Wednesday, November 23, 2011

Don't Buy, Lease.

When I was searching the Internet for some information for our SCM project, I came across this great magazine, which also has a really well put-together website. It's called Food Logistics.

The website is full of articles and advice for managers in the food and beverage industry who are looking to improve their logistics networks. The layout of the website is very organized, and I found an article that I believe will really resonate with the two local food purveyors that our group is analyzing. (One of which I know has purchased refrigerated truck(s))

The article is called "Drive Down Costs by Trailer Leasing," by Maria Hoffman, and it gives thorough support as to why both small and large food purveyors should consider leasing instead of buying trucks/trailers/transportation.

The article outlined at least 10 arguments as to why leasing equipment is better than buying, to paraphrase, here are just a few:

  • Leasing trucks is a form of risk mitigation. It turns transportation into a somewhat fixed cost, and saves your business capital that can be used elsewhere. (Which would be great since one of our food purveyors is opening a market/stand in Pittsburgh) In addition, there are rarely down payments on leasing vehicles.
  • Leasing companies take care of maintenance. Some even offer road-side assistance. This means that a food and beverage business can focus on what they're supposed to focus on - food.
  • No depreciation on the balance sheet. If anything, leasing a trailer will merely be a footnote in a company's financial statements. And, moreover, a company will usually have access to newer equipment.
  • Newer equipment and better regulating technology means that a company will be better able to control for refrigeration and gasoline costs.

Maria Hoffman goes one to discuss more on cargo and the average wear and tear that is placed on food transporting vehicles. In my opinion, the article really drives a good argument in favor of leasing.

If our food purveyors do not already subscribe to this magazine, I am definitely going to make a recommendation.

So, my next question would be, does anyone know any good trailer/truck leasing companies in the greater Pittsburgh area?

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