Big Trucking’s secret trick to impress Wall Street — and slam mom-and-pop fleets The price of a used truck has doubled

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{"text":"If you ever had a spare 18-wheeler you didn’t want anymore, now would be the time to sell. A 3-year-old used truck is selling for more than $141,000, according to ACT Research, more than double its price from this time last year.\n\nUnfortunately, you probably do not have any big rigs sitting around. That’s one of the many things that differentiates you and me from some of the largest public trucking companies in the U.S. \n\nAmerica’s biggest trucking companies have lots of used tractors and trailers. Some of those companies quietly made tens of millions of dollars in 2021 and the first three months of this year by selling old trucks in their fleets.\n\n“Gain on sale/disposal from property or equipment” is a sleepy, oft-ignored line of any company’s quarterly or annual financial statement. As my colleague Todd Maiden wrote last year, even trucking insiders don’t pay much attention to it in normal cycles. \n\nBut now, trucking companies have been using their outsized used equipment sales wins to offset other headwinds in the industry: increasing wages, hefty insurance premiums and, as of this year, a record upswing in diesel. \n\nThe strategy has always lingered for companies with lots of trucks sitting around, but it’s intensified as equipment prices hit record highs — and as many of their own drivers are leaving Big Trucking to open their own trucking companies.\nThe hot new side hustle for giant trucking companies\nThere are about 275,000 trucking companies in the U.S., according to the Federal Motor Carrier Safety Administration, but a whopping 86% of them are teeny-tiny — with six or fewer trucks. Just 120 companies have 1,000 or more trucks.\n\nMom-and-pop fleets have been booming in count since the pandemic. Since early 2021, at least 10,000 new trucking companies have been created each month. Many of those were small trucking companies; the total number of fleets with six or fewer trucks increased by 12% this past year, according to data from the FMCSA. Several industry insiders shared with me that large trucking companies were able to find the bright side of the “labor shortage.” They had too many trucks and not enough people, so they sold off old trucks to these new upstart companies.\n\nBig Trucking often looks at the little guy as a competitor. In conditions like 2021, small truckers were able to take advantage of absurdly high spot rate prices. Large trucking companies usually play in the contract world, though. They can’t suddenly stiff their long-term clients with massive rate jumps when the trucking market is red hot. And, in return, their customers don’t demand bargain-basement rates when trucking isn’t so frothy anymore.\n\nCurrently, we’re watching those spot rates crash. That raises questions on whether these new trucking companies can sustain their lease payments on these ultra-pricey trucks. ","videos":"[]","link":"{}","pics":"[]","canComment":true,"externalShare":false}

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{"replyTo":"","text":"It's been a race to the bottom since passage of the Motor Carrier Act of 1980.","replyToPid":0}