So Transrent Directors blamed the firms collapse on low and reducing rental rates?

Interesting comment. No doubt a general high street slow down over the last year has not helped the trailer rental and contract hire industry. But surely the Transrent management team must take some personal responsibility for their plight?

It was only in 2005 the company secured an investment round totalling £4.5m from its two principal institutional investors – Aberdeen Asset Managers Private Equity and Penta Capital Partners.These companies must be mightily dissapointed and now counting the cost.

For the last two years a number of trailer manufacturers have voiced concerns that Transrent had a flawed strategy. Seen as a parasite by some trailer manufacturers, stepping in between manufacturer and their end operator customer, Transrent were driving down rentals in a frenzied desire to grow market share beyond its claimed 8% level. They looked to scale up and benefit from increased volume.Margin for the trailer manufacturers was hit and end users became accustomed to paying very low and frankly unsustainable rental rates. Competitors like Transamerica and GE found Transrent a spiky thorn in their side.

The full impact of Transrents administration is now hitting home with upwards of 30 leasing companies now seeking ways of recovering debts, looking how best to administer their assets and no doubt frantically checking on where all their trailers are!

Penta Capital, and the venture capital arms of Aberdeen Asset Management and Close Brothers, look to be hardest hit.Hitachi Capital UK plc,
Barclays, Clydesdale, Scania and Alliance & Leicester all carry significant liability.Keeping trailers on the road with customers will be key to minimising losses. The challenge will be to keep the operators confidence high that a full support service will be provided.

Some lessors will no doubt have security over future rentals streams. Floating charges over trailer rental agreements will give some comfort but the administration of this will be a nightmare.

The administrators now face the headache of collecting payments from hauliers that had rented from Transfleet. Not an easy job when maintenance needs managing and services fall due. Some haulage companies are refusing to pay full rental liabilities until they have assurances that maintenance will be covered.

Some of the leasing companies are setting up third party deals to take over the day-to-day management of more than 6,000 trailers.Asset management teams will be working overtime to set up alliances and manage the finance company risks.

One major finance company told me today they had been on alert for some time expecting the ultimate collapse of the business. Post Christmas is always a low point in truck and trailer rental companies fleet utilisation. High street spending falls and there is always an over supply of available units parked up depreciating.

So the chickens have come home to roost for Transrent. The fallout will reach Finance company boardrooms. Questions will be asked how so much lending was afforded to Transrent. Some of the smaller leasing companies will be hit hard and tumble in to loss. Future trailer funding will be closely scrutinised by underwriters in the major leasing companies.Residual value implications will be a hot topic on risk managers agenda meetings over the coming months.

With increases in fuel costs, another upward movement in interest rates more hauliers will suffer and it would be no surprise to see another trailer rental outfit experience terminal decline.