Following up from the May edition of The Mover, which looked at Anthony Ward Thomas’ take over of Aussie Man and Van and its use of short-term hire vehicles, we’re taking a closer look at the use of short-term leases in the removals industry.
While not uncommon for companies to use contract-hire vehicles and for smaller relocation firms to hire in vehicles when and where they are needed, we decided to look into whether the hiring of vans on a longer-term basis is really worth it.
Andrew Lucas from Anthony Ward Thomas confirmed that back in February this year he had contacted Northgate vehicle hire to rent ten vans after the purchase of the Aussie Man & Van company. “This was to replace some old Aussie vans that were in such a poor state that they were written off and to cover the period before the ten new vans that we purchased were delivered,” he explained. Although the new vans have now arrived Andrew had kept four of the Northgate vans on the fleet awaiting the delivery of a further ten vans to complete the fleet.
He said that for his company the low cost and flexibility of the hire fleet were the key advantages. “We negotiated an extremely competitive weekly rate with Northgate,” Andrew explained, “and we can hire or de-hire vans and have them delivered or picked up within 24 hours.” The disadvantages, however, were important too. The company missed the lack of corporate branding on the road and installing and de-installing tracking units when vehicles are hired and de-hired is inconvenient. “We also need to repair any small damages before a vehicle can be returned.”
Dan Kiel at ATK Specialist Removals and Storage, who deal in antiques and fine art, said that the use of short-term hire vehicles was ‘a necessary evil’ and that in an ideal world it would be great to expand the fleet, however at the moment it isn’t really an option. Dan said that the use of the vans was more common in the past, but with the company going from strength to strength the need to use hire vehicles had declined and become more job specific. Dan also mentioned the quality of the vans that a hire company provides, many of which seemed in poor repair and didn’t come up to ATK’s usual standards. He talked about how the use of such vehicles was potentially damaging to the brand due to the lack of advertising and the seeming promotion of self-hire companies.
Carl Lewis who is Project Manager at Xpress Relocation said that his company uses short-term leases on a regular basis, hiring-in Boxers and Sprinters when the job requires it. With the business focussing primarily on corporate relocation, the need for smaller vehicles in the movement of offices to complement its fleet is high, especially when operating in busy areas that might not be accessible to larger vehicles. It rents vans from Limesquare in Milton Keynes, an expanding corporate hire company, and has had no complaints in its dealings while renting. This said, however, the availability of specific vehicles for certain jobs was not always as convenient as owning its own vans. Limesquare said that one of the main benefits of hiring is the predictability of the costs. Hire charges include all the day to day running costs except fuel and oil so there are no nasty surprises.
Gareth Hobbs at Vale Removals told The Mover, that from his experience it was more effort than it was worth to use short-term lease hire vehicles. Vale had previously used a short-term lease as a temporary measure after one of its vans broke down. The inconvenience of transferring kit from van-to-van and additional time consumed through acquiring proper insurance made the process less than dream-like. A priority among his concerns was the unprofessional image that using hired vans gave out to customers. “If a customer sees you turning up in a white van that’s not your own, they may begin to ask questions about the company,” said Gareth. For many removals companies, the lack of advertising on the side of these vehicles is also a turn off for using short-term hire and, echoing Dan Kiel, potentially damaging to the brand. Gareth did suggest that short-term hire might be an option for smaller removals companies, especially as a temporary measure to build up capital to buy their own vehicles as they grow.
Britannia Lanes in the Southwest, has taken a different route. Instead of hiring vehicles from a rental company, it has its own fleet of around 30 private hire vehicles that they rent out to the public. This means that, unlike other companies, they have a much wider pool of vehicles to choose from when undertaking specific jobs. Rob Lane of Britannia Lanes said, “Many smaller companies may like to use hire vans, especially when they’re setting up, but obviously, they don’t want to come to us.” He also went on to mention that with the rise of easily accessible and reasonably priced hire vehicles, the demand for the ‘man with a van’ services had fallen.
Jonathan Pearce is Marketing Manager for Northgate Vehicle Hire. His company hires vehicles up to 7.5 tonne, many of which are used in the moving industry. In a recent interview for The Mover he confirmed that an increasing number of companies are choosing vehicle hire as a way of dealing with the vagaries of the current trading climate. “Vehicle hiring is a recession friendly way of handling your fleet,” he said. “Vehicles can be hired for specific time periods but returned at a moment’s notice if trading conditions change.”
He also explained that vehicles can be provided in the hirer’s own livery if required. Clearly this only applies if the vehicle is on a long-term hire but it does get over the problem many moving companies have regarding protecting their image and marketing their brand.
Another alternative some companies are choosing, according to Jonathan, is to sell their entire fleets to the rental company and buy them back. “It allows you to release capital tied up in your owned vehicles which can then be more productively invested in other areas of your business. With funding an issue for many companies, this is an excellent opportunity to finance other areas of your business as well as obtaining the latest fuel efficient vehicles, saving you even more money.” Northgate changes many of its standard vehicles before they are three years old, therefore providing customers with reliable and fuel efficient vehicles.
Neither Northgate or any other van hire company was prepared to tell at what point the cost of long term hiring overtakes the cost of buying. However, for the hire company to make a profit it is clear that the break point must be reached at some point. They know their figures, of course, and long term, with a large fleet, they can make their required margin. However, for any individual company, in the short-medium term or with a limited number of vehicles, it is conceivable that hire would be more economic.
It seems as though the use of short-term van hire is fairly common within the industry, especially for smaller firms and when a job requires specific vehicles or presents an access problem to larger trucks. The use of these vehicles can provide a temporary help to companies that find themselves with too much of a workload and not enough fleet or in situations where their current vehicles are inappropriate for the work. They do, however, have a downside in that removals firms are dependent upon the availability of the short-term vans and the cost of using hired vans for certain jobs. The quality of the vehicles is also a concern for some parts of the industry, the road wear and condition of hired vehicles may be poor and, as such, the image of the business may be damaged. For other firms, the lack of advertising on the vans (and in many cases, the advertising for other companies) affects how the brand is perceived by the wider public – an issue that must surely give many marketing departments sleepless nights. As Dan Kiel of ATK said, “they are a necessary evil.”