As a trucking business owner or owner-operator, there's no piece of equipment quite as important as a trailer. Whether you're hauling electronics in a dry van, delivering groceries with a reefer, or transporting construction equipment on a flatbed, chances are you've already made an investment in your trailer before you took the load.
But just what sort of investment should you make in a trailer? How much money does a trucking business owner need to put on the line? In other words, should you lease or should you buy?
Whether you're a new trucking business owner looking for a first trailer or an experienced carrier planning to expand, this post will help you decide what option is right for your next trailer.
Initial Costs and Long-term Savings
Generally speaking, leasing a trailer will cost you less in the short-term while buying a trailer will yield greater long-term savings.
For trucking businesses that are still getting off the ground, leasing can be a good way to start moving loads without taking on debt—and leasing with fixed payments means you won't have to pay interest. If you simply can't afford to own a trailer yet, leasing is the way to go.
On the other hand, buying a trailer saves you money in the long run—provided that repair and storage costs remain manageable (more on that below). Trailers that you own can also be sold down the line, allowing you to recoup some of your initial investment.
It's also worth noting that in many cases, lease contracts allow you to purchase the trailer at the end of the leasing period. This will almost certainly end up being more expensive than just buying your own trailer in the first place. That said, if you're not sure how quickly your trucking operation will take off, the added cost of leasing before buying may be worth it for your peace of mind.
Repair and Storage
Unless you plan on making significant or frequent adjustments to your trailer, leasing comes out on top when it comes to repair and storage costs.
When you lease a trailer, you won't have to worry about normal wear and tear (and any serious damage will typically be covered under warranty). Storage is also less of a concern if you don't own any trailers, as you'll only need to store equipment you're actively leasing. In other words, the money your leased trailers bring in should more than cover any storage expenses.
Once you buy a trailer, you'll have to pay for routine maintenance. You'll also take on the full responsibility of insuring the trailer. In addition to the costs of repairing and protecting the trailer, you'll have to find a place to store it, even when you aren't using the trailer.
Trailer Quantity and Job Opportunities
We'll wrap this post up by looking at the role trailer quantity plays in a carrier's decision to buy or lease. To sum this section up briefly, leasing multiple trailers can help you grow your business fast, but smaller trucking operations may be better off buying.
Leasing allows a business with limited funds to add more trailers to its fleet. If you employ multiple drivers and have a reliable network of clients, leasing trailers can help you achieve growth fast. Leasing can also make more sense for short-term jobs. For example, if a customer needs a specialized flatbed trailer for only three or four loads, leasing allows you to take on the job without making the financial commitment that ownership requires.
Smaller trucking operations may want to focus on making a profit with one or two trailers instead of leasing more equipment than they can manage. Remember, owning a trailer is all about saving in the long term. So if you're planning on hauling the same sort of cargo for multiple, consecutive years, buying a trailer may be the best option for you.
Are you interested in an alternative to the conventional trucking business model? If so, take a look at how Relaymile is reimagining trucking to provide drivers with a healthier, more consistent standard of work.
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