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Truck Rental Shake-Up

As truck rental companies fight for their slice of a limited market in the Western Cape, a new entry in the form of Spartan Truck Hire could cause a few upsets writes FleetWatch Cape correspondent Stephanie Platt.

Owner of the business, Arnold Friedman, believes Cape Town will be the future growth sector for truck rental. "Johannesburg is saturated and prices are constantly being cut. Our entry into Cape Town is very challenging because this business is really about people and I believe we have a great team in place that will provide the same levels of service that Spartan has always given its customers in Gauteng."

The team in question consists of almost the entire ex-Rent a Bakkie staff who did not move across to the Value Group. Value declined to comment, although Elaine Robinson, national sales and marketing manager, confirmed she is aware of the situation.

Friedman says the company has kicked off with 18 units. "We are looking at increasing this to about 50 vehicles by the end of the year which will range from 1 ton through to 8-ton trucks, including refrigerated vans. I believe we operate in a niche market and we don't compete with the large operators like Super-Rent, Kempston and Value."

FleetWatch spoke to these companies for their reaction to Spartan's entry.

Steve Thomas, MD of Super-Rent, is aware of Spartan's presence. "Competition is always healthy. However, Cape Town is over-traded and my concern is that in this situation prices can be forced down. This will not be good for the industry as a whole as it will create an expectation from the client of a new base price."

"Good luck to them," was the response from Carolyn Clokie, director of Kempston Truck Hire. "In the past we have seen other companies open - and then close again." Agreeing with Thomas that competition is healthy as it keeps the industry competitive, Clokie has a different attitude on prices.

"Customers who use us only because of rates cannot be claimed as 'our customers' since they will always use the cheapest in the market. At the moment, Cape Town is over-fleeted and I would be interested to see what market research Spartan undertook which justified bringing them to Cape Town."

A tough market

The Cape market is an unforgivingly tough one that has seen other national companies like Key Truck Hire close within 18 months of setting up. Western Cape infrastructure is devoid of heavy industry and manufacturing which provides centres such as Gauteng with volumes. Business is also extremely cyclical, mid-winter being almost as quiet as is Gauteng in January. Truck rental is affected quickly by economic changes where business is dependent on companies hiring to cover deliveries that their core fleets cannot cope with.

Weelrent is now probably the largest of the local independent companies. Manager Basie van Zyl does not believe there is sufficient business for another operator.

"We all have vehicles standing. In construction, for example, there is not much new work coming up and very few large projects on the go. Of course it is a free market and anyone can do as they like. I'm just afraid it will start the price wars all over again as companies cut prices to get market share.

"As far as Weelrent is concerned, I would like to step back, let the big boys sort it out and concentrate on keeping the business we have. Unfortunately, new entrants always seem to try interfere with existing business by discounting which, in the long run, does not help anyone."

Simply put, a supply and demand situation where there are too many trucks and not enough customers will mean that either major de-fleeting will take place, rates will be cut in an effort to buy market share or more jobs will be lost when doors are closed. Unless, of course, Friedman is correct and Cape Town becomes a growth point. If that had to happen, not only rental companies but all transport operators working out of Cape Town would be delighted.

Contractual distribution

One area that guarantees year-round business is contractual distribution and this market is one that Spartan aims to move into. "It's the way of the future," says Friedman. "We understand the industry and believe we can create the synergy in Cape Town that has made us successful in Johannesburg."

The fact that all the rental companies actively pursue this market for all the same reasons means there is major competition not only between each other but also from owner-driver schemes. Given that, aggressive marketing, adequate infrastructure and high quality standards should be the yardstick which will measures success.

Spartan Truck Hire began in 1981 and has remained a family business, operating only from premises in Kempton Park until this expansion to the Western Cape. Now they have opened this branch in the industrial area of Paarden Eiland - an area where almost every other casual hire company has either a branch or a depot. The attraction of this area lies mainly its accessibility to all the major freeways in a city where deliveries to anywhere seldom take longer than 30 minutes.

Watch this space as we see where everyone stands six months down the line.