Whether you’re a driver looking to become an owner-operator, an owner pursuing the next step toward fleet ownership, or a fleet owner in growth mode, you can purchase a reliable used expediter straight trucks with relatively low miles – 250,000 to 500,000 miles – at a significantly lower cost than comparable new models.
But with the freight slowdown in 2019 that has carried into early 2020, what has been the impact on the used expediter truck market? What does the market look like for the rest of 2020?
ExpediteNow recently spoke with Danny Vernon, truck sales manager for Expediter Truck Sales (www.expeditertrucksales.com), a division of Expediter Services LLC, to get his outlook.
Here is an edited version of our conversation.
EN: As a frame of reference for our audience, what years, makes, and models do you typically sell at Expediter Services?
Danny Vernon: First, to clarify, Expediter Services is not a dealer. We don’t buy trucks or trade for trucks for resale. But we sell our own equipment from our fleet. And being a large fleet, we have a lot of equipment to sell.
Most of our straight trucks right now are 2015 to 2016 Freightliner Cascadias—Class 8 trucks. They’re equipped with a 22 ft. box, either dry or refrigerated. And we have a mix of vehicles with either factory (72-in.) or custom (100-in.) sleepers.
About how many miles are typically on those trucks?
We like to sell the majority of our trucks around 300,000 to 400,000 miles.
What is the strategy behind that? Is it based on the amount of life remaining that the customer can expect from that truck?
Yes. Especially for someone who’s just getting into the industry, a reliable pre-owned truck is a good value to start with. The lower miles means that there’s more life left on the truck and lower [repair and maintenance] costs involved, which helps the new owner be more successful.
If you look at the new truck market, Daimler Trucks recently announced (in January) a series of layoffs and restructuring as new Class 8 truck sales slowed considerably in 2019. What has been the impact on the used truck market when it comes to demand?
There’s no question that 2019 was a tough year for everybody. So, the market is soft right now. But when you’re looking at the overall truck market, and you’re talking about tractors, there are so many more tractors than there are [expediter] straight trucks.
Since the straight truck market is such a smaller part of the overall truck market, the hit is not as bad.
Any market is based on supply and demand. And the expediter truck is a specialty vehicle that, for the most part, is custom-built.
And expediting is a niche part of the trucking industry, so there are not a lot of these types of trucks available compared to over-the-road tractors.
Now, demand [for used expediter trucks] is down currently, but there aren’t as many of these trucks out there. So, if you go looking for one, there’s a limited amount of equipment available.
What are the factors driving that softness in the used expediter truck market?
Freight is soft, for one thing. So, there’s not a lot of people wanting to add to fleets. There are not as many drivers out there wanting to become owners of their own truck because they might not be seeing the level of freight they used to. So, they’re not ready to make that jump to ownership.
And lenders are tightening criteria for loaning money for commercial trucks. That drives sales down, as well, because you can’t sell a truck if you can’t get it financed.
When freight is down, you’re always going to see people fail and not pay—like Celadon, a large carrier, that’s gone out of business. And those things are happening from that large scale down to the individual owner-operators not being able to make it. When the market gets tight, those types of people can fail.
That causes any lender to look harder at every deal to make sure it’s going to be a successful deal—not only for them but also for the people they’re loaning the money to. If that customer can’t be successful, they’re not going to be able to pay.
On a 2015 Cascadia straight truck with a factory sleeper and dry box straight truck with lower miles, those are going to be around that $70,000 price range. A new vehicle like that is going to be close to $150,000 to $160,000. Of course, you’re talking about a 2020 model year truck versus a five-year older truck.
But that’s one reason the older truck can be a much better value because of all that money you’re saving. You’re getting a low mileage quality piece of equipment that’s been maintained by a reputable fleet. You can get more of a return on investment on that type of equipment—especially if you’re starting out.
What kind of savings would you be looking at with a custom sleeper truck?
A custom sleeper with a dry box—if it’s got a lift axle on it—is going to run close to $200,000 new. And we have some 2016 models with plenty of life in them that we’re selling in the $120,000’s.
And then on the [refrigerated box] side, new reefers with custom sleepers are upwards of $280,000. But a similar spec 2015 model truck with 400,000 miles on it is about $120,000.
Peering through your crystal ball, what do you see the used truck market doing later this year? Is it still soft? Has it improved? Or are you seeing headwinds?
We see the used truck market stabilizing throughout 2020, with demand slightly increasing. So, we’re looking for a better year in 2020. We’ve got good inventory for people who are going to be coming back into the market. We think that when freight gets better, people are naturally going to want to add trucks to their fleet. Or, they’ll want to get into the business by purchasing a truck to be an owner-operator.
So, we’re seeing a better year in 2020 and an even stronger year in 2020, with demand gradually increasing.