Fleet Advantage released a white paper illustrating the organizational flexibility and financial gains associated with an unbundled lease agreement (UBL) compared with a full-service lease (FSL).
The principal difference between a FSL and a UBL is that a FSL is not transparent to the customer, according to Fleet Advantage. In a FSL agreement, fleets essentially hand over all decision-making on fuel and maintenance and repair (M&R) costs to their lease provider, focusing only on a “bundled” monthly payment. This type of contract can be detrimental to a fleet’s bottom line.
In a UBL, fleets have greater flexibility on these individual costs but also the freedom to upgrade and scale through flexible leasing, which, according to Fleet Advantage, guarantees the lowest-possible financial costs involved with truck fleet asset management and truck acquisition. This need for additional flexibility was evident in 2020, as a recent industry survey showed that more than a quarter of fleets (27%) had to downsize their total number of trucks due to COVID-19 economic pressures.
Fleet Advantage’s report also noted that M&R is “front loaded” in an FSL. Companies will pay a minimum of seven cents per mile in year one versus two cents per mile when unbundling. For fleets sensitive to their bottom lines, it is not ideal to pay more than seven cents per mile in year one when the national average is two cents and a truck is covered under warranty for at least two years.
The Fleet Advantage report investigates several other areas, including:
“Particularly in today’s economy, it’s important that companies recognize they must be as flexible as possible with their own business models,” John Flynn, CEO of Fleet Advantage, said. “We saw this early on in the way organizations servicing restaurants needed to re-allocate their trucks and resources to help with the demand in other areas such as grocery. This has created a shift in some fleets and the way they approach their own business models, and unbundled lease structures allow for this flexibility.”
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