Rising parts shortages and constrained Class 8 production levels are forcing trucking companies to get creative for sourcing trucks and spare parts. Current OEM manufacturers are limiting acceptance of new orders, and for the orders they have there is a 12-month backlog-to-build ratio. This is causing ripple effects extending into the used truck market, with J.D. Power valuation services reporting the average auction price for newer used trucks rose 96.3% last year compared to 2020. 

Regarding this price pressure, Kenny Vieth, president and senior analyst at ACT Research, told FreightWaves, “The fact that the new vehicle part of the market is constrained means you’ve got constrained trade-ins,” he said. “The guys that normally buy the 4-year-old trucks can’t buy those, and the guys that buy the 8-year-old trucks can’t buy those because the guys with the 4-year-old trucks aren’t trading those in.”

This presents a problem, as many fleets are used to trading in older models before maintenance and repairs take a toll. “A lot of the big fleets in this country are built on core competencies,” Vieth said. “‘We’re built to haul freight, we’re not built to maintain trucks.’ The challenge for the really big fleets is they typically don’t have the bandwidth to maintain a significantly older fleet. They’ve got to have new trucks.”

Enter the junkyard

The nationwide parts and truck shortage is now forcing fleets to get creative. This is providing an unexpected boon for truck salvage companies, with engine parts and refurbished trailers in high demand. When describing the salvage frenzy, Robert Braswell, executive director of the ATA’s Technology and Maintenance Council, told the New York Post, “Fleets are scouring any and every marketplace for parts, sourcing them from Craigslist, eBay, salvage yards and other fleets. We’ve never seen it at such frenetic levels as we are today.”

Many salvage companies sell their trucks on the behalf of insurance companies. Their customers’ trucks were in accidents and must submit claims for the damaged vehicles. The insurance companies then contact the salvage companies to recoup money and pay out to the original policy holder. With used truck prices at record highs, salvaged truck sales have increased between 20% and 30% per the New York Post’s reporting.

This also presents an opportunity for equipment rental companies such as Ryder and Penske, which have the ability to lease out extra trucks and trailers but will also face similar headwinds regarding repair parts and maintenance. Traditionally, as rates increase, capacity is able to enter the market through truck purchases. But as the current market continues to struggle to meet demand, I predict fleets will continue to exhaust all efforts to keep their equipment moving in the face of such shortages. 

Supply chain disruption and parts shortages continue to have a negative impact on Class 8 truck order production. Recent data by FTR Transportation Intelligence reported preliminary orders of 21,100 units, a 2% month-over-month decline and a 53% decline from February 2021. Over a 12-month rolling average, Class 8 orders totaled 320,000 units. 

In a statement, Don Ake, vice president of commercial vehicles for FTR, said , “The steady order numbers do not reflect at all the huge demand for new trucks. There is a severe shortage of new and used trucks and the economy continues to generate steady freight growth in all segments. Even with the recent stagnant booking volumes, orders for the last 12 months are at an impressive 320,000 units. However, the stable February order total is not good news for future production. By not booking more orders, OEMs are signaling that the supply chain remains clogged and they don’t anticipate being able to ramp up production in the next couple of months.”

This lack of production capacity and shortage of new trucks are causing fleets to hold onto trucks past their traditional four- to five-year trade-in cycle, leading to limited supply and rising prices for late-model used trucks at auction. 

Combined with rising fuel prices, headwinds remain for trucking companies to increase fleet size, causing continued supply side pressures on transportation capacity.