Can I Lease My Fleet?
The vast majority of FedEx Ground contractors own their vehicles. Purchasing new vehicles and using debt is the preferred option for many contractors, and in many cases it is the better financial choice. However, owning vehicles does come with its own challenges and capital requirements to maintain your fleet. Vehicle maintenance and the capital required to replace old trucks can be challenging for new and existing FedEx Ground contractors.
What many contractors don’t know, however, is that there is a strong argument for using full-service leases in some cases. If you have routes that travel 35,000 miles a year or less, a full-service vehicle lease may be the best option for you.
A full-service lease is a program that provides a brand new vehicle for your fleet, and it includes all repair and maintenance expenses into your monthly lease payment. This effectively turns your CapEx and widely variable maintenance budget into a fixed, predictable, and scalable monthly payment. By using a full-service lease, you can eliminate the large upfront costs and debt to add a vehicle to your fleet, and you can eliminate the variability of maintenance costs and the risks of unpredictable expenses like losing an engine.
Hello Truck Lease
Hello Truck Lease (HTL) is a full-service vehicle leasing program designed specifically for last-mile delivery operations. A standard lease covers a 3 year period, in which all repair and maintenance expenses are covered except for a few incidental items such as tires and glass. Sales tax and license plate renewal is also included in the cost of the lease. All maintenance work is provided through local Ford dealerships.
The HTL program offers two different mileage bands: 25,000 miles per year and 35,0000 miles per year. If your vehicles travel more than 35,000 miles a year, which is the case for many rural routes, then a full-service lease program may not be cost-effective for you. Likewise, if you have a personal or operational conflict with using a Ford dealership for your approved maintenance then this program may not be the best option for you.
Ford Telematics Program
Another of the many benefits of the Hello Truck Lease program is Ford Telematics. Ford Telematics uses a device that plugs right into the vehicle’s computer system that allows remote access from anywhere to view the miles per gallon, location, and lights on the dashboard.
With Ford Telematics, you have detailed insight into the health and activity of your vehicles. Telematics allows you to do the following:
Track your fuel costs each month to provide you with an idea of your fuel consumption and costs per vehicle.
Setup geo-fencing capabilities. This allows you to track your trucks and receive alerts when drivers drive outside the fencing you set in real-time tracking.
Track the behaviors of your drivers, such as harsh braking and collisions. You can customize what behaviors you can track.
Stay up to date on maintenance needs to ensure that your vehicles run smoothly.
Leasing Recap
Pros
No upfront capital needed for new vehicles
Overall leasing costs can be cheaper than traditional financing + maintenance expenses
Variable repair and maintenance becomes a fixed cost
New vehicles add efficiencies and quality of life for drivers
Replacement vehicle if a leased vehicle is totaled
Cons
Limitations on yearly mileage for each vehicle
Must use a Ford certified dealership for repairs
Less tax advantageous compared to standard asset depreciation on owned vehicles
Have a Fleet Strategy
As a contractor, your fleet is an integral part of running a successful operation. Without reliable and safe vehicles, your business will not be able to experience future growth. Regardless of the option you choose, purchasing your vehicles or leasing them, you MUST have a strategy and commit to it. With Hello Truck Lease, you do not have to worry about paying unexpected repair and maintenance expenses and interest rates, allowing you to focus on volume growth and operating a strong business, but it is only viable if you meet certain criteria. Some of your fleet may be leased, and some may be purchased depending on the dynamics of your individual routes.
If you have more questions about leasing vehicles for your last-mile delivery operation, please reach out to our team. We would love to speak with you about your options and help you develop the best fleet strategy for your business.
Get the Most Out of Your Operation
Route Consultant is the premiere consultant and educator in the last-mile delivery and logistics space. Want to get the most out of your investment? Looking to optimize your operation and maximize profits? Need to teach someone how to successfully manage a delivery operation? Our suite of educational courses capitalize on decades of operational experience to bring you battle-tested strategies and best practices to find success in your business.
