Delivery options: own, hir€r lease

quires a capital invesunent. Irasing or renting trucks eliminates capital investment. Employing for-hire carriages on an as-needed basis has no capital investment, but provides limited control and reduced flexibility in scheduling delivery. All three methods provide internal control of transportation functions, facilitating flexible scheduling, ability to respond to time-sensitive deliveries and special handling.

I\ELIVERY can be a nightmare

Ufor a building products retailer, sucking up time and profits, or it can function smoothly, getting materials to customers on tine with mininum effort and expense.

Although the concept seems simple, delivery is more than trucks and drivers. Transportation uurnagement controls maintenance and upkeep, routing and scheduling, driver hiring, training and testing, environmental and Department of Transportation compliance, licensing and insurance.

After determining its needs and requirements, a company has several delivery system choices. Traditionally, a building products retailer has owned one or more delivery trucks with accessory equipment such as forklifts, employed drivers, maintained a repair center or contracted service from a local garage, purchased gasoline in bulk or relied on a service scation fu fuel.

Today, companies have a choice of buying, leasing or renting trucks or using for-hire carriers as needed. Each offers options, advantages and disadvantages. Owning trucks re-

A decision to own, lease or rent should consider cost-effectiveness, ability to manage a fleet, after-iax cash flow, customer service and capital tied up in equipment. Debt to equity ratio and ability to borrow money in the future as well as the company's ability to continue to invest in new technology, upgrade delivery skills and mandate environmental improvements also must be considered.

Story at a Glance

The Merchant

The company that chooses to lease has options ranging from basic to full service with truck and support services. Lease contracts. which should be carefully considered, vary from a common finance lease to conditional sales agreements, closed-end and open-end leases and temrinal rental adjustment clause (TRAC) leases. Full service leases provide a service menu including a transportation needs and expense analysis, maintenance, fuel, licensing, insurance, driver training, painting or putting decals on trucks or assuming residual value at the end of the lease.

Transportation Basics That Count

Inves0nent in equipment

Maintenance

Paperwork

Time spent on transportation issues

Vehicle downtime

Accidents

Routing & scheduling

Time sensitive deliveries

Delivery to remote locations

Peak season deliveries

Special handling problems

Environmental compliance

Employee relations & morale

Costs

Company image

Ways

To Select Best

delivery option types of leases ... advantages and disadvantagss of owning, leasing or hiring trucks.

The company that chooses truck ownership cim outsource maintenance including emergency road service and vehicle inspection, but it will still be responsible for management functions including DOT and environmental requirements, licensing and fuel tax reports, background checks, hiring and drug testing of drivers, insurance and claims.

Frequently home centers and lumberyards opt for a full service lease. Ryder, a nationwide truck leasing company, serves over 2,000 building product wholesalers and retailers with the average customer leasing one to six vehicles although some lease more than 100. Home Depot, with 305 specially designed tandem arle flatbeds carrying a forklift as well as cargo, and Weyerhaeuser, 64 tmcks, are the largest customers. Other companies such as Pixley Lumber in Oklahoma need only one truck

After managing their deliveries for many years, Big Tin Barn, TempleInland Forest Products Corp.'s retail division, turned the job over to Ryder five years ago for both Houston and Conroe, Tx., outlets. They lease 23 trucks with drivers and all necessary services including an on-site operations supervisor. Big Tin Barn general manager James Minton characterizes the system as "working very well." He likes being relieved of liability for trucks in Houston fraffic, the trouble of keeping good drivers and the cost of owning and maintaining a fleet

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