A Billion Dollars of Dry Powder: Why 10 Leasing is Betting on a Market Turnaround

In this episode of the Trucking Risk and Insurance Podcast, we sit down with Hooman Yazhari, CEO of 10 Leasing, to discuss the current state of the trucking industry, fleet management, and the future of trailer leasing. 10 Leasing is a major player in maintenance, repair, fleet management, and financing, specializing in trailers like dry boxes, flatbeds, chassis, and refrigerated units across the United States and Canada. 

Hooman shares his unique perspective, drawing from his background in aircraft and helicopter leasing, on how the trucking industry is navigating one of the worst freight recessions in history. We delve into the concept of the "snapback" effect, the importance of holistic fleet management, and why 10 Leasing remains in "growth mode" despite the current economic climate.

Our Guest: 
Hooman YazHari, CEO
Email: Marketing@TENLeasing.com
Website: TENLeasing.com

Your Hosts:
John Farquhar
National Risk Services Specialist, Transportation, Gallager GGB
https://www.ajg.com/ca/
M: 437-341-0932
John_Farquhar@ajg.com

Chris Harris
CEO, Safety Dawg Inc.
905 973 7056
Chris@SafetyDawg.com
https://safetydawg.com/

00:00 – Introduction to Hooman Yazhari and 10 Leasing.
00:43 – Operating in "Growth Mode" despite the current freight recession.
01:47 – How $1 billion in "dry powder" supports industry equipment and safety needs.
02:08 – Market outlook: Analyzing supply, demand, and normalizing rates.
04:07 – The critical role of trucking in the global economy and civilization.
05:06 – Lessons from aviation: Understanding the "snapback" effect in production and demand.
06:51 – Managing fleet risks: Balancing financials, operations, and asset utilization.
10:30 – The total cost of ownership: Why trailer maintenance is often overlooked.
14:15 – Financial strategies for fleets: Navigating credit constraints and interest rates.
18:45 – The importance of data in fleet management and risk mitigation.
22:10 – Future trends: Sustainability, electrification, and the evolution of trailer tech.
26:50 – 10 Leasing's operations in Canada and their massive network in Mississauga.
29:40 – Closing thoughts and how to connect with Hooman Yazhari.

Transcript

0:00

Welcome to another episode of the Trucking Risk and Insurance podcast. Today we are joined by Hooman Yazari, CEO of 10 leasing, as one of the largest players in the maintenance fleet management and financing 10 leasing specializes in everything from dry boxes and flatbeds to chassis and refrigerated trailers. In this episode, Hooman shares his unique perspective on navigating current freight recession and why he remains optimistic about the snapback in the industry. With a background in helicopter and aircraft leasing, he brings a fresh holistic view to managing fleet financials and operations in today's challenging markets. Let's get right into it. Welcome to the Trekking Risk and Insurance podcast. Hooman, welcome to the Trucking Risk and Insurance podcast. Can you take a minute and introduce yourself and your company, please? Sure. Thank you for having me. It's a pleasure. My name is Human Yazari. I'm the CEO of 10 leasing. 10 is one of the largest leasing, maintenance repair, fleet management and financing, players in the trucking world, specializing in trailers, whether it's dry boxes, flatbeds, chassis, and refrigerated. We have operations across the United States and Canada. And we are owned by a private equity fund called I squared, and we are in growth mode. Sorry, you said you're in growth mode. Yeah. In this economy? So here's what's really wonderful about being a leasing company. You can be of service to the industry. regardless of the cycle, right? And we are in the 3rd or 4th year, one of the worst freight recessions we've ever seen. But think what that does. It means there hasn't been investment. in the industry for 4 years. There hasn't been excess cash flow in the industry for 4 years. The lenders are facing other directions, looking at credits which perhaps are going to give them safer or better returns. So in a capital intensive industry that needs equipment that needs a refresh equipment that needs safety, needs maintenance, who's going to pay for all that, right? And the leasing companies come into their own, whether the market is growing because people need assets and we have them, or whether the market is strained and people need to finance assets, which, again, is what we do. We've got about a $1000000 of dry powder. And we will use it to help this industry get through, hopefully what is not much more pain. But again, uh, whatever we can do to be a services industry is what we will do. In your opinion, are we nearing the end of the pain? If I look at the news every day. And get, and think again, now I've seen everything. Um, but then tomorrow, it's very hard to tell. I think we were very optimistic that this year would be the turning year, right? And that was before the conflict in the Middle East started and oil prices went up by, um, you know, or diesel prices have gone up by 40 years percent would be more, depending on what day you listen to this podcast. Um, But if things normalize there, yes, there's a lot of supply that has come out of the market, right? Whether it's the drivers that have been, um, defrocked or whether it is the, um, the, the operators that just can't hold on anymore and have gone into bankruptcy, um, we haven't seen demand come up, but that supply reduction means rates have gone up a little bit, right? So, again, a little bit of optimism because supply demand is coming to a better balance. So, what I heard from you was a little bit of optimism. A little bit. kind of a glass half full kind of guy, you know? Yeah, yeah. Well, I mean, we... The conflict in the Middle East obviously is having an effect that, um, 6 or 8 weeks ago nobody predicted, uh, because I was caught unaware of... Not that, uh, President Trump keeps me in his uh, speed dial list or anything, but he didn't tell me about it. So, I was a little shocked and yes, fuel prices have escalated. John and I were talking about it. He's a diesel guy and he drives a diesel and I drive an electric. So he was envious of me, my situation. Yeah, big time. Yeah. Yeah. But, but the, the, the inevitable is that this is an industry that the world needs, right? Whatever you touch or look at in any room you're in, it came to you on the back of a truck and on either a flatbed or in a trailer. So we provide a service to our economy and our, honestly, our civilization that nobody knows about and thinks about, but it's critical. And regardless of what happens. Like the political policy has been to kibosh trade, right? So things aren't going to be made in China, that means they're going to be made here. People are going to need flatbeds to move stuff to make the factories, and people are still going to need to move that stuff from the factory to the retailer to our homes. So whatever happens, I'm optimistic that this industry will find its feet again. And and be healthy. And look, I, I, Before coming into this job, Um, which I've now been in for 5 months. So you're talking to a newbie. Um, I've been in aircraft leasing. Um, for midwear, right? at least 747s and 737s and whatever it was, commercial airliners. Uh, to, to, to the airlines. And I've done commercial helicopters to the helicopter operators, cargo, whatever it is. Um, and what we saw happening in COVID was Boeing an Airbus, really reducing their production, right, and putting their production lines on hold, um, getting rid of people. The airlines got rid of people. And then the demand snap back was so quick that now we, as passengers, are looking at $800 fares for simple domestic flights that used to be 300. Right? And I see, at, at, at, at, similar situation here where the trailer manufacturers have been very disciplined and not producing. The fleet operators being disciplined and not investing any money in upgrading their fleet or honestly maintaining it, sometimes to the levels that it should be. Um, and at some point, things come back, and usually they snap back. And, and, and, and I think that we are kind of setting ourselves up for that snap back, I think, unbeknownst to us, which would actually then suffer, make, make more problems because then everything suddenly gets really expensive. Um, but I, I, I, I think that that's where we're headed when I don't know. Well, let's hope it's sooner than later, but I certainly hope so. What do you figure the biggest risks, risks to fleets are today in trying to manage both their financials, financials and their operation? Yes. You know, It's interesting. I take a holistic view and your question, I think, is pretty holistic on what's important for fleets. Right? In a transportation business, Utilization is the most important thing, right? You can't have an empty aircraft boat, claim, train, truck, trailer, reefer. You can't, right? It's an expensive asset that either you're paying the banks for on a monthly basis or the leasing company. Um, And having the right asset type in the right place is very, very important, right? And and making sure that it's always working for you. It's always yielding. It always has something to carry that it's getting paid for. That is a risk, right? And that's that's the existential risk that I think businesses have. And that's why I'm a huge proponent of the leasing companies, because what we do is we bring flexibility of financing and availability to the market, right? When you buy something, you're committed to it for 20-ish years, right? Obviously, you can sell it at some point, but you're taking a risk of what you might sell it for. When you lease something, you can take the lease, match it to your customer contract, right? So you got a three-year deal with Pepsi. So you get a three-year lease with us, and once your contract is finished, you get rid of that asset and you're not carrying dead weight on your balance sheet. And I think that the more discipline in capital allocation operators have, the less risk they carry, right? And in the airline world, it's exactly the same. You don't want airplanes sitting around doing nothing. That kills you. And and in the trucking world, I think we're no different. What other risks are there? It's interesting. We've got older equipment because we haven't been refreshing our fleets as much as we could have in the last few years. Older equipment also needs more maintenance. I find many maintenance shops to be full. And when you have cost pressure, people sort of, you know, kind of do their maintenance a little bit later. They use aftermarket parts rather than OEM parts, and perhaps they're not as good, perhaps the jobs aren't as good. And I think safety becomes the 2nd thing that we need to think about, right? Um, and and then there's just the, the, the, the cold hard economics of do the numbers add up for the operators, right? Like, are they getting paid for the inflation that they've suffered. The capital was very expensive. And the um, fuel prices that have shot up. And those are the 3 biggest ones that I see, although there's probably 5 that I forgot to mention. Well, you mentioned about maintenance. And the older equipment, of course, needs more maintenance, but right now there's a shortage of diesel mechanics as an example. And I'm sure there's a shortage of trailer mechanics and reefer mechanics. And so when you do need that maintenance, now your equipment is in the shop longer than it has been before, which puts other strains. you know? And then if your equipment's old, you're not taking advantage of the latest technologies that are available as well. Yeah. Um, I think that's such a good point. I, you know, one of the things that we do is we provide our trailers with a full service, uh, uh, maintenance contract attached to it, right? So you pay a monthly rate and all your maintenance is taken care of, right? And we've got 53 shops across United States and Canada, and we have very, very rigorous standards of whether it's parts, or the training of the mechanics, the quality of the mechanics. Um, but, but the trend that you just mentioned, Chris, I think is a really important one. If I look at the demographics of the mechanic population, including ours. It tends towards people my age in their 50s rather than people in their 20s. Right? And replenishing that pool of talent with that next generation, I think it's a problem that the entire industry needs to consider and consider very, very carefully making these jobs attractive and making us a place that people want to come and work because maintenance is going to be required all day long for as long as this industry exists. What we also try to do is to partner up with some of the OEMs and piggyback off of their maintenance, for example, for refrigerated assets, which are sophisticated mission critical pieces of equipment where you cannot afford for them to fail or even deviate by 2 degrees because all your vaccines or whatever it is that you're carrying suddenly gets thrown away and you cost someone a 1000000 bucks. Um, so we partner with the OEMs to tap into their specialist maintenance network as well as another way to make sure that we're offering our customers everything they need. You know, and if I can just add to that, if there's any young people listening to this who are looking for careers, Many of the things that we just talked about trailer mechanics, diesel mechanics, reefer mechanics, are gonna be largely unaffected by AI. A lot of the university trained jobs. Like my brother, or sorry, my son-in-law is an engineer. He's already starting to worry about how AI is going to affect his career because he's only 32 years old. Chris, that's such a good point. I, it's interesting. Two things I'd say to the young folk that are thinking about their their career move. One, go somewhere where you have a future, right? Not just AI proof. And what we try to do is to make sure that the mechanics and the technicians that we hire get the best possible training, but also have a career path to advance, whether it's within the maintenance organization, right, to the shop manager, to the regional maintenance managers, to the vice presidents, and currently our maintenance leader started out on our shop floor, right? sits in the executive team. Um, And then your point about AI proofing. You know, what's also interesting? I was recently at the JP Morgan investor conference, right? talking to all our bondholders. Um, and what I sensed in the room, and there were, you know, probably 1000s of institutional investors in that conference, was a real flight away from investing in pure AI and tech, to investing in businesses that do stuff, own stuff, make stuff, like stuff, people with like grease under their fingernails because it's real stuff. Right? And I think it's a really interesting analog to people thinking about their careers as well. You're doing stuff that nothing else can do, right? I don't think the robots are going to take over this world just yet, right? But I trained as a lawyer, and I can see that that technology is going to make the legal world much more efficient, meaning you need, you know, much less people to do the same amount of output. Yep. So yeah. Well, there's so many careers that, I mean, when I edit, I do my own editing for this show, I use a lot of AI help when I do it. It's a phenomenal tool. Yes. But I'm also able to do more of it myself now and not farm out part of it and save a buck. Yeah, look, it's so interesting. We are in a generation that's going to embrace AI and I think we will all become much more efficient, which means that the outsourcing and the number of jobs will reduce. Humanity always seems to find something for people to do, right? When people were describing books. All those book scribes got fired in the printing pressure, but everyone had a job at generation later. It's what do we do with this generation that's a transitional one from a humanitarian perspective, from a commercial's perspective and from just doing the right thing, right? I think that's something all business leaders need to think about. Yeah, I think AI, I mean, this is way off subject, but AI is really, it's the most change I've ever seen in the world and it's happening very quickly. Yeah. And look, bringing it to us. We're in the midst of a complete technological reboot in our organization. Our company is a um, a rollup of 6 different groups, right? So we were merged. We now have 85, uh, 1000 trailers in our fleet, uh, over half a 1000000000 in revenue. And that is an amalgamation of 6 smaller businesses. And by taking these platforms and putting them together, we've created all the benefits of scale. One of the benefits is going to be having as much data as we could possibly get our hands on. But the next step is what do we do with that data? So if we've got a really simple example, if we've got GPS trackers on all our assets and we know how many miles they've gone and what conditions and what weather and what parts of the world, we can do a much better job in predictive maintenance, which means safety, right? And it also means efficiency. You don't suddenly get a surprise saying, you got to take this thing to the shop and then the shop has got a 2 or 3 day wait, right? You do it right before you need to, and you make an appointment, or we send a technician out to you, and we do it with our mobile trucking service. Um, so I think that safety and efficiency and using data to make all our work much more um, efficient, and we were talking about what's the biggest risk to people, it's empty trucks or trucks sitting around doing nothing, we negate that through AI and through the use of data. So I think it's going to bring a lot to us that will make businesses more efficient and more productive. And safer. I'd like to add that, I think one of the big downfalls that we have in our industry, we have a lot of small operators come into the business and whatnot, and they don't understand their costs. They don't understand what their bottom line is going to be. They're quick to offer rates to transport goods from A to B, but not realize, well, hang on, what does it truly cost me to do this? Yeah. Then you get you get operators that are going, well, in order to be a true trucking company, I've got to have the infrastructure. I've got to have the big shop. I've got to hire the people to fix my equipment and whatnot. When, hang on, you don't have to be. I know some very successful operators out there that all their equipment is leased. All their services are outsourced. No different than they are the company. That is doing services for other 3rd parties, a shipper. They're outsourcing their services to you, and many times it can be smart to partner with a leasing operation to go, hey, you don't need to worry about finding the mechanic to work on your equipment. We have that in-house. We can take care of that for you. We can let you know. And like, I liked what you'd said earlier about how maybe you have a contractual agreement with a client. It's only going to last months or years, and then I can turn the equipment back. Well, I can even set up a program that where, in my retention program, I want my drivers to have trucks that are no older than 2 years old. Yep. If I do that through a leasing program in the trailers, I'm going to improve my operations because I'm going to have less downtime, less worry about this breaking down and whatnot. Um, and and I pay a fee. I pay a fee and I have reliable equipment at any time, day or night. And the bonus part is, I can partner with somebody like Hooman, to help me with my financial risk and help me to better understand what is the best way to manage this without outlaying a whole bunch of money down to finance brand new equipment that I now have to depreciate and try to figure out how to get write-offs. You're right. And you know, what's interesting is that we need the level of sophistication in the operator to understand, it's not about your monthly payment, right? Leasing maybe a little more expensive than borrowing from a bank and paying whatever it is 300 bucks a month, whereas it's 330 bucks a month. But actually, everything you just said, you don't need to hire them mechanics. You don't need to think about, you don't need to hire a person to remarket these assets once they're 3 years old. We'll just take it off your hands, right? You don't need to worry that actually in 3 years, the thing may have fallen off the side of a cliff in terms of its residual value, because it's all about Tesla trucks now, and, you know, batteries have become a reality, will take that risk, right? So you're absolutely right. I'd love the industry. To kind of think about what, what is it that is what our core, right? Our core is moving things around. It isn't owning, it isn't maintaining, it isn't trading of tracks and trailers. It's being there for our customers on time with the best price, with the highest reliability and safety, and then we can outsource things to the rest of the world. And, you know, the airline industry has kind of copped onto it, right? Like 55% of commercial aircraft are leased, right? So all these airlines that you'd see, the big flag carriers, most of them don't own the majority of their fleet. And then maintenance is done somewhere else. These people are worried about safety on time performance and distribution, like sales. How do we sell ticket people, right? And I think if we think about that, in our industry, how do we become the most efficient operators? Let the guy with a $2000000000 balance sheet, take the financial risk. When you've got a $30000000 balance sheet, you're not going to get access to capital. You're not going to get flexibility of capital and of assets, and we can share our purchasing power and our ability to absorb risk with those operators to make their life much simpler and honestly let them sleep a lot more sadly. Well, and one of the bonuses, I can pick up the phone call and call Hooman and say, I need 10 trailers by next week. Could you help me out? And you're more than likely going to get that. Kansas, right? And moving them from Seattle to Kansas is like 1,500 bucks each or whatever. But being the scale that we have, we probably have 10 trailers where you need them. So moving them is not an issue, right? Right. Whereas, whereas if I, if I'm not, if I'm thinking I need to buy trailers. I need to get a hold of the dealer. I have to put financing together and, oh, those trailers aren't going to be in for 6 months. You know, so that could be the difference between me getting the contract with a customer or not getting a contract. And specking them right is another issue, right? Um, You, you perhaps need a certain spec that perhaps once this deal is over won't be either required, like a, like a, a heavier floor, for example, which obviously makes things more expensive and and heavier. Um, So let's just get the right equipment for the right job, give it back to Hooman and say, look, I need a different trailer for my next job and you're like, yeah, sure. Because we've got 2300 customers and we can move all these assets between all of them. The right asset is with the right people and you're not married to something that you don't need later on. Right. Exactly. Is that similar, or can you expound on the differences between leasing and owning? I mean, you've touched on some of the things already, but there is a huge difference between leasing and owning. Can you explain it? How it affects a trucking company? Yes. Um, When you lease something, the simplest point is that when you lease something, You only have to put whatever it costs per month, um, perhaps with a with a one or 2 month security deposit up front, but that's your financial commitment. Um, and you also know that you've leased it for 2 years, right? So your maximum commitment is however many months, however many dollars per month, times 2 years. You, you, you're buying you're leasing from somebody who has a maintenance network and the best mechanics in the industry with the right training and the right tools and the right parts. So you're getting something that's safe and up to the highest possible standards. You're also coming, you know, coming into a network of of either mobile trucks or maintenance operations across North America that you can tap into, and you can buy that in advance by getting a full service fee or you just get a net lease and and you take it either to our shots or other people's shops. But the most important part of it is that after 2 years, you can decide what to do. You come to us and say, you know what, I want to hold on to this for another 2 years or 3 years. Or I don't want this anymore, right? The market slowed down. Um, or, you know what? I need something bigger or I need something with this specification. Or I'm going into the temperature control business. You got a reefer for me. And if you owned that thing, you would have spent $40,000, if you have to go for a dry van, if you have to go to a bank, you probably have to put down a 3rd of that upfront in advance. So there's like a, you know, 12, $13,000 commitment. Whereas with us, you just put down, I don't know, six, $700 and the rest is on a monthly basis. So you start paying when you get paid, right? So your cash flow is really easy. And then you're on your own for maintenance. Um, and and after that 2 years, you have to figure out, holy moly, do I sell this thing and usually take a pretty big loss, right? Because these things depreciate quite aggressively in the 1st three, 4 years. Or do I try to fit myself into another job that will use this asset? But actually, the phone just rang and I need I need a refer, right? So it's that flexibility that leasing offers you. And it saves you a ton of money and a ton of risk once you think about it over a 3 to 5 year period. Well, I'm just going to say in that risk, the volatility of it, when it comes to the time that you're done with that asset. And as you'd said, you know, you take a hit with it, but at the same time, if the market fell out on used equipment, you could get next to nothing for that piece of equipment when you're done, whereas it's easier to just hand it back and now you deal with it. Maybe you also will, I'll have another client who could use this piece of equipment and carry on its lifecycle. Yes, and we have clients of every lifecycle of an asset. So if you want assets that are less than 7 years old, we've got new stuff, right? And we have a constant order with the OEMs. We have good relationships with them and get good prices. If you want stuff for cartage, which is sort of midlife, right, we have those. And if you want storage, for example, we've got older assets, storage trailers, which, again, are watertight, maintained, have their safety certificates, et cetera. So you're not going to some junkyard and trying to figure out how to get something that you can use for storage. that's cheap And by allowing those assets to move through the lifecycle very kind of elegantly through our sales and distribution network. We take that burden off of the operators. We know lots of people who say, we buy these things and we sell them after, you know, 5 years or we only want midlife. And we say to them, well, okay, we've got those, we can get them to you maintained and ready, and we'll take them off your hands after 4 years, because we know what to do. And by the way, I think one thing that differentiates us as a leasing company is if our client says, I want to lease it, but after 7 years, I want to buy it off you or I want the option to buy it off you, would say, okay, right? Which many leasing companies won't do because they think they're cannibalizing their own business, but what I would like to do is to make sure that our customer gets whatever they need from us. And I bet you they'll come back. Yes, they'll buy it, maybe for a couple years, they'll use it. But then they need maintenance, right? We've got maintenance. And after a certain amount of time, that asset's going to be too old to use, right? So we can buy it from them because we have a trading function. Or we can let them figure out how to get rid of it and we'll give them a brand new one when they need it, right? So it's that long-term customer relationship and long-term fleet management that we're trying to do, help the customer think, what do I need over the next 3 to 5 years and help them access all of that in partnership with us. And if they need like 300 brand new reefers in 2027, Well, tell us now because we'll go get the best deal by, you know, getting the, the, the OEMs that are pretty keen to give you good deals in today's market. To bid for it and secure those prices now. What a great place to wrap that up. Human, thanks so much for coming on the show from 10. Thank you so much for having me. Well, I gotta say the company name again. 10 leasing. And I was surprised to hear that you are in North America, meaning United States and Canada, because you're talking to 2 Canadians, eh? Hey, um, I have a, I have a special place in my heart for Canada. Iranian by birth and when our country fell apart. However many years ago, my grandparents ended up in Vancouver. And I spent every summer in Vancouver, Canada, and my grandparents had such love for Canada that embraced them and gave them a home after they had to flee their own country because, you know, of their religious beliefs. But 10 has a very, very large operation in Mississauga, where I spent a ton of time. And we have shops there in 3 locations, not just in Mississauga, but around there. And we have a massive network coast to coast, from Delta near Vancouver, all the way to the east coast to Canada, all along that corridor, where the trucks move, and Canada's a huge market for us. Yeah, well, I'm only about 30 minutes away from Mississauga. Um, I'm there next week, and I'm there a lot, so I would love to take you to London. That was such a great conversation with Human Yazari from 10 leasing. His unique perspective on the snapback effects from his aviation background really highlights why staying disciplined and maintaining your fleet is so critical even in this horrendously tough market. If you found this discussion on fleet financials and market trends helpful, please hit that. Like button and subscribe to the Trucking Risk and Insurance podcast. Your support helps us keep bringing you these deep dives into the industry. Thanks for listening and we'll see you on the next episode.