We recently wrote about the airline industry’s shift toward acquiring new aircraft by leasing rather than purchasing. According to the Economist, airlines worldwide are increasingly opting to lease aircraft for a few years at a time, avoiding the risk of a slump in the plane’s second-hand value. They estimate one-third of the world’s aircraft are leased, up from less than five percent in 1980.
According to trucking industry analysts, the trucking industry may be headed in the same direction. John Flynn, CEO of Fleet Advantage, explains how the rapidly changing dynamics of the trucking industry are converging with more traditional indicators — like current fleet age and replacement demand — to drive the market.
New truck fuel efficiency and emissions technologies are advancing rapidly and drastically changing how well-informed fleet operators acquire, operate and manage equipment. These advances — taken in conjunction with rising fuel and maintenance costs – are causing the market to recognize the difference between “functional obsolescence” and “economic obsolescence.”
Leasing is a viable option for forward-thinking fleet operators who want to turn over truck inventory every one or two years to take advantage of improved technology and efficiency.
In other leasing news, American Railcar Industries (ARI) recently completed a $199.8 million financing of its railcar lease fleet (credit facility) through its newly formed, wholly owned subsidiary, Longtrain Leasing I. The debt is an obligation of Longtrain that is non-recourse to ARI and is secured by a portfolio of railcars and operating leases acquired from ARI by Longtrain. (ARI and its subsidiaries lease railcars manufactured by the company to certain markets.)
The writing on the wall is plain: Now is the time to reconsider the advantages of equipment leasing.
The attorneys at Glass & Goldberg provide high quality and cost-effective legal services and advice for clients in all aspects of business litigation and transactional law, including reviewing, structuring and implementing complex leases. Call us at (818) 888-2220, email us at email@example.com, or visit us on the web at www.glassgoldberg.com to learn more about the firm and to sign up for future newsletters.