Beverage Industry logo
search
cart
facebook twitter linkedin youtube
  • Sign In
  • Create Account
  • Sign Out
  • My Account
Beverage Industry logo
  • NEWS
    • R&D News
    • Supplier News
  • PRODUCTS
    • New Products
    • Reader's Choice Poll
  • CATEGORIES
    • Alternative Drinks
    • Beer
    • Bottled Water
    • Cannabis Beverages
    • Carbonated Soft Drinks
    • Energy Drinks & Shots
    • Juice & Juice Drinks
    • Plant-Based Beverages
    • Sports Drinks
    • Tea and Coffee
    • Wine & Spirits
  • R&D
    • Beverage R&D Features
    • Ingredient Spotlight
  • PACKAGING
    • New Packages
    • Packaging Equipment
    • Packaging Material
  • OPERATIONS
    • Distribution
    • Plant Focus
  • TOP LISTS
    • Beer Market Report
    • Executive of the Year
    • State of the Beverage Industry
    • Top 100 Beverage Companies
    • Truck Report
    • Wholesaler of the Year
  • MEDIA
    • eBook
    • Podcast
    • Polls
    • Videos
    • Webinars
  • DIRECTORIES
    • Annual Manual
    • Contract Packaging Guide
    • Take a Tour
  • MORE
    • Classifieds
    • Channel Strategies
    • eNewsletters
    • Events
      • Membrane Technology Forum
    • Interactive Product Spotlights
    • Market Insights
    • Sponsor Insights
    • Store
    • White Papers
  • EMAG
    • eMagazine
    • Archived Issues
    • Advertise
  • SIGN UP!
DistributionPlant Focus

Distribution

Should you buy or lease your beverage trucks?

Leasing more attractive in financial uncertainty

By Jeff Cioletti
Should you buy or lease your beverage trucks?
August 31, 2020

It’s an evergreen question in fleet management: do you buy or lease equipment? It’s one that comes up even more often when the economy contracts, as distributors re-assess their resources. It also is unclear how long the current pandemic-driven downturn will last and whether it will have a sizeable influence on the lease-versus-buy decision.

“Downturns have an impact, though not for us directly,” says Gary Thompson, executive vice president and general manager at Powers Distributing, Orion, Mich. “[In] downturns, interest rates drop, cash is in shorter supply, so leasing may become more attractive. Depreciation, tax and stimulus policy are big — they determine who gets what write-offs and when. With 100 percent immediate write-off, if you have the cash to purchase or the ability to leverage purchases, buying becomes more interesting.”

But in both boom times and in bust, the real X-factor is maintenance. It’s less of an issue for distributors like Powers that have their own in-house maintenance shop. But those distributors who don’t have that service are more likely to benefit from a full-service lease program.

“When the truck breaks down, on the leasing side it’s painful for both parties,” says Chuck Davis, director of sales for PACCAR Leasing Co., Bellevue, Wa. “So we both have a vested interest to make it work well.”

Maintenance plan defrays costs

When fleet managers opt for a full-service lease, they’re typically paying for a maintenance schedule for the duration of the lease. “In ownership, when the truck goes to the shop [the shop] is invoicing someone, whether it’s [the lease company] or [the fleet], Davis explains.  “They’re billing time at the market rate.”

If the fleet is paying, say, $450 a month to the lease company for a maintenance plan, service expenses become considerably more predictable, Davis notes. “Companies, all the time, will spend $4,000 to have a set of tires put on and that’s one month’s budget that may or may not have been planned,” he says. “[With a full-service lease] we may have to put on a set of tires for $4,000, but the customer is only paying their standard $450 a month maintenance.”

When approaching a lease agreement, Davis advises that fleet managers consider the time and mileage expectations for the equipment — and not just for the trucks themselves but for all of their components.

“You need to make sure that all of the components are built to last for that period — and not just last, last reliably,” Davis warns. “That’s what our market is built upon: reliability and predictability. What can really ruin a lease agreement is that, say, in the last year [of the term], things start to fail or [the equipment] doesn’t hold up because it was not spec’d correctly. So, real diligence around the specifications of the equipment is really important.”

Powers’s fleet is a mix of owned and leased equipment. Depending on the terms, it has leased some of its tractors. For its trailers, the distributor has opted for purchasing them as they tend to last at least 20 years and Powers is able to refurbish them every four years.

In the end, it all comes down to a distributor’s individual needs, access to maintenance and cash in hand.

“Recognize that outsourcing can certainly be a real advantage, removing some of the complexity out of the distribution system,” Davis says.  

KEYWORDS: beverage delivery beverage fleet distribution deal

Share This Story

Looking for a reprint of this article?
From high-res PDFs to custom plaques, order your copy today!

Recommended Content

JOIN TODAY
to unlock your recommendations.

Already have an account? Sign In

  • top 100 beverage companies

    Top 100 Beverage Companies of 2024

    For the global beverage market, mergers and acquisitions...
    Sports Drinks
  • Chocolate, Strawberry, Vanilla shakes

    Classic flavors provide reliable, consistent results for beverage-makers

    Classic flavors of chocolate, vanilla and strawberry...
    Ingredient Spotlight
    By: Chloe Alverson
  • Free Spirits Instant Bar Bundle

    Lifestyle trends drive growth for non-alcohol category

    As lifestyle trends continue to drive growth for the...
    Wine & Spirits
    By: Lauren Sabetta
Manage My Account
  • eNewsletters
  • Online Registration
  • Subscription Customer Service
  • eMagazine Subscription
  • Manage My Preferences

More Videos

Sponsored Content

Sponsored Content is a special paid section where industry companies provide high quality, objective, non-commercial content around topics of interest to the Beverage Industry audience. All Sponsored Content is supplied by the advertising company and any opinions expressed in this article are those of the author and not necessarily reflect the views of Beverage Industry or its parent company, BNP Media. Interested in participating in our Sponsored Content section? Contact your local rep!

close
  • Fourpeople toasting with cocktails made with low-sugar ingredients, celebrating healthier drink options.
    Sponsored byCargill

    What’s Hot in Sugar Reduction: Beverages

  • chocolate milk
    Sponsored byCargill

    Sweetening the Future for Dairy and Dairy-Alternative Beverages

  • woman pouring a drink
    Sponsored byFFP

    Building a Beverage System: Meeting Consumer Demand for Precision Wellness

Popular Stories

Sting Energy

PepsiCo, Sting Energy unveil global partnership with Formula 1

PepsiCo + poppi

PepsiCo completes acquisition of poppi

people drinking Wynk

Mindful drinking prompts growth for THC beverages

Top 100 Beverage Companies of 2024

Events

April 16, 2025

2025 State of the Industry Series: Alcoholic Beverages

On Demand In Beverage Industry’s annual State of the Industry: The Alcohol Beverage Market, analysts at S&D Insights LLC delve into these trends and how they’re shaping the industry.

June 26, 2025

FAST. FOCUSED. FUELED: Delivering Energy Consumers Can Feel

Learn how to formulate products that deliver the energy experiences that people want, and keep them coming back for more.

View All Submit An Event

Poll

Retail Coffee Segment

What retail coffee segments will fare well into the next year?
View Results Poll Archive

Products

Milk and Dairy Foods Nutrition, Processing and Healthy Aging

Milk and Dairy Foods Nutrition, Processing and Healthy Aging

See More Products

Related Articles

  • John Peter Koss picture

    What beverage distributors should consider before automating a warehouse

    See More
  • Jeff Coletti_Distribution

    How to make your beverage fleet insurer ready

    See More
  • Silver Eagle Distributors Truck - Beverage Industry

    Beverage fleets increasingly employ vans, non-CDL trucks

    See More

Related Products

See More Products
  • beer.jpg

    The Chemistry of Beer: The Science in the Suds, 2nd Edition

See More Products

Related Directories

  • Magline Inc.

    Magline, Inc. is the world’s leading manufacturer of Magliner route distribution solutions and much more. We are a committed partner in helping to grow your business. By listening to your challenges first, our team can work with you to develop the right solutions that fit your unique distribution needs.
  • RAM Systems Inc.

    Since 1981 proudly serving the beverage and distribution industry, providing robust solutions for sales, delivery and warehouse management, ERP/CRM, sales analysis, supply chain and much more. RAM’s suites include host and mobile software, rugged mobile printers, Apple iPads and iPhone, systems integration/interfaces, electronic commerce, communications, and automated billing options
×

Elevate your expertise in the beverage marketplace with unparalleled insights and connections.

Join thousands of beverage professionals today. Shouldn’t you know what they know?

JOIN NOW!
  • RESOURCES
    • Advertise
    • Contact Us
    • Directories
    • Store
    • Want More
  • SIGN UP TODAY
    • Create Account
    • eMagazine
    • eNewsletter
    • Customer Service
    • Manage Preferences
  • SERVICES
    • Marketing Services
    • Reprints
    • Market Research
    • List Rental
    • Survey/Respondent Access
  • STAY CONNECTED
    • LinkedIn
    • Facebook
    • YouTube
    • X (Twitter)
  • PRIVACY
    • PRIVACY POLICY
    • TERMS & CONDITIONS
    • DO NOT SELL MY PERSONAL INFORMATION
    • PRIVACY REQUEST
    • ACCESSIBILITY

Copyright ©2025. All Rights Reserved BNP Media.

Design, CMS, Hosting & Web Development :: ePublishing