Rouse Services is the industry leader in market intelligence for equipment, with the most accurate, specific, complete, and current equipment values in the market today to help power its three main solutions: Analytics, Appraisals, and Sales.
Each quarter Rouse issues reports about the truck, crane, and used equipment markets. Its Q2 truck report was just released and demonstrates an acceleration of the trends that began to emerge at the end of Q1.
Spot rates have declined sharply while fuel costs have skyrocketed, plus, shifts in consumer spending patterns and inflation have caused inventory levels to rise at major retailers. All of these factors have caused reduced optimism for the short- and medium-term outlook of the trucking industry. And, unsurprisingly, as a result, used truck pricing declined meaningfully in Q2, but is still extremely high relative to historical standards.
Decreased consumer spending post-COVID
Once coronavirus reached North America and lockdowns began to be imposed, consumers rushed to purchase large quantities of groceries, toilet paper, hand sanitizer, and other household essentials. This massive influx of demand caused trucking capacity to become overloaded.
In 2021, rates climbed as consumer demand outstripped the ability of the trucking industry to meet it. There were periods in which spot rates exceeded contract rates due to strained trucking capacity. FYI, these contract rates allow shippers to lock in rates for a length of time while the spot market assists shippers when there is additional need beyond what contract carriers can manage.
The easing, if not elimination of, COVID-related gathering and travel restrictions throughout the United States has led to decreases in consumer spending on physical goods and increases in spending on services and travel. This is a reversal of the factors at play in the early parts of the pandemic that, in part, led to a dramatic increase in trucking rates.
Additionally, inflation has served as a headwind to the physical amount of goods that are being purchased.
Truck prices decline from historic highs
In Q2 2022, truck tractor sales volume remains lower than prior year, but the size of this gap has decreased in recent months. Additionally, in many cases box trailer sales have increased year-over-year. However, both truck tractor and box trailer sales are down relative to Q1 2020, just before the initial economic impact of COVID-19.
In recent months Rouse has observed a sharp reversal of pricing trends, but values remain at extremely high levels relative to historical norms. To help illustrate with a specific example, let’s look at Freightliner Cascadia sales (see chart below), the model that sells most at auction. In early 2020, a 2013 – 2015 model Cascadia could be purchased for approximately $18k. Despite aging and natural depreciation, that same vintage truck reached peak pricing in February 2022 at nearly $40k. This same truck can be purchased for approximately $30k today.
Just as spot rates began to recede from peak levels in March 2022, so did auction prices. However, while truck tractor values have fallen sharply over the most recent quarter, they are still very high relative to historical averages. In fact, pricing is similar to levels seen in Q3 2021 before considering depreciation.
Data pulled from Rouse’s Q2 2022 Truck Report
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Rouse Services provides a series of regular reports to its customers, with insightful commentary, thoughtful analyses, and data-driven takeaways, including:
- a quarterly deep dive into the Truck & Trailer Market, taking an inside look at pricing & volume patterns, as well covering notable developments in the transportation industry
- a monthly Equipment Report outlining market value trends for key product groups, including general construction rental and heavy earthmoving
- a quarterly Crane Report with insights into drivers of demand, valuation trends, rental patterns, OEM activity, and more
- a quarterly deep dive into the UK Market, examining secondary selling activity & pricing results, combined with construction spending, and key developments across the industry
To learn more about Rouse Services and these reports, visit rouseservices.com/