Leasing helps Bulkley Valley Wholesale deliver the goods in remote B.C.

Mike Dandenault will tell you the term “temperature control” takes on new meaning when you’re hauling food to remote communities across northern British Columbia.

Dandenault manages Bulkley Valley Wholesale, which distributes refrigerated and frozen goods to independent grocers, restaurants, schools, mining camps, pantries, and other locations within a 550-mile radius of Smithers, B.C., a small town near the geographic center of the province.

From November through April, its trucks start their shift in packed snow and freezing temperatures, deliver to dozens of towns on the Pacific coast in thick fog and drizzle, and then return home covered in a layer of ice.

“The vehicles go through a complete freeze-thaw-freeze cycle in one day,” says Dandenault. “Lift gates, rollup doors, reefer units—anything that can get rained on will freeze over as soon as the truck hits the mountains. It’s brutal.”

The company, a division of Overwaitea Food Group and Save-On Foods, doesn’t have facilities to maintain its vehicles and Dandenault has no appetite for hiring mechanics. Over the last three years, Bulkley Valley Wholesale shifted away from truck ownership in favor of full-service leasing.

“We compete on service as much as we do on price up here,” Dandenault says. “We owned a hodgepodge of used equipment that was expensive to keep running and our drivers didn’t necessarily want to drive. It’s hard to say what cost more, operating old trucks all the time or the repair bills when the vehicles broke down. When you have five vehicles, losing one is a huge hit to your productivity.”

Balancing Act

Full-service leasing has long been a popular way for large grocers and food distributors to finance and operate a private fleet.

A full-service lease is essentially a closed-end operating lease with a maintenance agreement and other services bundled into one fixed monthly payment typically over a five-year term. Lease payments are recorded as expenses on your income statement, an off-balance-sheet treatment that can preserve cash and keep your company’s debt-to-equity or leverage ratios low. New general accounting standards took effect in December 2019 that require all leases with terms of more than 12 months to be listed on the balance sheet.

Familiar Names

While leasing historically has been favored by big companies running “vanilla” specs on short trade cycles, that’s changing.

Todd Berger, Director of National Accounts at PacLease, a unit of PACCAR, which manufactures Kenworth and Peterbilt trucks, says the shortage of reliable for-hire truck capacity and the increasing complexity of trucks and refrigeration equipment have prompted more food and grocery distributors to consider leasing.

“They want a fleet of late-model vehicles to support their core business—trucks with their name on the side and their driver making deliveries—but they’d rather have someone else handling the maintenance,” Berger says.

He adds that electronic controls, safety-related technology, telematics, and emissions equipment have increased the time and skill it takes to conduct preventive maintenance and repairs.

“A full-service lessor is equipped to manage all of this for one set amount,” Berger says. Other services can be bundled into the package, from mobile repairs and replacement vehicles when needed to fuel-tax reporting, vehicle tracking, and driver training. 

The leasing company may also be able to consolidate your vehicle maintenance if you operate a fleet of trucks from different manufacturers.

Reliable Runs

Full-service leasing has worked well for Bulkley Valley Wholesale. The company operates three Peterbilt Model 579 tractors leased through Peterbilt Pacific Leasing, the PacLease franchise in Surrey, B.C. A Peterbilt Model 348 straight truck is on order to replace one of the company’s two remaining trucks it has in ownership.

The tractors haul 36-foot trailers (the size is better for maneuverability), plus one 48-foot trailer for larger orders and longer hauls. With the nearest Peterbilt dealer nearly two hours away, Peterbilt Pacific Leasing contracted a shop in Smithers for routine preventive maintenance.

“We were able to spec the trucks to our terrain and the task at hand,” Dandenault says. “They have 500-horsepower engines and 18-speed transmissions, which work great in the mountains, plus moose guards and extra lighting. The trucks are optimized to handle our payloads, and they’re more reliable and comfortable to drive, which our drivers like. Overall, they project the right image for our company.”

Servicing Customers, Not Trucks

Most importantly, he says, Bulkley Valley Wholesale can focus on servicing customers instead of trucks.

“Not every community up here has a grocery store, and some people have to drive a long way just to get to a place where they can buy meat and produce,” Dandenault says. “To us, having a vehicle break down is costly in terms of our productivity, but it can be detrimental to someone living in a remote area. They’re counting on us. If we can’t make our deliveries, the options can be pretty limited.”