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Fleet Chooses Full-Service Leasing Option

July 2014, Business Fleet - Feature

by Amy Winter - Also by this author

One of Bailey's trucks has become a popular photo-op for Denver Broncos fans. Decorated with the Broncos colors and logo, this Kenworth truck delivers the team's equipment.
One of Bailey's trucks has become a popular photo-op for Denver Broncos fans. Decorated with the Broncos colors and logo, this Kenworth truck delivers the team's equipment.

With 18 to 25 deliveries per day, regular maintenance is essential to keeping Bailey’s Logistics’ delivery trucks on the road.

Part of Bailey’s Moving and Storage, the logistics department’s 50-vehicle fleet is spread between its four U.S. locations, including Denver, Oklahoma City, Salt Lake City and Birmingham, Ala.

Initially owning all of its trucks, the wear and tear from stop-and-go driving was leading to serious maintenance issues by 200,000 miles — or in some cases 175,000 miles. For Chad Johnson, this meant more instances of breakdowns and higher maintenance expenses.

“Our mechanics couldn’t keep up and trying to budget for transportation became a guessing game — repairs were getting out of hand,” says Johnson, who serves as Bailey’s executive manager. “And equipment reliability began to affect our performance. If we missed a delivery day due to an out-of-service truck, that meant calling customers and working with them to reschedule.”

To reduce maintenance costs and better meet DOT regulations, Johnson decided to go with a full-service lease.

Additionally, leasing helps from a budgeting perspective.

“We have our lease payment and can budget appropriately,” says Johnson. “Before, we couldn’t really budget. If one of our trucks broke down, we’d have to call around and get the vehicle towed and then find a replacement vehicle. And who knew what the monthly repair bills could be?”

Currently, Bailey’s Logistics’ fleet is made up of all leased vehicles — a 50/50 split of Hino 268s and Kenworth T270 trucks.

In the face of several potential leasing companies and truck options, how did Bailey’s choose a lender and the appropriate trucks to fit its delivery needs?

After using one truck leasing company for several years, Johnson wasn’t completely satisfied with the service provided. To begin the selection process, he started reaching out to other vehicle leasing companies.

MHC, a PacLease franchise in Denver, provided Bailey’s with Hino and Kenworth trucks as long-term rentals. These “test drives” provided drivers with the opportunity to drive the trucks during their daily deliveries and then report their feedback, according to Johnson.

By test driving several truck models — including International, Freightliner, Hino and Kenworth — for three to six months, Bailey’s was able to assess each truck’s performance, maintenance expenses and miles per gallon.

In the end, the Kenworth T270 Class 6 truck topped the competition with the fewest maintenance issues and highest miles per gallon — while hauling Bailey’s daily delivery weight.

After renting the Kenworths for six months, Bailey’s signed a lease contract with MHC for three Kenworth T270s. In 2013, Bailey’s added 10 more Kenworth T270s to the Denver fleet, two more to the Salt Lake City fleet and five more in Oklahoma City.

Working with MHC, Bailey’s closed-end, 48-month leases include a two-year opt-out clause, according to Johnson. “Most of our work involves contracts, so we don’t want to be tied into a lease for an extended amount of time.”

To keep the trucks up and running during the lease period, MHC’s full-service lease includes regular scheduled maintenance checks.

Every two weeks, MHC comes out to Bailey’s work site to take care of smaller maintenance issues, such as replacing windshield wipers or light bulbs, according to Johnson. For more thorough maintenance checks, MHC will take the trucks off-site for repairs.

Additionally, MHC provides Bailey’s with metrics and data on each truck after a trip to the shop. “It gives information on miles per gallon, idle percentage readings and hard-braking reports,” says Johnson. “If we can increase miles per gallon and decrease idling time, overall it helps us to reduce expenses.”

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