The main difference between cold equipment rental and hot equipment is that you get equipment without an operator. As practice shows, it is much more efficient for a client to put his operator on a rental car than to take a car with an operator. Because in these cases, the owner of the equipment, the tenant, and the operator have fundamentally different goals, functions, and capabilities.
With a hot lease, the owner supplies the equipment with the operator and does not take care of it in the future until he receives it back. In this case, the main thing for the operator is that he has signed acts on working hours, he does not care about the amount of work. That is, his interests are contrary to the interests of the tenant. In turn, it is important for the tenant how much work will be completed and how quickly, but there are practically no levers of influence on the operator since he is not a full-time employee of the customer company.
We see a different picture in the case of a cold lease when the customer and the operator work in one team. Their income and salary depend on the volume, quality, and speed of work, which determines their motivation. A company that provides equipment for cold lease is also interested in ensuring that the client has maximum productivity and, for its part, takes on the maintenance and repair of special equipment, ensures the maximum availability of equipment. Northern Mat also provides heavy equipment mat for construction.
The main criterion for choosing a lease without an operator, among other forms of direct and indirect ownership of equipment, is its availability. The client picks up the equipment from the warehouse 1-3 days after the request. It is also cheaper than buying and maintaining graders, bulldozers and excavators, and easier than financial and operational leasing. If leasing is received by 40-50% of clients, then for cold lease, as a rule, up to 80% of applications are approved.
The main users of the cold rental service are medium-sized companies with 100 employees or small companies with several dozen employees. For these companies operating in the market of road construction equipment services, equipment rental is an excellent opportunity to increase the volume of work and fulfill obligations with a guarantee. They do not have their own technical means, do not want to buy equipment, they just take cars and work on them – it is convenient for them to work with the rented one.
In this case, the lease helps the company to take a contract and quickly start working when other ways to find equipment for a new volume of tasks (leasing, buying) are unavailable or too expensive. Learn more that this applies not only to small but also to medium and even large enterprises.
Where cold rent is popular
The need for a cold lease arises when there is a peak load with a large volume of work. Basically, this combination is typical for large infrastructure and seasonal projects. Therefore, the two main industries in which cold leasing is most in demand are the oil and gas and gold mining industries.
Gold is mined from late March-early April to October-November. In the fall, gold miners hand over the ingots and prepare for new projects throughout the winter. And if their equipment is rented, they don’t have to think about repairing it. Cold lease is designed for intensive use of equipment in large volumes. At the mines, bulldozers and excavators work at least 10 hours a day, and more often 22-24 hours, 4-6 months a year. For the remaining 6–8 months, these machines are not needed by customers. In this case, it is clear that a cold lease is more profitable than a full property. Caring for the technical maintenance of the equipment during operation, repair, its resource, storage, and restoration falls on the shoulders of the lessor’s company.
When deciding to rent mining or road construction equipment on a cold lease, consider the following nuances:
- Equipment is rented without fuel;
- The rental price includes the cost of full service;
- The minimum rental period for excavators can be up to 4 months or more;
- The minimum rental period for heavy bulldozers can be up to 10 months or more;
- The equipment is rented on a full prepayment basis.
The procedure for the provision of equipment for rent
When a client contacts, the type of equipment, the place of operation, the interesting period of operation, the rental price is discussed.
The price always depends on the term – either the standard price or additional discounts and other options for long-term rentals. The main condition for the lease is the legal purity of the tenant company. After checking the financial documents, an agreement is concluded, the client makes a 100% advance payment and a security deposit (the cost of return transportation) and then picks up the equipment.
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