Given the recent failures of Silicon Valley Bank and Signature Financial and resulting concerns Americans have in the banking industry, now seems like a great time to revisit the characteristics you should look for in your financing source.
Whether you purchase or lease your assets, your financing source needs to be a strategic partner—one that can help ensure you are spec’ing assets properly for your duty cycles and for the best total cost of operation (TCO). This will become increasingly important as we move into a cleaner transportation future with more powertrain options available for fleets to choose from.
Trucking is one of those industries that attracts people when business is going strong or when new technological developments are at play. Currently there are a lot of people interested in trucking that have not been in the past. And that brings me to my first piece of advice.
Select a finance source with industry knowledge. Trucking is cyclical, and it is one of the first industries to be impacted by an economic downturn and, conversely, is often one of the first to benefit coming out of the downturn.
Trucking is also a highly regulated industry, and often those regulations—especially those surrounding emissions—will have a deep impact on buying cycles. Any finance source you partner with needs to understand these swings and be able to help you navigate through them. You need a financing partner that is going to be comfortable with some uncertainty as we move to battery-electric and hydrogen fuel cell vehicles for which we have limited data on reliability, durability, and resale value.
Beyond understanding trucking on a broad level, your finance source needs to understand the intricacies of your business. Your fleet isn’t like any other, and you most likely have varying operating dynamics within your fleet. Those dynamics will influence the type of assets you need as well as the types of financing that might be best for those various applications.
The ideal finance source will offer flexible financing options that allow you to adjust asset life cycles to respond to changing market conditions. They have to offer different financing choices for different types of assets or even for similar assets that are operating in different duty cycles. As in almost every aspect of trucking, there is no one-size-fits-all approach for asset financing.
