How telematics and big data have revolutionized truck leasing

Full-service leases are becoming increasingly customizable, as telematics and big data are allowing lessors to better predict operating and repair costs. Pulling data off the trucks and tapping into OEM partnerships allows full-service leasing providers to know exactly how much it costs to operate a specific make and model in comparable applications, and even when repairs should be scheduled.

This, in turn, gives them the confidence to put together plans custom-made for fleets that may have some increasingly demanding requests.







Take for example Amazon. The company wants to own its fleet of trucks but doesn’t want to have to touch them for maintenance. PacLease put together a maintenance plan covering about 600 trucks for the online mega-retailer to handle all the maintenance, while Amazon gets to enjoy the benefits of ownership.

“They want to own, but want the benefits of leasing,” Mike Willey, assistant general manager of PacLease says of an emerging breed of customer that wants a “managed maintenance program” or “unbundled lease.”

These plans may include: preventive maintenance; repairs; vehicle reporting; DOT record management; consolidated billing; replacement vehicle supply; and warranty management.

“Companies can pick and choose the type of maintenance program they’d like,” Willey adds. “Leases have always been customizable, but now more so than ever.”

Darryl Munson, Idealease manager for Rush Truck Centres of Canada – Eastern Ontario, agrees.

“Full-service leasing has traditionally been a really cookie-cutter type of industry,” he says, noting operational lease styles are on the rise. “The industry as a whole has had to adjust its mindset. One-size-fits-all is no longer going to meet our customers’ expectations.”

Telematics and the data they generate can be thanked for this trend towards greater customization and more creative offerings. The more data a lessor has available, the better they can confidently piece together a custom-built plan.

“Our vocational programs are the best examples of this,” Willey explains. “The demands in those operations range widely, from operational needs, length of term, special maintenance considerations – especially in Canada. We will custom make each lease specific to that operational use to make sure they are only paying for the services they want.”

This could include skip payments on months when seasonal demand is low, something that may be more difficult to arrange with a traditional financier such your local banker, who may not understand the unique demands of your trucking application.

Of course, lessors can’t offer such flexibility without knowing how much it will cost to operate and maintain that vehicle, and that’s where big data comes into play.

A full-service lease lets fleets focus on their core business rather than hiring and training technicians. (Photo: PacLease)

“We have to use that data, break it down analytically to completely understand total cost of operation and stay ahead of the maintenance [costs],” Willey says. “Maintenance is becoming predictive in our world with some of the modeling programs we have today.”

“We’d be foolish not to use the data that’s available to us,” agrees Munson. “When we look at our fleet, we’re able to predict how much our vehicles are going to cost us [to operate and maintain] better than before because we’re able to pull that data. We can actually look at the data that show what our actual costs are in different marketplaces and different applications so we can drill down on those costs.”

“When we think about telematics, it’s pretty much table stakes. You have to have that equipment in your trucks.”

Chris Fairey, Ryder System

Most leasing companies have relationships with truck OEMs, allowing them to tap into data from a vast population of vehicles. Some leasing companies are actually offering telematics and data analysis as a service to their fleet customers. Here’s your truck, and by the way, let us help you with route optimization while we’re at it.

“When we think about telematics, it’s pretty much table stakes. You have to have that equipment in your trucks,” said Chris Fairey, vice-president – business development for Ryder System in Canada, noting even Ryder’s short-term rental trucks come equipped with telematics. “Customers want access to data to help them make decisions and fine-tune the ways they operate.”

When a lessor is confident it has a handle on the operating and maintenance costs of the vehicle it is offering on lease, it can put together bolder, more creative plans. Isuzu, for example, now offers a Priority Service Maintenance Program (PSMP) that covers virtually everything on the vehicle except driver wages and fuel. Even wear items like brakes and tires are covered.

“We’ve seen growth in that as customers want that one payment to cover their trucks,” says Brian Tabel, executive director of marketing with Isuzu. “When making a purchase at the beginning they can make all their maintenance for the duration of their lease so everything is taken care of. Everything is lumped into that monthly payment.”

Ryder is now offering more shorter-term leases – as short as 24 months – on new trucks, and even a fleet buyout program, which Fairey said “helps customers dispose of parts of their fleet through our infrastructure, and lease new equipment.”

The buyout program is aimed at giving fleets and easy path to switch from ownership to leasing, with Ryder disposing of the equipment through its own network.

What’s next? Daimler Trucks North America announced a “dynamic leasing” program during the 2019 North American Commercial Vehicle Show. Think of it as a “pay-as-you-drive” model that matches lease payments to billable miles, based on data pulled from the Detroit Connect telematics platform.

Then DTNA CEO Roger Nielsen dubbed it “the future of truck financing.” Asked for an update on the program, DTNA communications manager Fred Ligouri said: “We’re running a pilot of the dynamic lease product with a small number of select customers…As an industry first truck leasing product, we’re taking the time to ensure that the dynamic lease customer experience is second to none – easy to understand, easy to use, and most importantly, positively contributing to our customers’ bottom line.”

No details on when the new spin on leasing will be more broadly offered.

Getting trucks

Business is booming for leasing and rental providers, as fleets are struggling to secure 2021 build slots for new trucks due to supply shortages.

“Right now, we are doing more three- and six-month extensions than we ever have,” Willey says.

Leasing providers aren’t immune from the challenge of getting new trucks, but they do have the advantage of leveraging their OEM relationships.

“We are feeling the impact like everybody else, but we have a slight advantage being part of the OEM,” Willey explains.

Munson feels the supply chain issues caught some fleets off-guard.

“A lot of customers weren’t aware this was going to happen,” he says. “We’re just now seeing customers really take notice. If you haven’t put orders in at this point in time, you’re going to be left behind for build slots for 2022. Rental utilization is record breaking.”

Idealease takes a strategic approach to securing build slots with its OEM partner Navistar, Munson says.

“We’ve been able to still have build slots available to us,” he says, adding Rush Truck Centres was also able to pre-order trucks when it became apparent to its strategic management team that demand would outstrip supply. “We are in really good standing at this point in time.”

Fairey says Ryder has the added benefit of managing relationships with several truck OEMs.

“Due to the scope of our organization and how we order, there are some economies of scale there that help us and help our customers,” he says about Ryder’s ability to secure build slots.

James Menzies is editor of Today's Trucking. He has been covering the Canadian trucking industry for more than 18 years and holds a CDL. Reach him at james@newcom.ca or follow him on Twitter at @JamesMenzies.

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