Presenting Logs at Roadside the ELD Mandate
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Eyes on the prize Pre-2000 trucks take on a new luster as a way out of the ELD mandate. Now might be the best time to beat the expected spike in prices. BY TODD DILLS Cherryville, now, and it will go up as December 2017 Association’s efforts to overturn the man- THE N.C.-based gets closer.” date have been unsuccessful. independent That’s the compliance date for the There’s evidence of some movement Tim Hepler ELD mandate, which exempts all own- in the last year toward older trucks is proud of ers of 1999 and older model-year trucks by the smallest of fleets. According to SHIFT his 1998 from compliance (based on the chassis Overdrive sister business RigDig Business PART 1: EXEMPTION Volvo 770, Vehicle Identification Number, not the Intelligence, its database of verified powered by a newly rebuilt Caterpillar engine’s model year). While Hepler Class 8 trucks on the road today saw the 3406E. Asked if he’d noticed any shift was being facetious with his offer, such share of pre-2000 trucks owned by one- in the market for pre-2000 model-year sentiment has been a staple of com- to four-truck fleets grow by more than a trucks in the wake of the Federal Motor ment boards and conversations with percentage point in the past 12 months. Carrier Safety Administration’s electronic truck owners this past year as the com- During most of that period, a wait- logging device mandate final rule, he pliance date has drawn closer and the and-see mode prevailed among most slapped a price on his truck: “$150,000 Owner-Operator Independent Drivers owner-operators, since it wasn’t until 30 | Overdrive | December 2016 Who’s running the old trucks 1.5 Shares of pre-2000 model-year Class 1.2 Where older trucks are migrating 8 truck population, last 12 months 0.9 0.6 0.3 1 0.0 -0.3 -0.6 POWER UNITS 1-4 5-9 10-19 20-49 50-99 100-249 250-499 500+ rigdig.combi, RigDig Business Intelligence, Class 8 vehicles active verified If you compare fleets’ shares of pre-2000 model-year Class 8 trucks over the last 12 months versus FLEET SIZE 2 8 the last 24 months, only the smallest fleets show an increased share. The chart reflects change in percentage points; the share for one-to-four-truck fleets rose 1.4 points to 42.1 percent. 7 6 5 3 4 1 1 to 4 power units 42.1% 5 50 to 99 5% 2 5 to 9 18% 6 100 to 249 4.6% 3 10 to 19 12.8% 7 250 to 499 2.3% 4 20 to 49 10.6% 8 500+ 4.6% David Morin bought this 1999 Western Star early in 2016, anticipating the ELD mandate. He invested about $20,000 in buying the truck and prepping it for service. Courtesy of Morin David Oct. 31 that the 7th Circuit Court of 1999 models, one 2000 and one 2001.” posedly had been rebuilt.” New head gas- Appeals upheld the ELD mandate. At Though Morin was somewhat confi- kets and other evidence gave him some press time, OOIDA planned to press the dent that broad opposition to the man- confidence in the seller’s claim. appeals court for a rehearing. date at the time of its release might lead The work he put into it before introduc- Among the 5 percent of Overdrive read- to its repeal, fear of the unknown with ing it into his fleet included “a bunch of ers who’ve already put older vehicles into ELDs set in quickly. When the chance small things” to start, and more after its service since the mandate was announced arose early this year to buy an additional first big run. Months later, with the unit in is David Morin, owner of Z-Tranz, a ’99 model, he jumped at it. service and about $20,000 spent on parts Morganton, N.C.-based small fleet. Prior A private party was selling the Western and his time for the fixup, he feels like to the mandate being introduced, the Star. “It needed a good amount of work,” the seller was telling the truth about the owner-operator had four trucks, “two Morin says, but at least “the motor sup- rebuild. “It doesn’t use any oil,” he says. A $20,000 investment is not an insub- stantial amount for a truck of that age, Hepler believes. About his own 1998 Are you in the market for a pre-2000 model-year truck to avoid ELDs? Volvo, he says, “Normally a truck like this, because of the age on it, might be Not sure I already operate a pre-2000 truck 35% 6% worth between $3,000 and $5,000. But since this one’s been well kept up, it’d probably be worth a little more – $10,000 at the most” – in a normal market. NO 20% I’m looking for one now 22% But that era of engines is already in higher demand, given minimal emissions I will look I’ll look equipment, says Chris Visser, National for one only for one Auto Dealers Association senior analyst if mandate in 2017 and product manager. “EPA ’98 and challenges 6% Overdriveonline.com poll fail 11% earlier trucks still in solid, usable condi- YES: 39% tion are already bringing strong money BUYERS AND SELLERS: Among the 35 percent of respondents who noted they already operated a pre-2000 truck in this in non-emissions regions due to their poll at OverdriveOnline.com in November, 5 percent said they’d purchased a 1999 or older model in the past year since the ELD simplicity, fuel economy and reliability. mandate’s introduction. Among those who answered No, 2 percent noted they had such a truck that they were looking to sell. The ELD cutoff will further increase December 2016 | Overdrive | 31 EYES ON THE PRIZE demand for remaining trucks in usable condition.” OLDER TRUCKS HOLDING VALUE As the ELD mandate gets closer, Hepler wouldn’t be surprised to see BETTER SINCE ELD ANNOUNCEMENT “older trucks like this going to $30K Dealer and market-analyst sources report between average prices for 1995-99 and to $50K retail, especially aerodynamic little in the way of information on retail 2000-04 trucks in some of the months trucks with electronic motors. Those sales of pre-2000 model-year trucks. So since the mandate’s introduction in will be not just gold but diamonds, and it’s difficult to accurately gauge whether December 2015. The data comes from might go even higher.” prices were affected by the introduction of Overdrive sister equipment-auction Morin agrees. “Right up close to the the ELD mandate final rule, containing the information purveyor TopBid.com. mandate, demand will go through the pre-2000 model-year exemption. Auctions can be a source for a big However, even with notable month- selection of older trucks. As with any roof, and there’ll be price-gouging.” to-month changes, wholesale auction truck purchase, be certain you can Presenting at the Used Truck data for the past two years show that document major maintenance and other Association’s annual conference in the older truck prices have declined at vehicle-history considerations such as November, Steve Tam of ACT Research a slower rate than the newer trucks. engine hours, mileage, application of predicted some private carriers and The graph shows a narrowing difference use and more. owner-operators will go for pre-2000 trucks. “The ELD impact should be a $18,000 small positive” for the used truck market $17,000 Used truck prices in 2017’s fourth quarter, Tam said. Avondale Partners’ Donald $16,000 Broughton, also speaking at the UTA $15,000 conference, likewise expected some increased demand for pre-2000 tractors $14,000 next year. He believed the number of $13,000 owner-operators who will purchase spe- cifically due to the mandate isn’t high. $12,000 Overdrive’s November polling results $11,000 suggest a different assessment: 39 per- $10,000 cent of readers indicated they are look- 1995-99 model-year trucks ing for a 1999 or older unit or would $9,000 at auction, average price be by next year unless the mandate is 2000-04 model-year trucks overturned. $8,000 at auction, average price UTA President Craig Kendall, also $7,000 president of Peterbilt of Knoxville in of survey the U.S. TopBid.com equipment auctions across Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Tennessee, still sees strong demand for 2014 2015 2016 pre-2004 pre-EGR engines in “the right FMCSA introduced the ELD mandate with its pre-2000 model year exemption Dec. 9, 2015. spec and useful mileage.” A couple of That’s the overall pre-2000-truck 11.8% share of total oper- ating Class 8s on the road today, according to RigDig Business Intelligence, a sister business of Overdrive. Such small numbers – and smaller non-ELD carriers’ control of more than half of the pre-2000 units – leads FTR Transportation Intelligence COO Jonathan Starks to conclude that the market for such vehicles “will be very sparse. If somebody has an old truck that is in that good of shape and they don’t like the ELD rule, they aren’t selling.” 32 | Overdrive | December 2016 EYES ON THE PRIZE recent anecdotes from sales representa- Tim Hepler’s 1998 Volvo tives have told the story of “customers 770 primarily moves trailers, often on lanes talking about even older trucks to avoid between Hepler’s electronic logging devices.” Charlotte, N.C.-area Kendall says his dealership cautions home region and Florida.