Paying more for older trucks

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It’s been clear for a year that certain things have been improving for trucking. Freight demand has increased, and with it demand for drivers. From the vantage of the American Truck Dealers, holding its annual meeting in Phoenix, the rebound is evident for some other reasons, too, one of which – used truck prices – won’t excite you like it excites the dealers.

Kyle Treadway, chairman of the American Truck Dealers and president of Kenworth Sales Co. in Salt Lake City, noted five sectors of truck retailing that indicate an economic recovery is underway:

1. Freight volumes are rising.

2. Used-truck demand is boosting prices.

3. Parts and service business is improving.

4. Truck rental and leasing defies seasonal declines.

5. New-truck orders are increasing.

Back to used truck prices. Here’s what ATD’s press release says:

“Treadway said the decline of truck sales over the past three years has resulted in about 70,000 fewer Class 3 to 8 trucks sold in the United States and Canada, while the average equipment age continued to rise in the first quarter of 2011, according to R.L. Polk. A buyer’s definition of what was an ‘acceptable’ piece of used equipment has changed, he said. With used trucks in demand and harder to find, the average retail price for used trucks has climbed as much as 20 percent in 2010, he said.”

Paying more for trucks with higher mileage isn’t what any owner-operator wants to hear, but that’s the reality of today’s market. Many fleets are in a better position in that they can bargain for better prices on new trucks. However, analysts have noted that the increased sales of new trucks in recent months isn’t really an expansion of the industry’s capacity but a replacement of trucks that had aged beyond their owners’  normal trade cycle. So you might see more fleet trucks coming into the used market, but most will not be as fresh as you’d like.