With growing freight demands and a shortage of drivers, transportation companies are forced to come up with alternative solutions to keep up with business and stay competitive. The booming economy has led to an increasing number of contracts for over-the-road haulers, and we’ve seen a direct correlation with class 8 truck and trailer sales.
Tractor sales have reached record numbers this year, however, orders have been so strong in the last few months that production is full and lead time is long. Additionally, according to ACT Research, North American trailer production is expected to land at approximately 326,000 commercial trailers in 2018, following a very strong 2017 and continuing growth in 2019. This has led to a rise in the trailer to tractor ratio.
But, why would companies purchase more trailers if they can’t get the tractors to pull them? We believe that more trucking companies are adopting the drop hook trucking model, an operating tactic that can maximize trailer utilization, reduce deadheading, and increase driver productivity. It can also be the answer for transportation companies waiting for tractor delivery due to the rise of production lead times. Here’s how it works – drivers drop off a trailer when they arrive at the loading dock and immediately hook up a fully loaded trailer without having to wait. Sounds like an easy solution to the truck and driver shortage, but it can be a challenge for trucking companies to find trailer financing.
Commercial Trailer Loans can be Difficult to Find
Trailers can be expensive, and manufacturers are continuing to raise their prices due to the lack of inventory and high demand, along with the increased raw material costs. Trucking companies are also having to pay sales tax, Federal Excise Tax (FET) and fees for IRP Tags for their trailers. All these expenses could place a significant strain on a company’s cash flow unless they find a lender who will finance trailers with or without the purchase of a truck.
If you plan to upgrade your fleet or add to your trailer fleet, you may consider working with a lender to provide financing for the purchase. However, many banks don’t understand the trucking industry and the advantages of having additional trailers available for increased productivity. They may only finance your trailer if purchased with a tractor. They may also have extraordinarily stringent credit criteria or require a longer duration of time in the business. Either way, they don’t always make it easy to get the equipment or money you need to operate effectively.
The Solution – Commercial Trailer Financing with a Trusted Lender
Commercial Credit Group (CCG), on the other hand, can help you obtain commercial trailers for your transportation business. We offer financing for dry vans, refrigerated trailers, flatbeds, lowboys and dump trailer financing. Since trailers typically hold their market value if maintained properly, we can provide trailer loans for new and pre-owned equipment, or we can refinance your existing equipment (given you have a little equity built up) for a cash-out loan.
Once you have the equipment you need to operate efficiently, whether you adopt the drop hook model or are just looking to add more trailers, you can take advantage of the booming economy. Despite the driver shortage, you can utilize trailer financing to increase productivity, keep your business running smoothly and feel comfortable with additional working capital under your belt.