Overdrive Magazine | Trucking Business News & Owner Operator Info
Issue link: https://read.dmtmag.com/i/856429
August 2017 | Overdrive | 41 sales years on record. Then supply went the other way during the historically low build years of the Great Recession in 2008-09. Since then, used truck pricing has reflected a correction of either an abundant supply or a short supply. Those low build years, extending into 2010, left used truck lots nearly empty in the years that followed, caus- ing pricing to spike. Then, tighter capacity and stronger rates pushed new truck orders upward again in 2014 and 2015. "That supply is already in the books, you could say," says Clough. "We don't know precisely when they're com- ing back [as used trucks], but it certainly looks like we're going to have higher supply coming in probably through 2019, 2020." Chris Visser, senior ana- lyst for J.D. Power Valuation Services, agrees. Absent a major shift in demand, he says, "we're looking at 2020 before there's any real change in supply." Ritchie Bros., the country's leading auctioneer of used trucks, hasn't seen many 2015 model-year tractors return- ing to market yet, says Mike McMahon, head of strategic accounts. "We will start see- ing movement into the next year," he says. Kendall says much of that used inventory will be "late-model aerodynamic sleeper trucks" such as the Freightliner Cascadia, Peterbilt Models 386 and 587 and the International ProStar. Such tractors will be the cheapest due to their supply. "Classically styled trucks," says Kendall, referring to the squarer-bodied Peterbilt 389, Kenworth W900 and Western Star 4900EXD, are in shorter supply and there- fore likely to cost more. It's possible a spike in demand for more truck capacity could occur, boost- ing demand for used trucks and countering the low prices resulting from the glut. However, projections for growth in freight movement and GDP are modest. If that holds, used truck demand won't help absorb the excess supply, Clough says. Demand for used equip- ment could be depressed later this year and into next, at least for some segments of the used market, says Don Ake, FTR analyst. Owner- operators and small fleets may be reluctant to buy as they comply with the elec- tronic logging device man- date taking effect Dec. 18, he says. "If they're uncertain about how this is going to impact them, they may run their truck a year longer than nor- mal," Ake says. On the flip side, should the ELD mandate restrict the industry's capacity, as many predict, and the freight mar- ket quickly accelerates, fleets could turn to the used market for cheap capacity, he says. "If that's not the case, it's going to take a while for inventory and prices to come back [into balance]. But that's the cycle of the market."