Bottom line: No one schedule works for everyone. But you’ll find your best trade times if you practice these basics:
Trading in a Time of Upheaval
Bob Janicki, leased to Daily Express of Carlisle, Pa., isn’t so confident the economy will do better this year, as forecasted. And given the depressed value of used trucks, he’s not sure he’ll be able to trade his 1999 Kenworth W900L, as he’d like to.
“I’ll have to wait and see what the market does,” Janicki says.
Owner-operators could easily interpret the market’s gyrations to justify buying this summer. Interest rates are still low. Many buyers of new trucks believe it makes sense to order now, before the Oct. 1 introduction of more expensive, low-emission engines. This summer might also be the last chance to take advantage of relatively low used-truck values, which have been increasing for months and will likely continue to do so partly because of skittishness over the new engines.
In spite of those factors, every owner-operator has to consider first his own situation.
“Most guys right now, if they’re only in the truck two years, their hands are tied,” says Perry Wiseman, owner of Truckers Accounting Service. “They’re sitting there with a note that’s still $60,000 or $70,000, and the truck’s worth only $35,000. I’m recommending those guys try to stick it out.”
Wiseman and his clients often conclude that a 4-year-old truck is ideal to trade: The warranty has expired, the depreciation benefits have been exhausted and the loan is nearly paid off.
“Maybe 10 percent of the time do they ever pay off the truck,” Wiseman says. “Rather than rebuilding a truck, spending 10 grand, they like going out and spending the same money and getting something a little nicer.”
Kevin Rutherford, an owner-operator accountant and small fleet owner, sees the trading cycle differently. He advises his clients to keep a truck at least two or three years after paying it off. By his calculation, even with higher maintenance costs, you can save as much as $24,000 in three years. Many owner-operators take this tack, enjoying many years of freedom from a truck note.
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