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How Finance Companies can Help HS2 Stay on Track

15 Oct 2020

Infrastructure megaprojects are crucial to societal and economic progress. The downside is that they always seem to cost more and arrive later than planned. The funding envelope for HS2 Phase One alone is £45bn and the timeline may extend to 2033. Besides its many other objectives, the project also aims to build the world’s most sustainable high-speed railway. To keep this project in check and meets these ambitious goals, UK Prime Minister Boris Johnson said, “HS2 must be delivered more efficiently and cost-effectively so that communities feel its benefits more quickly, particularly those in the North.”2

Phase One alone will cover 134 miles of dedicated track. It will be one of Europe’s biggest earthmoving projects in recent history. To accomplish this, it’s estimated that 1,730 machines will be required. From fleets of cranes and excavators to specialist waste management vehicles, material handling equipment, forklifts, conveyors and everything in between.

“This is an unprecedented project and represents a massive effort, so there is a lot of uncertainty for the suppliers and businesses participating,” says Martin Joli, Global Head Fleet Solutions and New Business Development at DLL. “Financing partners have an important role to play in helping mitigate the financial risk for those companies who are looking at investing in large fleets of equipment that may only be used for a relatively short period. Financial solutions should support the sustainability ambitions, ensuring the equipment can be recycled in a responsible way. That’s a guiding principle of our company DNA and our financial solutions.”

Efficiently accessing multi-branded equipment fleets

The sheer scale of this effort will require many HS2 suppliers to rapidly procure fleets of equipment from different vendors, often for a 2 to 5-year period. “These situations are ideal for usage-based financing solutions, such as operating leases, because they allow vendors the opportunity to use the equipment for the full duration of the project without having to own it,” says Mark Hield, Senior Account Manager, UK Fleet Solutions at DLL. “The vendor can decide what to do with the equipment at the end of the project when the contract ends. For such leases, vendors should look for industry-specific financing specialists who understand your business and equipment used.”

“At DLL Fleet Solutions, for example, we offer a number of leasing products and fleet management services geared specifically to simplifying the process of acquiring and managing fleets with different types and brands of equipment. To do this, we draw upon our expertise across diverse sectors,” says Mark Hield.

Reducing TCO of equipment

Whether HS2 vendors need to finance a fleet of earth moving equipment or cranes, they will want to leverage economies of scale to drive down their costs. By partnering with financing companies that have expertise in multi-asset and multi-branded fleets for the Construction, Specialist Vehicles and other relevant sectors, HS2 vendors can reduce the Total Cost of Operation (TCO) for the equipment they finance.

“Specialists at DLL Fleet Solutions have deep asset knowledge which allows them to accurately predict the value of an asset at the end of the project. Based on that, we advise customers how to leverage flexible and cost-effective financing options to match payments with usage. Part of our ability to offer competitive financing is the fact that we own a leased asset when it comes off the market, and can provide remarketing services that create a more powerful revenue model.” says Mark Hield.

Reducing waste in sourcing equipment

This ties in with HS2’s key focus on sustainability. Financing companies can play an important role by applying the circular economy principles not only to the raw materials but also to the equipment required for the HS2 project. “That’s our area of expertise,” comments Martin Joli. “Besides operational lease, we offer other tailored financial solutions that fit the circular economy, like extended usage, redeployment and second life finance. That means we have thousands of assets that we are accountable for and that are coming back to us. It’s very important to us that we ensure that all the assets we own are used to the full extents of their capabilities.”

Financing solutions at scale
“DLL is a registered supplier for the HS2 supply chain and is actively working with key suppliers to help them meet their financing needs,” says Martin Joli. “As one of the top 5 Asset Finance companies in the UK, we have ongoing relationships with leading manufacturers and HS2 suppliers across the Construction, Transportation, Industrial, Materials Handling, Waste Management, Specialist Vehicles and other sectors. Our global resources and underwriting capabilities enable us to provide financing solutions at the scale that will be needed for this project.”

This is a defining moment for the people in the UK, and we look forward to playing our part in writing this new chapter of history"

Let’s make history together
“This is a defining moment for the people in the UK, and we look forward to playing our part in writing this new chapter of history,” says Mark Hield. “We believe that by working together with a clear focus on our end goal, we have the potential to make this not only the biggest – but also the most successful infrastructure project of this century.”

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