While truck drivers, dealers, manufacturers and lenders are feeling most of the pain, an upset in the trucking industry could result in higher shipping rates and price tags for consumer goods, reported the Atlanta Journal and Constitution.
Tom Nacey, regional marketing manager for the transportation finance division of Carmel, Ind.-based Conseco, told the paper the company has stopped issuing new loans on tractor-trailers after its inventory of repossessed units doubled since January to nearly 700 trucks. About 6 percent to 7 percent of the units Conseco has financed have been repossessed or returned voluntarily -- about four times the typical level, he said.
According to the Constitution, owner-operators’ trucks aren’t able to pay their way because of higher interest, fuel and insurance costs. Diesel fuel hit $2 a gallon this spring in some regions -- about twice its level at this time last year. The national average is currently about $1.45.
Fuel costs amount to 20 percent to 30 percent of owner-operators' revenue, Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, told the paper. Meanwhile, a glut of used heavy-duty trucks has caused prices to drop about 30 percent since January, he added. Some drivers owe more on loans than their trucks are worth. Some truckers have found themselves buried by heavy debt payments after manufacturers tempted them with zero-down financing promotions, Spencer says.
Although some in the industry have pointed the finger at Freightliner for adding to the used-truck glut, Freightliner President Jim Hebe told the paper his company has been laboring to solve the used-truck problem, not intensify it. "What's killed these guys in the last year is fuel costs and interest rates," he said.
The problem appears to vary according to the region of the country. Some dealers in Atlanta, for instance, are saying they haven't seen many repossessions or a big drop in sales, according to the paper. Trucker Darien Stephens told Truckinginfo.com that his parents, who are also owner-operators, recently decided to trade in their Freightliner Classic. A dealer in Texas offered them $13,000 more in trade than two dealers on the East Coast, saying he likely wouldn't keep it on his lot for more than a few days before it sold.