Fleet Concerns for 2023 – Issue #5: Used Truck Trajectory
This is the fifth blog in a series expanding on the issues fleets are facing covered in the January blog by Dean Vicha.
The previous blogs on the issues fleet owners and managers are most concerned about were targeted towards new assets as well as prolonging the lifespan of existing trucks in the fleet. But there is another aspect of the fleet to consider: how to dispose of an asset once you’ve decided to replace it. Keeping track of where the market pricing is at any given point is very important to ensure you get the best price possible.
Where the used truck market is headed now
Used truck market pricing has been dropping substantially since mid-2022. There are many reasons why, but freight volumes are central to it. Spot rates dropped off noticeably in the beginning of 2022 due to less freight. The result: transport equipment started to be idled. That had a natural negative impact on truck purchases and it took a few months to stymy both used truck sales demand and new truck orders.
The chart below shows the changes in the spot market from January through December 2022
Trucks and trailers have continued to be idled and that has led to these assets hitting the used market in large volumes all at once, thus greatly reducing the market prices. The Truck Paper has featured a 52% increase in class 8 sleepers advertised to sell and a 69% increase in daycabs from January 2022 till now. This is simple economics and the result is pricing has dropped dramatically. Actually, by over 50%. This might appear to be a crisis situation until you remember that prices almost tripled (increased) from the Pandemic (spring 2020) till the end of 2021.
The Truck Paper chart below illustrates how the volumes have changed from last year to the current time.
Additional reasons for the drop in pricing
There are numerous other reasons that have contributed to this situation, including fuel cost, interest rate hikes along with warehousing catching up with demand. In the new truck market, production has improved considerably and that extra production has allowed some major fleets to finally retire some of their trucks thus adding to the used market inventory.
Steve Tams from ACT, who has been a regular speaker at our NationaLease meetings, has recently been quoted saying that prices could drop another 40% in 2023. That is a dramatic drop following this earlier dramatic drop. Relative to current news, we just experienced another interest rate increase and fuel prices have started to increase with the news that OPEC is cutting production by 10%. This doesn’t bode well for a freight recovery, so it might be the right time to be quite proactive in selling any idle or soon to be idle trucks or trailers.
When it comes time to dispose of your assets, NationaLease can help.
NationaLease has years of expertise in disposing of used trucks and we use that expertise to get you the best return possible. In general, we are purchasing and selling trucks every day as NationaLeaseusedtrucks.com and are therefore on the cutting edge for determining what your fleets used values are or in setting residual values. Best of all, our extensive network of truck and equipment dealers means we can get you the best price and fastest possible sale, with almost no effort on your part.
About Dale Tower
Dale Tower is Vice President, Remarketing, with 30 years’ experience in the transportation industry. His primary focus is on the development and growth of Remarketing services, which provides NationaLease members with a value-added service that frees them of the responsibility of selling their used trucks while obtaining higher gains. Dale previously held executive roles at TEAM Vehicle Sales, NationsRent, Budget Rent-a-Car, and Ryder System, Inc. Dale attended Ricks College in Idaho.