The Pros and Cons of Chassis for Lease vs. Chassis for Purchase

To buy, or not to buy? These are not your only options. Long-term leases for heavy equipment such as tank trailers and tank chassis are often an affordable alternative to buying and will reduce some risk exposure. This article explores the advantages and disadvantages of both chassis for lease and buying chassis equipment. When in doubt, consult a chassis leasing company such as Penn Intermodal Leasing, LLC for assistance with understanding lease options, and to make an informed purchasing (or leasing) decision for your business.  However, every company’s situation is unique. Consult your planning, legal and accounting personnel to assess an equipment acquisition strategy specific to your business.   

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Are you considering buying a new chassis? Purchasing a used chassis? Or, acquiring a chassis for lease? First, consider the product(s) to be transported. Will it be the same product, or might you need flexibility over time to accommodate a variety of related products? How much (what volume) will be transported in each load? How soon will you need the equipment and how often are shipments scheduled? Will you need a single chassis, or a fleet of chassis to accommodate this volume? Acquiring multiple units may result in lower per-unit costs.

Consider what the equipment will be used for- regional hauls, local transport, or primarily storage and in-plant movements.  Next, consider the expected length of time the equipment will be in use; a few months, a few years, a decade or more? Business conditions are unpredictable. Make your best forecast.  

Most importantly, consider the current financial condition of the business such as; capital reserves, cash flow, interest rates, borrowing capacity and risk tolerance. We will explore these considerations in more detail below:   

• Financial Risks   
• Life-cycle Costs 
• Opportunity Costs 

Financial Risks of Chassis for Lease vs Buying

To a business owner, the financial health of the company is of paramount importance. Chassis leases offer the ability to spread payments out on a monthly basis preserving capital for other uses. This is comparable to financing a purchase and making payments on a loan. Although a loan still requires a down payment upfront and will only cover a portion of your purchase.

However, with a chassis purchase, the company owns the asset and the loan is shown as an outstanding debt for the company. This is partially offset by tax-advantaged depreciation. Typically, the total cash outlay for an equipment purchase in use for a long time period is lower with an out-right purchase and you have the benefit of depreciation. The asset may also be used as collateral that can be strategically leveraged to secure additional capital and used to fund projects to meet business objectives.

The primary risk of purchasing an asset is the term of the purchasing commitment. If business conditions change, and the equipment is no longer needed, it may be returned at the end of the lease term. In the event of a downturn where the equipment is still needed, but at a lower utilization, a leasing partner, might even be willing to adjust terms until business improves. 

In addition, leasing companies offer chassis for lease that are newer and more reliable than the customer could afford to purchase. Newer equipment is often lighter, more durable and incorporates the latest safety and comfort features. Thus, the equipment is economical to operate and driver satisfaction improves.

Total Cost of Ownership (TCO) for Chassis for Lease vs For Purchase  

What is the total cost of ownership for buying vs leasing a chassis? The primary considerations of upfront capital requirements and the term of the commitment were addressed above. This leaves on-going maintenance, insurance and storage costs. 

Initially, these costs will be comparable for purchased or leased equipment and depending on the terms of the lease. However, as equipment ages maintenance costs for non-routine repairs will increase. In addition, a company that purchases equipment now assumes end of life risks and may be stuck with older units, limited resale opportunities and storage or disposal costs, but they may have had several useful years after the equipment has been paid off.   

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Buying a chassis requires a higher upfront cash outlay, but the total cost will be lower than a long-term lease. If conserving capital is a high priority for your company, then leasing a chassis is your best option. However, those with the cash who desire to reduce the total cost of purchase will want to buy their equipment outright.     

Opportunity Costs of Chassis for Lease vs For Purchase 

It is particularly important for supply chain and logistics professionals to quickly access equipment to meet the rapidly changing transportation needs of their customers. Deals can be won or lost depending on equipment and driver availability. 

The larger the company, the more people that need to sign off on large purchasing decisions. Once a purchase is approved, orders for new equipment may be subject to manufacturing schedules and delays. Chassis for lease are readily available when and where you need it, and lower upfront capital without a long-term commitment can streamline purchasing approvals.

Want more information for your chassis purchasing decision-making process, contact Penn Intermodal, LLC at 1 (888) 909 – PENN.    

Ask about Chassis for Lease or Purchase from Penn Intermodal Leasing LLC, a Chassis Leasing Company

Another option for your shipping container delivery is utilizing a truck with a long flatbed which can hold either one 40’ container or up to two 20’ containers. A forklift or crane is used to set your container on the truck at the beginning of the trip and lift it off when it reaches your site.

Pros: Because your container will be loaded onto a truck that is likely carrying other cargo, flatbed delivery is a low-cost alternative, especially when the container needs to travel long distances.

Cons: You'll need to ensure that the proper equipment is available to load and unload your container. This can add cost if you don’t have that available on both ends.

Pulled by a trailer, a chassis is a metal frame with wheels designed to carry containers securely. Shipping lines use them to bring containers to customers for loading and unloading. If you ship cargo overseas, this is usually how the container will arrive. It will stay on the truck while you load as they are used to the container backing up to docks for loading. 

Pros: Low-cost way to move a container. The tractor disconnect easily from the chassis, which gives added flexibility if you need some time to load and don’t want the driver to have to wait. Although that option may only be available if you are near where the container will go into the port or rail. Chassis are one of the accepted types of trucks allowed into the rails and ports. 

Cons: You must load the container while it stays on the chassis or have some means of lifting the container on and off the chassis. When a container is on a chassis, it is dock height. Lifting a 40’ steel container on a chassis requires a crane.

Contact us to discuss your requirements of Container Trailer Chassis(nl,mn,pt). Our experienced sales team can help you identify the options that best suit your needs.