Rouse Services Q3 deep dive examines factors affecting truck price increases
The last year has been a challenging time for businesses everywhere with supply chain issues, equipment shortages, rising fuel costs, labor shortages, and other factors at play. And all under the shadow of – if not caused in some way by – the pandemic. Rouse Services’ latest report on the state of the transportation industry in Q3 of this year looks at some of the cause and effect of rising used truck prices.
According to the report, the transport industry has faced its own unique set of problems, in part due to various bottlenecks, congestion at ports, cargo piling up and difficulties in moving goods in and out of ports due to COVID protocols and reduced workforce numbers. Further compounding the problems, of course, is the driver shortage. And regardless of the all the industry speed bumps and roadblocks, trucking demand remains strong, spurred by consumer purchasing.
Truck supply & sales down, used prices up
One of the big trickle-down effects of the current transport challenges, is truck manufacturers not being able to source materials to make new trucks at the pace required. Thus many trucking companies have turned to the used truck market to increase fleet sizes, driving up used truck prices to unprecedented levels.
Contributing to the increase in price and demand for used trucks is the fact that less trucks and trailers are being disposed of due to truck supply constraints.
Consequently, less units being sold means prices for available assets have increased considerably. Below is a chart showing the Rouse value indices for truck tractors and box trailers with values baselined two years prior (Q4 2019).
To illustrate the general value trend with a specific example, below is a chart of volume (dark blue bars) and average sale price (light blue line) of the Freightliner Cascadia, the model that sells most at auction. At the beginning of this period, a 2013 – 2015 model year could be purchased on average for approximately US$18,000. Despite aging and natural depreciation, that same vintage truck can be purchased for about US$28,000 today!
Here’s the same Cascadia average price curve (blue) indexed to 100% at the beginning of the period. When compared to a straight-line depreciation of 1.5% per month (dotted gray line), truck tractors had roughly followed a normal depreciation rate until the second half of 2020. From there, due to market strength and demand for trucks, prices have increased sharply through 2021.
The used truck market offers big opportunity for sellers
You may have heard anecdotally that the truck market is hot, and the Rouse Services report clearly supports the case. If you have trucks to sell, contact us today – we can help you sell when, where and how you want to take advantage of this unprecedented market.
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