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How Do Truck Rentals Mask Asset Utilization Issues?

Posted in Fleet Utilization and Availability, Fleet TCO on January 9, 2015

When you need a truck, you rent one. It's a simple as that, right?

While it may be simple to rent a truck, the way that rentals are accounted for deserves a little more of your attention.

Let's start with the basics. Your fleet rents trucks for three main reasons:

  1. Substitute vehicles: This is basically a replacement unit when a truck is down and you have coverage under your full service leasing agreement. Even though you aren't paying for the rental, you should still account for the fact that the asset was down.
  2. Replace a down asset: This is a rental you need because you have an asset down and a customer waiting for a delivery. Rather than miss a delivery, you rent a truck to take the place of your asset that is inoperable.
  3. Capacity increase: This is a rental you need because you have more business than you can handle with your current available assets.

The problem with rental costs comes in because most fleets lump all types of rentals into one line in the operating budget. The result is that large sums of money spent on rentals don't end up as part of your maintenance TCO calculation and as a result you may perceive that you have a higher asset utilization than you really do.

When rental costs are lumped together there's no easy way for a fleet manager to understand why the rentals occurred. It becomes a vicious cycle. Since there's no analysis into the reason, you may be overlooking issues with your current maintenance practices that could be contributing to these costs.

Tracking the reason for rentals also leads to a better understanding of the true asset utilization and maintenance TCO. To help, we have recently worked with the TMC to create new tracking codes (code key 20) for asset status that covers each of these rental situations.

Take the Next Step

Try to capture all rental costs and use that as a starting point for developing a process that appropriately categorizes rentals based on the reason they were needed. Then you'll understand how rentals are impacting asset utilization, maintenance TCO and profitability. Whether in hard dollars, soft costs or operational impacts, you can learn ways to improve your Fleet TCO and profitability to put more dollars on your bottom line. Learn how in the on-demand webinar, "Fleet TCO Analysis: The Real Cost of Service and Maintenance."

Topics: Fleet Utilization and Availability, Fleet TCO