Are we fixing to see a huge purge in trucking?

Why are rates so low… I was offloading today at a refrigerated warehouse and there was a driver next to me getting offloaded. The driver comes up to me and asked if I can help him fix his reefer. I walk over, look at his codes restart the system, and his starter is done for. His load is supposed to be -10, but it definitely was not. I told him to take it to Carrier as the guy doesn’t seem to mechanically inclined. Worst thing about it. His trailer was still halfway full with product for more stops. I have no clue why folks think they can get a cheap beat up truck and cheap beat up Reefer with 29k hours and try to make it. All they’re doing is eventually going on a business, taking cheap freight- this having rates drop, and having Insurance go up for everyone.

 

No, it's not a large amount even for the smallest of banks.

It's been a while since I've looked, but I believe minimum working capital required to get a Federal Bank Charter is $18 million (please note the distinction from operating capital). A $200k loan represents 1% of the working capital, not a significant amount. It becomes even less significant when you understand that most loans get sold off and the bank just is the payment processor.

While none of us are getting 6% on a new loan right now (7.5-10% is reasonable for equipment loans right now, imo), very few of us would have any issue getting the loan, especially anything under $250k. Heck, in August I bought my sister a house and it only took 3 emails and a couple of texts to arrange financing. And two of those emails were because it took 6 months to find her a house she liked and I was willing to pay for and I had to resend recent pay stubs.

 

What is the Fed charges banks rate?

How Does the Federal Funds Rate Work? The Federal Open Markets Committee sets the federal funds rate—also known as the federal funds target rate or the fed funds rate—to guide overnight lending among U.S. banks. It's set as a range between an upper and lower limit. The federal funds rate is currently 5.25% to 5.50%.

So the banks pay almost 6% interest for the money they borrow, but they will give you a loan for less because you're so pretty. And even they will be able to sale such loan to somebody else.

 

That’s not how banks make money. Banks make money by buying money low (the interest they pay on deposits such as savings and CD’s), and selling it high (via loans such as commercial, vehicle, mortgage or revolving loans). Local and small regional banks arent interested in borrowing or lending any significant amounts of money from other banks, or worse, the Fed Window.

Even better, for every dollar they have as a deposit, they’ll lend several dollars out again. They literally MAKE money.

Local banks NEED commercial loans such as truck loans so they have a diverse loan portfolio. They may sell some loans, such as conforming mortgages, but they need a variety of loans on their books so they aren’t over exposed to any one sector that’s going in the tank (like commercial real estate is doing right now).

As long as they have retirees with hundreds of thousands (or more) in “CD ladders” selling them money at 1 or 2%; businesses with five and six figure checking account balances and people with money in 0% savings accounts, they make plenty of margin selling money for a truck loan at 6 or 7%. They have no need to go to another bank for funds.

 

I'm getting prepped for my renewal and my agent said he's moved multiple carriers off Progressive because their premiums have skyrocketed across the board. Either they've paid out some large claims or trying to get away from the commercial truck business or a little of both.

Here recently I had a few brokers (2-3) say they will not use carriers with Progressive coverage. It was weird as the same broker wouldn't load me with a reefer load but would a dry load, so I assume it has something to do with their reefer breakdown coverage.

 

Well, let us know what your bank name is to see their cd rates. I doubt they're under 5%.

 

4.29 in Pocatello today.

 

It's not even just fuel... insurance is going through the roof, too. Couple months ago, when I was doing the last round of market analysis before deciding to take the plunge, I was quoted $2200 down and $1700/mo for all legal minimums... make the phone call yesterday to actually start up my insurance, and the down payment nearly doubled to $4100 while the monthly went up to $1900/mo. It's not like I can't afford it; I updated my books and redid my projections, and it's still manageable for me, especially since I don't have a truck payment since I bought mine outright. It's just frustrating that #### like this can just double out of nowhere

 

i keep a starter and alternator in a tool box, slightly better case give it a few tap tap taparoos with a hammer and run continuous until you get it changed

 

So Just my .02.
We are in the middle of a massive purge in this market I can not count how many supposedly big truck companies are already out of business in chicagoland and i know of about 3 to 4 more with over 100 units that can not make truck payments or registration barely making insurance. It all goes down to them running a very ####ty business structure when there was $$ in this business everyone was spending like there was no tomorrow so now they are getting what they deserve because they can not run a proper business. Insurance are changing their policies around when it comes to physical damage on the truck so they have less of a risk a lot of trucks are coming up missing BIG SUPRISE, specially the people that can not make payments on a $250K loan. So we desperately need this purge to happen a lot of people are in this business that should not be in any business for that matter everyone thought $$$$ was on the streets all they had to do is pick it up, but now here comes reality.