2-9. Comprehensive Guide to Leasing Logistics Equipment

1. General Explanation of Leases

A lease is an arrangement where a leasing company purchases equipment, vehicles, or other assets on behalf of a business or individual and rents them out for a fixed fee over an extended period.

Typically, this involves three parties: the "Customer (User)", the "Leasing Company", and the "Manufacturer/Dealer". The user selects their desired equipment, the leasing company buys it from the dealer by paying the purchase price, and then leases it to the user.

Two Main Types of Leases

Leases are broadly classified into two categories based on the nature of the contract:

1. Finance Lease
   Characteristics: This is essentially similar to an "installment purchase". Early termination is generally prohibited during the contract period. The user pays the full cost of the equipment, including interest and insurance, through lease payments.
   Commonly used for: PCs, copiers, industrial machinery, etc.
2. Operating Lease
   Characteristics: The expected "residual value" (used value) at the end of the contract is estimated in advance and subtracted from the total cost. The user only pays for the remaining amount in installments, keeping total payments lower.
   Commonly used for: Automobiles (car leases), aircraft, construction equipment—items with high resale value.

Differences Between Lease, Rental, and Outright Purchase

The greatest advantage of a lease is the ability to introduce the latest equipment or vehicles while keeping your capital reserves intact.

2. Explanation of Logistics Equipment Lease and Rental

In the logistics industry, leasing and renting are widely utilized to minimize initial costs when introducing equipment (forklifts, AGVs, racks, pallets, etc.). Recently, as automation equipment (AGVs/AMRs) used to address labor shortages has become more expensive, choosing the right procurement method is crucial.

Differences Between Leasing and Renting Logistics Equipment

Generally, you choose based on whether you need "long-term dedicated equipment (Lease)" or "short-term response to demand fluctuations (Rental)".

Leasing Scenarios (Long-Term / Fixed Equipment)

• Introducing Expensive Automation Equipment: Automation devices like AGVs or sorters that cost millions to tens of millions of yen. You can introduce the latest equipment without massive cash outflow.
• Maintenance Lease: A common format for forklifts. In addition to the standard lease fee, it includes maintenance costs like legal inspections, repair parts, and tire replacements, greatly reducing vehicle management efforts.

Rental Scenarios (Short-Term / Fluctuation Response)

• Peak Season Countermeasures: Temporarily increasing forklifts, roll cages, and pallets during specific months when cargo volume spikes, such as mid-year/year-end gift seasons or holiday sales.
• Emergency Substitutes: Used as a temporary stopgap when owned forklifts break down and are undergoing repairs.

3. Statutory Useful Life and Lease Term

When entering a lease contract, the "statutory useful life" and "lease term" are closely related for tax and accounting purposes.

Definitions of the Two Terms

• Statutory Useful Life: The "usable lifespan" of an asset as defined by the government (National Tax Agency).
• Lease Term: The actual contract period agreed upon between the user and the leasing company to rent the asset.

Rule for Appropriate Lease Term (The Relationship)

In a finance lease contract, users cannot freely set the lease term to be as short as they want. Tax rules define an "Appropriate Lease Term", which sets a lower limit based on the statutory useful life. This is to prevent excessive tax avoidance (e.g., setting an unnaturally short lease term to expense the cost rapidly).

*If a contract is signed for a period shorter than this, it is treated as a "sale (transfer of ownership)" rather than a "simple rental" for tax purposes, meaning the lease payments cannot be fully expensed as they are paid.

Calculation Examples

• PC (Useful life 4 years): 4 years × 70% = 2.8 years → Rounded down to "2 years" minimum lease term.
• Large Machine Tool (Useful life 12 years): 12 years × 60% = 7.2 years → Rounded down to "7 years" minimum lease term.

4. Current Interest Rates and Leasing (Impact of Rate Fluctuations)

As interest rates rise, lease payments generally increase accordingly.

When leasing companies purchase equipment to rent to customers, they procure (borrow) funds from financial institutions like banks. Therefore, when market interest rates rise, the leasing company's "funding cost" increases, which is added to the lease fee.

Components of Lease Fees and Interest Rate Impact

Lease fees are calculated by adding up the following costs and dividing by the lease period (in months):

1. Equipment Price (Principal)
2. Interest (Funding Cost) ★This is where market rate fluctuations have an impact
3. Fixed Asset Tax, Vehicle Tax, etc.
4. Property Insurance Premiums
5. Leasing Company's Commission (Profit)

Differences Between Existing and New Contracts

• New/Future Contracts: Lease contracts signed after an interest rate hike will have the higher rates applied, resulting in higher monthly payments than before.
• Existing Contracts: General finance leases in Japan are almost always contracted at a "fixed interest rate". Therefore, even if market rates rise during the contract, the monthly lease payments you are currently paying will not increase mid-term.

5. Lease Fee Table (Calculated at 2% Interest Rate)

This is a basic fee table assuming an "Equipment Price of 10 million JPY", calculated using a current interest rate of 2.0% (fixed, equal principal and interest payments).

6. Logistics Equipment Examples: Statutory Useful Life and Lease Term/Fee Calculation Table

Prerequisites: Interest Rate 2.0% (Fixed, equal principal and interest). Amounts are rough financial calculations based on the principal equipment price excluding tax.