tie up significant capital in vehicles or shop-maintenance capability. Others might be a cable company that needs to provide a safe means of getting its technicians to the top of utility poles.
Where can such companies go for help? A reputable leasing company will be pleased to supply the needed expertise.
With years of full-service leasing experience, PacLease provides transportation consulting. Whether companies are looking for assistance spec’ing a Kenworth or Peterbilt truck to maximize fuel efficiency and performance, or assistance implementing a driver incentive program, PacLease says it has the expertise to help.”
If such assistance, however, results in an ongoing cost that’s not reasonable, the fleet can end up with the right, but unaffordable, truck. Large leasing operations usually manage to avoid such a situation.
NationaLease Purchasing Corp., a nationwide network of independent truck-leasing companies, for example, provides purchasing strength made possible by 125 affiliated companies in more than 550 locations, the company says. The company’s strategy is to acquire trucks, tractors and trailers, at the lowest prices possible. These savings make it practical for NationaLease affiliates to offer competitive leases and fleet-maintenance packages, the company says.
While full-service leasing has been the most popular product leasing companies offer, in recent years a number of leasing company’s contract maintenance offerings have grown in popularity. Because of the wide range of services, there is no single all-encompassing definition of contract maintenance.
Ryder, for example offers programmed maintenance and on-site maintenance. The company says its Ryder Programmed Maintenance offers an extensive range of truck maintenance and fleet maintenance services, which can be tailored to meet a company’s needs. Fleets can customize the service mix, whether they want to maintain control over fleet or truck maintenance services, or want to place all responsibilities in a turnkey program. Fleets can even opt to have their own on-site shop or anything in between. The company says its on-site maintenance program helps fleets develop state-of-the-art maintenance facilities at their own locations where they can maintain control of the operations while Ryder manages the details.
IdeaLease says its contract maintenance program offers customers the following benefits:
state-of-the-art technology and expert service technicians;
a fixed fee for predicting expenses;
service during off-hours; and replacement vehicles during scheduled maintenance.
Freightliner SelecTruck dealers also offer a maintenance program, MileMinder, for trucks leased or purchased through DaimlerChrysler. The company says the program allows a fleet to focus on its core business while professionals manage vehicle maintenance at predictable and often reduced costs. It offers a guaranteed cost per mile with a maintenance package that includes all mechanical repairs and preventive maintenance, tire repairs and replacement and roadside service.
Contract maintenance may be a viable consideration for a fleet that has not provided its technicians the training that’s needed to keep up with the advanced technologies incorporated in newer trucks. It also may be a solution for fleets that are not able to find qualified technicians when maintenance staff replacements or increases are required.
Vehicle availability, or lack thereof, is a critical consideration in a trucking operation. It certainly was 15 years ago for Manfredini who, at the time, was responsible for a fleet that was all leased from a company that placed little value on scheduling obligations.
“I had a bad experience in the early ‘90s with another leasing company,” Manfredini says. “We had vehicles go out for maintenance but not returned on time. Drivers would come in at 3 or 4 in the morning to find there were no trucks available. As a result, we had customers that didn’t get their deliveries. That’s the reason we don’t lease our entire fleet.
Nothing like that has ever happened with PacLease, but we continue to be very cautious,” he says. “It was eight years ago, after owning our entire fleet for many years, that we leased a single truck from PacLease. That worked out good enough that we now have five leased trucks in our fleet of 15.”
K.A. Steel Chemicals recently took advantage of the ongoing relationship it has with its lessor to respond to an opportunity that had developed on the East Coast an opportunity that depended on its ability to make timely deliveries. To do so, the company needed to expand its fleet operation into the area, which it was able to do in short order through the nationwide PacLease operation.
“The availability of a new or replacement vehicle is important for us if we are to service our customers as well as we want,” Manfredini says. “Our goal is that no customer will ever know that we might have a problem with a truck. That’s our problem to solve, not his to be concerned with. A national presence of our leasing company is also important because maintenance isn’t our business. I depend on our supplier for that.”
Good communication between the fleet and its truck supplier, whether a retail dealer or lessor, is critical. Both dealers and leasing companies are in the business to supply trucks to fleets. It’s in their best interest to supply the best tool to get the job done.
“Make certain your supplier understands what you need for your operation,“ Manfredini says. “It’s all what you’re able to negotiate. The way you customize your lease is no different than the way you customize your trucks. The lease for every truck might be different depending on your needs.”