Trucking is critical to keeping the nation running. Over 72 percent of all freight in the U.S. is transported by semi-trailers. In a time when supply chain is more important than ever, the trucking industry is at the core of America’s economy and business.
That makes it all the more important to make smart business decisions about when to trade in or sell your semi-trailer. Your decision will need to maximize your profitability while keeping your costs as low as possible. Several factors will weigh into the decision to determine the right timing.
Let’s take a look at four factors that have the greatest influence on whether now is the right time to trade-in or sell your dry van or refrigerated trailer.
Related: Why CRTS Refuses to Profit from Trailer Shortages
1) Maintenance Costs
If you’re spending more on maintenance costs, it might be time to trade in for some newer equipment to reduce expenses. But the timing is important. Every trailer will have maintenance costs — the question is whether you’ve arrived at the tipping point yet.
Several factors play a role: the age of the trailer, how much you’re spending on maintenance and repairs, your operational needs, and more.
You can use a simple way of evaluating your expenses by tracking three kinds of maintenance costs:
- Preventive maintenance such as scheduled service
- Predictive maintenance, which uses real-time information to predict upcoming repair needs
- Unscheduled maintenance, which are unplanned trailer repairs
Monitor the ratio of unscheduled-to-scheduled maintenance and aim for a 70/30 split. If your scheduled maintenance falls below 40 percent, it may be time to think about trading in or selling your trailer.
2) Fleet Mix
Over time, your fleet mix might need to change a bit as new business opportunities arise. For example, let’s say you’ve been running 25 dry vans. You might run up on some refrigerated freight that’s really good for your operation. It’s coming out of a place that’s close by, and coming back to another place that’s not too far away. It’s in a good lane, and you’re getting a decent rate on it.
You add five reefers to your fleet, but soon your refrigerated freight has become more profitable than the dry freight, so you add more refrigerated trailers to your fleet.
If you aren’t using your dry vans anymore, it could make sense to trade yourself out of those trailers to get the kind of trailer you need as your business evolves.
3) Age of Your Equipment
In the last several years, some shippers have become adamant about refusing to load trailers that are more than ten years old.
After a decade, trailers have a higher probability of breaking down or leaking. Reefer unit maintenance can increase, the insulation under the floor can get waterlogged, which causes it to start breaking down, making the floor less solid and less thermal efficient.
Drivers are also less likely to be careful if they’re pulling an older trailer that isn’t new and shiny. Shippers don’t want to trust their freight to someone who doesn’t take care and maintain their equipment as they should.
If you have an aging fleet, you’ll need to start making plans to trade in or sell your trailers. Consider the fact that the older they are, the less value they will have.
Related: Long-term Considerations of Owning a Trailer You Shouldn’t Overlook
4) Market Conditions
Consider the market conditions before deciding to trade in your equipment. Fleet managers need to be astute observers of the industry to understand today’s market conditions. Currently we’re in an unprecedented market and it’s virtually impossible for most fleet managers to project a trailer’s worth from one day to the next.
In a volatile market, trailer values will fluctuate dramatically. It may be very difficult to get the best value out of your trailer if you don’t time it right.
When the market is stable, you’ll have much more accurate insight into the trailer’s trade-in value, and a much better chance of coming out on top.
During uncertain times, you may want to consider keeping your trailers on your lot if you can afford to do that, until the market stabilizes.
The specs on your trailer can also affect market value. Even if your style of trailer is in demand, the specs you have on it might make it difficult to trade in.
Make the Right Trade-in Decision for Your Fleet
CRTS is here to help you get more value out of your semi-trailer. We look out for our customers’ best interests and work with them to get the deal they need, not the deal we want. When you’re ready to trade in your semi-trailer, we’ll talk with you about your options so that you can make the best choice for your business.
We’ve been in business for over 50 years, and we’ve built a reputation throughout the region for looking out for our customers’ best interests.
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