With the 2022 Truck Renting and Leasing Association (TRALA) Annual Meeting underway in Miami, the rental and leasing (L&R) market has taken another step in its return to normalcy.
If only he could get more trucks.
Two years into the sudden market upheaval created by the pandemic, rental and rental inquiries are at record highs. Skyrocketing freight rates and volume and new truck production bottlenecks in the trucking industry continue to draw more and more carriers into the L&R market.
“We are busier than ever,” says Dean Vicha, president of NationaLease. “We have just had a record year in 2021 and so far we are well ahead of the pace of 2021 [in 2022]. The demand is stronger than it has ever been.
PacLease is also experiencing an increase in customer demand. Sales Director Chuck Davis says circumstances in the freight and equipment markets have pushed more customers into leasing, although he also notes PacLease’s recent growth has not been fully driven. by the liner market. Davis says PacLease business activity has also boomed as more specialized industries, such as construction, have turned to leasing to improve their maintenance routines.
“A lot of these companies were buying trucks and doing maintenance on their own. Now it’s getting harder and harder to do, so they’re looking for alternatives,” he says.
“We’ve seen a lot less transactional business. Due to the current supply backlogs and growing demand for new trucks, more and more customers are taking advantage of long-term rentals to supplement their truck needs with our fleet,” said Collin Dean, General Manager of Five Star Idealease. . “We haven’t really seen a change in preferences, just an increase in demand in the long-term rental sector.”
Meeting this customer demand has also not been easy for L&R operations. Not in an environment where new trucks and trailers are so hard to come by.
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Davis says PacLease prioritized existing customers in handling additional customer demand.
“It’s our first obligation,” he says. “We are taking care of this group as best we can.” The company has extended lease terms and leveraged its lease assets to keep customers in gear in situations where their next batch of trucks isn’t yet available. Some individual dealers have also looked to the used truck market to add units when faced with production shortfalls.
The story is similar at NationaLease. Vicha says that when the company goes into business with a customer, “we promise uninterrupted transportation 24/7. We strive to take care of the customers we have a relationship with and continue to meet their needs. He says NationaLease’s national account sales team has prioritized connecting with customers as often as possible to meet current and future equipment demands and says individual members are trying to do the same.
Fortunately, most customers are aware of the industry’s equipment inventory issues, which has helped motivate customers to quickly place orders and agree to extend lease terms or accept rental units. if needed.
“The one thing we keep emphasizing to customers is that it’s important to queue now,” says Vicha. “We expect OEMs to continue to have backlog issues for some time to come.”
Dean says Five Star Idealease is building on its core business values to meet growing customer demand. The company “leverages its relationships with its customers to help find creative solutions to meet their needs. We are committed to going the extra mile for our customers, especially during these challenging and unprecedented times. »
And despite the availability issues they face, L&R fleets say they are still onboarding new customers. The current climate has just forced them to be more selective about their expansion.
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“It allowed us to be more selective about who we do business with,” says Vicha. “We have to be picky about who we are going to give our [equipment] attribution to”.
Davis says PacLease’s rental fleet remains the fastest route to bringing a new customer into a truck. Order slots are provided when available, and the company is open about the challenges it faces in attracting new and existing customers to new units.
“We try to be very transparent with customers about what we can do and what’s unknown,” he says.
In the meantime, L&R companies are managing their fleets as best they can. Business cycles continue to grow longer out of necessity and maintenance schedules become more and more detailed. With little or no equipment reserves in their rental fleets, leasing companies have no choice but to carefully monitor all of their equipment in hopes of keeping downtime to an absolute minimum.
“To avoid increased maintenance costs, we stick to a rigid preventive maintenance plan and take advantage of International’s OnCommand Connection program to mitigate potential breakdowns and disruptive downtime,” says Dean.
In this market, downtime is crippling for everyone.
“For customers, a truck that sits in the shop for three or four weeks is just as bad as a truck that isn’t built for three to four weeks,” Davis says. “It’s still a truck they need but don’t have.”
Yet despite all these challenges, no one in the L&R sector seems to mind. Not after what they went through in 2020.
“Today is March 31. If you had told me March 31, 2020, which is what we would be facing now, I would have signed up immediately,” Vicha said. “We’re looking at less than 50% utilization, with customers handing over trucks earlier…everyone was putting a turnstile on their business.”