And then came Canada Cartage, eh..That is correct. Private fleets, who wanted no part of buying, maintaining and then selling their trucks, were the ideal customer for the full maintenance leasing companies. We had a small number of trucks on lease to actual transport companies, but the lions share of both trucks and trailers were leased to private fleets.
I do believe that there is a good fit depending on the core part of your business. Like you said there are pro's and con's for both. The model ideally works if you mile each truck out to the max (but do not dare go over). Make sure that there is no damage on the trucks when you hand them in otherwise you will be responsible for even minor issues. Financially we believed that no more than half your trucks should be leased - if times are slow you can move only the leased trucks and spare your owned trucks so that the residual value is maintained.So by leasing equipment you are concentrating on your “core” business, which is moving freight. Not operating a repair facility, as you say with mechanics and parts, etc, etc.. You use the leasing company’s expertise in truck procurement and maintenance, which is their “core” business. The one downside I see, is you give up the depreciation of the equipment and any residual value when it comes time to dispose of the truck or trailer. But again, perhaps the road side repairs, replacement vehicle and the other perks of the lease make up for that. I don’t mean to drag this topic out but it does demonstrate the different options available and how some firms can use them successfully.
in most acquisitions the first thing they do to improve profitability is shut down their shop.When we started out we where 50/50 between owning and leasing and owning definitely had an advantage. Then we saw that advantage really started to being "almost" equal. Then we started to realize that we where not taking into account losing a vehicle for 2 days to 2 weeks and what did you do with the driver at that time. Breakdowns (major) on the road where even more of a problem everything was taking twice as long to fix on the road and driver downtime which irritated both us and the driver. Did you rent a truck for the driver or stick them in a hotel room all costs that where not always figured into ownership. Some suggested lack of expertise which we do not lack it is a completely financial decision, we decided from day 1 that we did not want our own shop, mechanics, parts etc. Seen way too many times people dreaming up make work projects for their mechanics just to keep them busy which we all know means more $$$$ spent.