There are thousands of used truck trailer dealers and buyers routinely buying and selling used trailers across the United States. American Trailer Exchange, an Atlanta-based truck trailer dealer, estimates the secondary market for (used) truck trailers to be approximately 400,000 units a year, which equates to more than $3 billion in sales. Dry cargo vans, flatbed trailers, refrigerated vans, and tanker trailers make up the majority of this equipment. The trailers have a useful life of at least twenty years.
They are typically traded multiple times during their useful lives as they transition from long-haul service to regional transportation, to local drayage use, and finally to warehousing service. A general rule of thumb is that trailers are remarketed every five years and then used indefinitely as storage units. Average annual shipments of new trailers are approximately 250,000 units. Trailers have a variety of specifications and configurations that determine their use and establish segments within the purchasing market.
Used Truck Trailer Supply Sources: The supply side of the trailer aftermarket is somewhat fragmented with no nationally organized distribution system. There are only a few used trailer providers with a nationwide reach. The used truck trailer market is comprised of trailer manufacturers who accept trade-ins for resale; public and private carriers that often sell excess equipment to dealers; equipment leasing companies and banks remarketing their assets off-lease through their asset management departments; a small number of companies that buy large lots from national trucking companies and redistribute equipment through dealers; and more than 1,500 equipment dealers and brokers serving regional market areas. No individual participant has more than 5% market share. Market fragmentation often results in market inefficiencies with equipment passing from the original seller to brokers, distributors and other intermediaries before reaching the ultimate end user.
Types of companies that contribute to the used truck trailer supply chain:
1. Trailer Manufacturers – There are more than 100 truck trailer manufacturers in the United States that sell, on average, 250,000 new trailers per year. The top 10 manufacturers account for more than 75% of total sales. Trailer manufacturers have traditionally been a large source of aftermarket trailers, because they are often required to accept trade-in used equipment in order to sell new units. In recent years, however, manufacturers have gone from being an active player to a reluctant entrant due to their need to recapitalize manufacturing operations. This recapitalization has been achieved by closing factory branches in favor of (generally non-exclusive) franchised dealers; and by refusing to accept certain commercial packages or offering much less for them. Most manufacturers have reduced their used trailer department staff to one or two employees who now rely heavily on dealers to purchase this equipment.
2. Trucking Companies: Trucking companies are made up of public and contract carriers. Public carriers are available to shippers on a lease basis for shipments ranging from one piece to multiple full truckloads. Contract carriers dedicate equipment and drivers to shippers exclusively. According to the Transportation Technical Services (TTS), there are more than 27,000 registered trucking companies in the US and Canada. Except for the largest firms, truckers do not specialize in selling their equipment. The sale of excess fleet trailers is usually the responsibility of the Maintenance Manager. The Maintenance Manager’s primary focus is purchasing and maintaining tractors and trailers. Since his performance is based on fleet readiness and cost of operation, equipment liquidation is not a top priority, so he relies heavily on dealer experience in selling equipment. Dealers are typically invited to bid to purchase used trailers available for sale by trucking companies or the equipment is sold at wholesale auctions.
3. Private carriers. Private carriers are companies that operate an in-house trucking division to haul their own cargo, including manufacturers of all types, wholesalers, distributors, and retailers. TTS says there are 19,200 registered private carriers in the US and Canada. The equipment is similarly sold to rental truck companies; however, private carriers tend to be more willing to consign equipment to dealers due to the limited space available to park idle trailers.
4. Banks and equipment leasing companies: Bank loans and equipment leasing financing are the primary means for end-users (trucking companies and private carriers) to purchase new trailers. Inevitably, banks and equipment leasing companies must occasionally repossess when leases expire or credit defaults occur. Historically, this segment sells or re-leases trailers to the end user at the end of the initial lease term. The industry also sells to other buyers in the secondary market to increase residual values and overall lease profitability. General equipment portfolio asset managers with a wide variety of asset types generally do not have the human resources to specialize in just one asset type. They often turn to experts to handle their equipment management and remarketing needs, including negotiating equipment returns and trailer hauling, storage, repair and remarketing. Wholesale auctions are another method used to get rid of leased and repossessed trailers.
5. Dealers: According to the Department of Labor’s Standard Industry Classification (SIC) System, there are more than 1,500 trailer dealers in the United States. Most dealerships are dedicated to representing various lines of new trailer manufacturers, providing parts sales and repair services, and selling used trailers. Individual distributors typically market within a local or regional market area. Dealerships acquire used trailers through trade-ins, as well as from the four other sources mentioned above. Dealers are the leading provider of used trailers to end users.
Used Trailer Buyers (End Users): Trucking companies, private carriers, manufacturers and distribution companies are the main buyers of used truck trailers. Buyers of used trailers are typically national no-brand companies, small and medium-sized businesses, and owner-operators. Most of these companies buy trailers through the more than 1,500 truck trailer dealers in the United States.
National companies and major long-haul carriers often prefer new trailers for a variety of reasons, including five-year warranties, accelerated depreciation, reduced maintenance costs, and company image. Beyond function, pickup trailers provide national brands with the benefit of consistent low-cost advertising through graphics on the sides and rear of the trailers, whereby novelty and image are factors. important. On average, large fleet owners sell trailers after five to seven years.
Unlike a car, where style and image play a large role in determining owner value, functionality and condition are most important to many truck trailer owners. With proper maintenance, the life of a trailer can exceed twenty years. The price of a five-year-old trailer with 75% of its useful life remaining is about half the original price, so used trailers are often an inexpensive alternative for most companies that ship product.
For more information about truck trailers, see the following website: American Trailer Exchange
