Contract hire in the frame

London, UK: One of the big questions for suppliers is whether to take full control by owning a fleet of commercial vehicles, or at the other extreme to sub-contract every aspect of warehousing, transportation and fulfilment to a third-party logistics supplier.

Another option, which more and more suppliers and retailers seem to be considering is the middle way – the contract hire of commercial vehicles, often with full maintenance, compliance and accident management.

Andrew Morley, group sales director of commercial vehicle contract hire company Prohire, says that contract hire combines off-balance sheet transport with the personalisation of an owned logistics service. Given that the Prohire option has also been taken up by several full-service logistics companies as well as suppliers across a wide spectrum of market sectors, commercial vehicle contract hire can clearly be a ‘win: win’ for all parties.

“On the one hand commercial vehicle contract hire enables operators to control their own customer service, having sufficient involvement in transportation to manage the handling of their own goods in transit, minimising damage and returns,” Morley says.

“As such it appeals particularly to companies with awkward or very high value freight. On the other hand, it presents the perfect opportunity for any supplier or logistics operator used to running their own fleet to do so off-balance sheet, freeing up capital for investment in other business critical areas.

“There are in addition many other advantages to this method of managing transport, several of which completely contradict the supposed downsides of contract hire. One area that sometimes concerns contract hire novices is the whole question of costs – especially end of contract costs – and how they are calculated and managed.

“It’s all about the proper management of assets while they are in use and the best and cleverest disposal of those assets – financially, sustainably and in terms of legal compliance – when the time is right,” Morley says.

“A Prohire customer may pay a little more in terms of the contract hire deal on paper, but the savings in practice more than offset this. Many customers have also experienced other cost savings, such as vehicle insurance and fuel bills reduced because of the way the fleet is being managed.”

Andrew Morley, group sales director, Prohire: “Contract hire is a massively beneficial way for suppliers and logistics providers to procure their transport fleets.”

Compliance is an important concern for any HGV operator, and it is yet another added value service that Prohire can include in its menu-based contract hire offer. Moreover, the company’s heritage as an HGV specialist means that its expertise in compliance is based on the standards set by HGV legislation, even when the contract hire fleet includes LCVs. This ensures considerably higher standards for LCV fleets than those required in the car and van leasing sector, enabling greater peace of mind – and superior residuals – for the customer.

Such are the advantages of contract hire that Prohire is enjoying a particularly buoyant period of growth. So much so that it is making a multi-million-pound investment in its fleet with the addition of dry freight rigids, tractor units, panel vans and refrigerated vehicles. The expansion also includes curtain-side and box bodied rigids with a mix of tail lifts as well as drop-sided and crane equipped vehicles, for which demand has risen on the back of previous investments. 3.5 tonne panel vans and refrigerated vehicles have been specifically ordered for the advent of the Ultra-Low Emission Zone (ULEZ) to support London-based customers who are keen to avoid daily charges to operate within the London charging zone. The orders buck the industry trend which has seen other companies pulling away from ordering new vehicles for delivery in 2019.

“Contract hire is a massively beneficial way for suppliers and logistics providers to procure their transport fleets. It combines cost advantages and peace of mind with a whole host of added value services. Prohire’s very personal approach just maximises these benefits and enables customers to outline exactly what they want to achieve and receive a consultative, bespoke response,” Morley says.

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