Logistics And Haulage Finance

The wheels of the logistics and haulage industry keep the motors of the UK economy turning. 89% of all goods transported by land in this country are carried by road and even the remaining 11% travels to shipping ports, rail heads or airports by road freight, according to statistics produced by the Road Haulage Association (RHA).

There are nearly half a million heavy goods vehicles (HGVs) over 3.5 tonnes already registered in the UK, and the industry employs around 2.5 million people.

Despite the logistics and haulage industry being highly competitive, the profit margins are low. Inflationary pressures in the domestic economy add to the commercial challenges and Brexit has cast a degree of uncertainty over the operations of many companies involved in the industry.

Nevertheless, 2018 was a generally successful year for the industry, according to the Freight Transport Association (FTA) in its annual Logistics Report.

According to the FTA, concerns about the nature and scope of Britain’s trading relationships with Europe post-Brexit may have some impact. In an industry which relies on EU workers, an estimated 35% of FTA members are also worried about recruitment at a time when freedom of movement is significantly restricted.

But the greater worry is the effect that domestic inflation may have on investment. Apparently, 14% of its members have delayed investing in essential haulage vehicles as consumer spending faces a decline.

Invest In Your Industry

Instead of holding back on essential investments and seeing your heavy goods vehicles age, delivering less reliable performance and increased running costs, you might choose to stay ahead of the game and gain an edge over the competition.

We offer several logistics and haulage finance options here at ACF Direct that allow you to choose the funding method that best suits you and your business.

Hire Purchase

You may wish to opt for buying new rolling stock under a hire purchase agreement.

After putting down an initial deposit (typically around 10% of the purchase price), you are required to make equal monthly repayments on your chosen HGV or other vehicles. By the end of the agreement, when the final instalment has been paid, you take full ownership of valuable new rolling stock.

From the start of the hire purchase agreement your acquisition is capitalised for your business, with the asset appearing on your balance sheet.

Finance Lease

If you do not wish to own the vehicle but need continuous, exclusive use of it, an alternative option is to enter a finance lease. A finance lease typically extends for the whole of the useful working life of the HGV, during which time you are renting rather than buying.

At the end of the lease you are usually presented with two main options:

  • Agree to pay a token, peppercorn rent to continue using the vehicle – usually amounting to no more than an annual payment of what you had paid each month; or
  • Sell the vehicle on behalf of the finance company and retain the lion’s share of the sale proceeds (typically as much as 95%).

Operating Lease

Another alternative option is an operating lease, which typically extends for a much shorter period (e.g. three to five years).

The residual value of the HGV is agreed at the start of the lease. When the contract ends, you have the option of paying that sum to retain the vehicle as your own, or you can simply hand it back to the finance company.

A further operating lease agreement then provides you with another new HGV to utilise.

Please contact us here at ACF Direct to discover how we can help finance your next HGV.