Taking the lessons it has learned from its tractor leasing program, Fleet Advantage kicked off a new trailer leasing program at the North American Commercial Vehicle Show in Atlanta on Oct. 29, 2019.
Fleet Advantage’s news ExchangeIT trailer lease program gives fleets flexible trailer lease options that it said will lower total cost of ownership. The program utilizes its successful lifecycle management approach from its tractor program and applies it to trailers through the use of data.
Fleets that replace trailers every five to seven years through the EXchangeIT program, as opposed to legacy practices of operating them for 10 years or longer, can achieve significant savings to their bottom line, the company said. Refrigerated trailers see the largest cost savings with a per-unit savings of $8,408 in the first year, when replacing a 2015 model-year trailer with a 2021 model year.
“As a company, what we’re doing is always for the customers,” Ezel Baltali, manager of purchasing for Fleet Advantage, told FreightWaves.
While fleets typically hold trailers for 10 years or more, Fleet Advantage believes they can benefit financially from shorter trade cycles as part of a lease.
“There’s always going to be opportunities with weight savings, new tires or brakes,” Baltali said. While refrigerated trailers may offer the greatest opportunity for saving, dry van operators can also see benefits from weight savings, tires and aerodynamics, he added. Maintenance and repair savings also play a role, particularly on the refrigeration unit. In addition to developing aerodynamic components, benefits of new equipment include temperature and trailer tracking, tire monitoring and inflation systems, and overall cooling improvements that eliminate degradation of insulation.
Under the lease program, fleets could:
- replace individual units at lessee discretion when economically obsolete
- extend individual units beyond the lease term at fixed, reduced rates
- terminate individual units
The move into trailer leasing is an opportunity for Fleet Advantage, Baltali said, noting that the concept of using data to influence tractor lifecycle management will be applied to the trailer units, which will come from a variety of manufacturers based on customer preference, cost, and residual value calculations.
“It’s not that we haven’t leased trailers before because we have,” Baltali said. “It’s that the volume and opportunity in the market is there.”
Fleet Advantage provided the following data that it said led to a $8,408 per trailer savings for a 2015 refrigerated trailer being replaced by a 2021 model:
| Refrigerated Trailer Cost Assumptions | ||
| Model Year | 2015 | 2021 |
| Original Equipment Cost | $63,932 | $70,000 |
| Refrigerated Trailer Hours Per Year | 2,200 | 2,200 |
| Average MPY | 70,000 | 70,000 |
| Gallons Used per Hour (Refrigerated Unit) | 1.00 | 0.65 |
| Fuel Cost / Gallon | $3.00 | $3.00 |
| Monthly Payment | $691 | $757 |
| Maintenance Year | Entering Year 7 | Entering Year 1 |
| Refrigerated Trailer Maintenance CPH | $0.9091 | $0.2500 |
| Trailer Maintenance CPM | $0.0120 | $0.0050 |
| Tire Expense* | $1,500 | $0 |
| M & R Expense (Trailer) | $840 | $350 |
| M & R Expense (Refrigerated Unit) | $2,000 | $550 |
| Finance Expense | $8,293 | $9,080 |
| Refrigerated Unit Fuel Cost | $6,600 | $3,752 |
| Fuel Savings from Aerodynamic Components and Weight Reduction | $0 | -$2,908 |
| Total Fuel | $6,600 | $844 |
| Total Cost | $19,233 | $10,825 |
| Cost Savings Per Unit | $8,408 |