The drop in used truck prices is leaving many owner-operators stuck with overpriced equipment that they purchased when prices were very high. Many made purchases in the belief that prices would keep increasing and that they could get back what they spent and possibly more.
Chris Visser, a senior analyst and the commercial vehicles product manager for industry analysis company J.D. Power Valuation Services, also noted that prices are decreasing as more independent truckers leave the industry and sell off their old trucks. (Related: Soaring diesel prices are hammering the trucking industry, leading to more inflation on nearly everything.)
"The market is primarily absorbing trucks from fleets no longer retaining all of their older iron as new trucks trickle in and, to an extent, from owner-operators leaving the industry or going to work for a fleet," said Visser.
"Trucking economy data show rising terminations of owner-operator authorities and a steady and notable decline in spot rates from February through May," said Visser. "Taken alone, those two items could suggest that new owner-operators who entered the industry in 2020 and 2021 are now exiting the industry."
In J.D. Power's latest Guidelines report, the company said auction prices in May for used trucks made in the 2020 model year fell by 11 percent compared to April. Prices for model 2019 trucks fell by nearly 16 percent month-over-month and 2018 model prices dropped nearly 10 percent.
"In May, three- to five-year-old trucks averaged 12 percent less money than April, but 57.5 percent more money than May 2021," said Visser, noting how prices are still relatively high compared to before 2020. "Year-over-year, late-model trucks sold in the first five months of 2022 averaged 82.6 percent more money than the same period of 2021."
Steve Tam, vice president of the market analysis company ACT Research, also noted that retail prices in dealerships are still near or at record highs. Pricing moves in dealerships usually fall after auction prices drop. But as rates fall, so will demand for new and used trucks.
"Unfortunately, long-awaited reports of loosening inventories come at exactly the wrong time in the cycle," said Tam. "This is the beginning of the end of the cycle, which promises to be every bit as exciting on the way down as it was on the way up."
Many truckers are warning that skyrocketing diesel prices could have long-term consequences for American supply chains.
Austin Smith, the owner of Texas-based trucking company Iron River Express, said it costs him over $20,000 a week to keep his three trucks running.
"If something drastic doesn't change in the next few weeks/months, I promise you, you'll see empty shelves everywhere you look," wrote Smith in a Facebook post that has been shared over 290,000 times. "You'll see chaos as people fight for the basic necessities of everyday life."
Diesel prices have risen by over 76 percent in the past year. The national average price of diesel is currently at a record $5.812 per gallon and is still rising. This means that truckers are spending more and more to keep their trucks on the road each day.
Richard Resek, a trucker that runs routes out of the ports in New York and New Jersey, told Business Insider that he has to spend as much as $1,700 each day just to refuel his truck. He is also resorting to turning off his air conditioning and rolling down his window during long summer nights and plotting out routes to drive by gas stations with cheaper fuel prices.
Nick, a trucker from Maryland who owns a small carrier company, said he has had to take loads at a loss.
"I have the option not to run my fleet at all, but I care more about keeping my drivers busy," he said. "Drivers are the most important asset and sometimes that means I have to accept loads that are not in my favor."
Other truckers are unable to keep operating at a loss and are instead closing shop. Shauntai Robinson, the owner of Mid-Carolina Transportation, said the elevated fuel prices will likely push new business owners out of the industry after a record number of new trucking companies opened in 2021.
"The industry is overrun with new carriers that don't know how to quote a rate," said Robinson. "They're so focused on competing for a load that their quotes are unrealistic. They won't be able to sustain that."
Learn more about the trucking industry and the state of America's supply chains at SupplyChainWarning.com.
Watch this clip from "Tucker Carlson Tonight" as he talks about the state of the economy, including how diesel is becoming unaffordable for truckers.