The transportation industry has been heavily impacted since 2020, and it seems that some struggles aren’t yet ready to trend positive. High fuel prices, the cost and availability of parts, increasing pressure to switch to electric vehicles (EV), fewer people wanting a career in transportation and lack of resources to train those who do are causing stress on the industry.

In 2020, there was an abundance of products that needed to be transported, and the transportation rate was sufficient to provide companies with a good profit. An increase in production and the need to distribute those products kept trucks and trailers in high demand, resulting in transportation price hikes. With fewer trucks and trailers being manufactured, their cost increased significantly. Trucks were being valued at an all-time high but have been normalizing over the past year.

Local production of consumer goods eventually caught up with demand and reduced the need to transport supplies. With fewer loads to haul, driver demand lessened. At the peak of transportation demand, there were roughly six loads available to haul for every driver; now, there are only two. Transportation costs dropped because transporters lowered their cost to get a load to haul. With lower rates and an increase in the cost of fuel and repairs, many truck drivers left the transportation industry as they were sitting idle and still needed to make payments on their trucks. With fewer drivers needed, many companies and independent drivers sold their trucks and trailers. This created a surplus of trucks and trailers to be sold, which impacted equipment values.

According to ACT’s data, the value of a truck and trailer in 2023 decreased by 28%, with a slight increase of 1% in December of 2023. The year-over-year showed value decreased by 25%. It may be in the best interest of banks to check the values of the trucks and trailers used as collateral on loans. Some banks that were heavily into trucking loans have been impacted, resulting in a merger or liquidation of the bank.

We are still seeing a glut of trucks and trailers on the market. Now is probably a good time to get valuations on this type of equipment in your portfolio to determine if you have sufficient collateral on the loan.

Purple Wave Auction operates as a full-service seller agent to remarket agricultural, construction and transportation assets. We provide a personalized, turn-key solution in creating liquidity for borrowers and conducting bank-owned equipment sales. To learn more, visit www.purplewave.com.