The transportation equipment leasing industry has been on a crash course to disaster for 10 years, according to one industry executive, but there is a road to survival, and it's on the Internet highway.
"Leasing companies that do nothing but lease equipment have ceased to exist," says Brian Adley, CEO and chairman of Chancellor Corporation (www.chancellor.com), a financing and fleet management solutions provider in Boston, Massachusetts.
"Companies that don't find a way to use technology to expand the scope and depth of services to their customers cannot survive."
Leasing is a commodity, says Adley. Once the big banks identified leasing as an opportunity to expand financial services, pure-play leasing companies have found it difficult to offer competitive rates. The pressure has continued throughout this decade. Many leasing companies are falling by the wayside, or are being acquired, even in the midst of growing demand. This is particularly true in the transportation market where trucks and tractor-trailers are needed to deliver the approximately $300 billion in goods expected to be sold over the Internet in the next few years, he says.
"Solutions are the solution," he adds. "A company like Chancellor has grown because it views leasing as one part of a total solution for the management of transportation equipment from acquisition of the asset through disposal of aging vehicles and replacement. In between are the critical fleet management and asset management services that enhance the value and reduce the total holding costs of the equipment for the customer. Even all that isn't enough today to give leasing a new lease on life."
The future is about providing information and services so customers can instantaneously track every phase of equipment management over the web. Customers should expect that, with one click, not five phone calls, they'll be able to monitor online the progress of their equipment acquisition, Adley says.
"Once their trucks are on the road, they should be able to log onto their account on their provider's web site and find the statistics for fuel use, cost per mile to run their equipment, and the overall efficiency of their vehicles," he says. "They should be able to follow the process of trading in their vehicles at the end of term while a company like Chancellor sells them in the retail market and leases back newer trucks, saving time and money and managing the entire process.
"Customers should view their service provider as the source for industry intelligence and data to help them make informed decisions about management of the equipment they depend on to deliver their products."
Internet technology makes this level of service possible, but it takes commitment, talent, and resources to apply technology to advance the business. Leaders in the industry have to become one-stop, online information providers whose objective is to help businesses manage their fleets and control their assets, he says.
"The transportation industry has to catch up to the web technologies that are changing the economy and the way the whole world does business," Adley says. "The US Department of Commerce estimates that the country's total freight bill is $500 billion, with more than 80% spent on surface transportation, primarily trucks. With the Internet changing the dynamics of the country's distribution channels, the potential is enormous. The Internet will improve efficiency and information delivery, as well as produce cost savings. It will create extraordinary advances in the speed and effectiveness of doing business-with no loss of personalized, real-time support at the customer's convenience." Companies that move quickly will revolutionize the business through Internet technologies. Those that delay will be left behind.