Railcar Leasing Advantages
Financial benefits
Leasing gives your company the use of a
productive railcar fleet and frees cash for investment in the business itself, where the
returns are usually greater. Other financial benefits include:
- Leasing payments are tax deductible and may provide certain
financial advantages.
- UTLX full-service leases are operating leases, which provide
off-balance sheet financing.
- Leasing can leave intact your established lines of credit
without restricting your ability to obtain new credit at attractive borrowing rates.
- Cash budgeting is more accurate and less complex when
monthly expenses are predictable.
- Leasing provides 100% financing, as opposed to 75-80%
through most other methods.
Leasing Reduces Your Risk
Leasing terms typically range from three to
five years for railcars which have a DOT-mandated maximum life of 50 years. By leasing,
you gain the flexibility to manage your fleet size and the mix of car types as your
business conditions and needs change. You may even be able to terminate some of your
leases early if Union Tank Car can find a new lessee for the cars.
A lease also transfers the risk of equipment
obsolescence to Union Tank Car. Although future market predictions and projections of
conditions at termination of the lease can be made, rapid evolution and
regulation/deregulation within the industry can create an inventory of outmoded equipment.
If you are a UTLX lessee, that's not your problem when your lease expires.
Leasing Reduces Your Administrative Costs
Many of the administrative burdens that are
normally the responsibility of a railcar owner can be provided under the terms of a
railcar lease. A UTLX full-service lease, in addition to providing and maintaining the
railcars you need, includes the administrative care of Union Tank Car's professional staff
for the equipment covered by the lease. Typical car ownership responsibilities that we
handle for you include:
- Mileage payment accounting, auditing and claims filing.
- Maintenance scheduling and car repair.
- Maintenance expense accounting, auditing and claims filing.
- Compliance with Association of American Railroads
(AAR) and
Department of Transportation (DOT) reporting rules and car design regulations.
- Car design engineering and representation on regulatory
committees.
- Field technical service support.
- Payment of state ad valorem taxes.
- Registration in UMLER and The Official Railway Equipment
Maintenance is a big part of
the full-service leasing package
Whether your fleet consists of one or 1,000 railcars,
maintenance can be a major expense. Either it requires a large investment in buildings,
heavy equipment, tools and replacement parts, in addition to a skilled workforce, or the
work can be done in contract repair shops, which may not be as convenient or
cost-effective.
When you choose the UTLX full-service lease, Union Tank Car
takes care of all maintenance and testing requirements. If one of your cars needs service,
you simply notify the district sales office responsible for your account, and arrangements
will be made to have the car routed to one of the strategically located UTLX repair shops
or repair points. Or, in areas served by mobile units, minor repairs or testing may be
handled at your plant site.
Lease payments are suspended while the car is shopped for
normal maintenance. If you need a replacement car on a temprary basis, your UTLX
representative can often locate one through UTIL-I-FAX® subleasing service.
UTLX Full-Service Leasing
Under the UTLX full-service lease, Union Tank Car furnishes
all the services that are normally the responsibility of an owner and backs those services
with the necessary specialists to keep fleet records of maintenance, repairs, and other
administrative details. Scheduled maintenance and emergency repairs are accomplished with
the highest dependability and a minimum of down-time through the nationwide network of
UTLX shops and repair points.
Full-service railcar leasing has been Union Tank Car's
business since 1891. Depend on Union Tank Car's leasing experience to provide the railcars
and the specialized services that will improve your distribution efficiency. If you
already own a railcar fleet, it's not too late. Call your UTLX sales representative to
discuss the financial and administrative advantages of a UTLX purchase/leaseback.
UTLX Railcar Services
- UTIL-I-FAX® subleasing service functions to pair
shippers who anticipate a railcar surplus with other shippers who have interim needs for
similar equipment. Available cars are publicized on the weekly "green sheet",
which is distributed to more than 1,000 railcar users.
- UTLX Repair Shop Network offers a full range of maintenance, repair, lining and coating services for railcar lessees and owners.
- Mobile Repair Units that are equipped to service
railcars at your loading point are stationed throughout the U.S. The repair crews can
handle light repairs, valve tests and pre-trip inspections.
