Scott Anderson, senior vice president for leasing and finance at Rush Enterprises, says his company’s leasing segment continues to grow.
It’s an upward trend within the Rush Truck Leasing business that he’s observed for more than a decade—and an option that appears increasingly attractive amid the economic uncertainty created by the ongoing COVID-19 pandemic.
“I’ve been with Rush for 15 years, and over that 15-year period, every single year, we’ve had slow, steady growth,” Anderson said.
“(Leasing) provides a way (for fleet operators) to predict and control the total cost surrounding the operation, or the total cost of ownership. And what I mean by that is, you’ve got fixed and variable components to it—a fixed lease payment and then what is charged per mile—so based on how you use the asset, that’s your cost structure. Whereas if you own, however you try to service and maintain that vehicle, it can be a variable component to your cost of ownership. So it provides a more predictable way to think about how to own and expense the use of that asset.”
In addition to a lower cost of entry, vs buying a new or used tractor, leases like those offered by Rush and its full-service affiliates, Idealease and PacLease, typically include programs that eliminate the need to manage assets after the terms end. Fleet owners don’t need to worry about buying, selling or trading the vehicle, they simply turn it back into the leasing company, and then either replace the unit or downsize the fleet, as needed.
Leasing also provides fleets the ability to secure 24-7 maintenance or support services anywhere the asset is located. So if a Pennsylvania-based driver has a blown tire somewhere in Wyoming, no problem, they simply call the company’s help line for help, making managing the asset—and keeping drivers on the road—an easier proposition.
Growing market
Rush’s lease-rental business, with approximately $252 million in annual sales, still is a relatively small portion of its total revenue, which Rush Enterprises said set a record of $5.8 billion in sales last year. Rush Truck Leasing has 45 dedicated locations, in addition to “captive” shops, where on-site technicians serve customers who outsource the maintenance activity within their fleets.
Rush’s lease fleet, available on daily, monthly or a long-term basis through a range of leasing and rental options, boasts a wide variety of nearly 8,500 physical assets, including Class 6-8 Peterbilt and International trucks. And when today’s fleets spec those trucks, Anderson says more and more ask for automated transmissions. “The driver pool is shifting, or getting younger, and automated transmissions are almost now the norm, where they used to be a small component of it,” Anderson said.
Many of the fleet customers Rush serves also are increasingly specifying day cab tractors over sleepers. Those carriers tend to hire out their over-the-road routes, Anderson said, and concentrate on more regional uses. Diesel, over other greener fuels, however, still is the norm for most of Rush’s leased tractors. Customers also continue to inquire about safety features and telematics, and their ability to comply with industry regulations in leased units.
Tank fleets, too
When it comes to the tank truck fleets that Rush Truck Leasing serves—such as fuel haulers and wholesale petroleum distributors—vehicle weights are a critical factor, Anderson added, due to overall gross vehicle weight (CVW) requirements, so they tend to seek lighter-weight tractors. And with many tank fleets, high-mile applications and high-idle times are the norm, so Rush representatives keep those factors in mind when spec’ing assets for tank fleet customers.
Rush mounts all customer-specified equipment, including pumps, before delivery in order to enable full-service support. “We spec many of our trucks with product pumps to accommodate the petrochemical business segment, and you don’t necessarily see that in a lot of lease or rental businesses, where they’re just straight day cabs or box trucks,” Anderson said. “We feature that to provide support for the customers we bring to our fleet in that way.”
The goal of providing that support never changes—even with the coronavirus pandemic disrupting life across the globe. While Anderson acknowledges Rush Enterprises has slowed investments in major capital projects due to COVID-19, the company still recently expanded its RushCare Rapid Parts call centers, which now are better equipped to handle the surge of incoming calls created by travel restrictions and stay-at-home orders.
“(COVID-19) has slowed down some activity, where some customers, as they review their business, have had to think about capital commitments or investments,” Anderson said. “And then on the rental side of our business, which is the smaller revenue component of the lease-rental business, activity is dropping. The rental business tends to support what I call overflow, or the extra equipment needs of customers, and because of COVID-19, some of that has pulled back, too.”
The ‘new normal’
To keep customers safely engaged, Rush also offers online ordering platforms as a “contactless” way to order parts for shipping, delivery or pickup, so customers don’t have to enter a store. Additionally, express services expedite vehicle diagnosis and maintenance for same-day service. Rush also boasts RushCare Service Connect, which leverages technology to maintain continuous remote communication with customers without visiting a physical location.
They’re also doing their best to adjust to national, state and local guidelines for social distancing and other means of slowing the spread of the virus—while continuing to fill a steadily growing need for its fleet customers.
“We monitor the CDC guidelines, and make sure we’re in compliance with those guidelines,” Anderson said. “We’ve mandated that all our employees wear face masks and stay 6 feet apart from each other and customers. We thoroughly clean and disinfect our facilities on a regular basis. In some places, including our corporate headquarters, it’s daily and continual.
“And we moved toward what we call curbside parts pickup, and really stressing online ordering and web-based activities where we can, so customers know we have those capabilities, and if that’s top-of-mind in your business, we can take care of you that way.”
