Semi Trailers Rental Fleet – Appraisal

A group of white trailers parked in a parking lot.

Fair Market Value
Orderly Liquidation Value
as of 4/12/2019
as of 10Apr2023

Bluechip Asset Management (“BCAM”) conducted an inspection and written appraisal of a fleet of approximately 5,000 semi trailers, the entire rental fleet of a trailer rental and leasing company. BCAM performed an inspection and appraisal for this customer and its bank of a very similar fleet in 2019 and again in 2022, at opposite ends of the roller coaster in used trailer pricing. In 2020 ten year old 53’ dry van trailers from tier 1 OEMs Wabash, Utility, and Great Dane were selling for almost 100% of the ten year old new price. With corrections in freight rates, supply chains, and semiconductors for new trailers the prices crashed down by over 50% during 2022-23. 

The intended use of this report was for the Client to use in assessment of collateral value in the matter of loan terms and conditions compliance, and, later, for the Client to use in internal planning for its fleet.

The scope of this appraisal was a physical inspection of the trailer fleet and a written appraisal. 

Market Overview – Semi Trailers

The semi trailer market is diverse and there is a wide variety of sizes and configurations that are employed to meet the needs of freight operators. The market is expected to grow from $19.3 billion in 2019 to $24.7 billion by 2026. The semi trailer market is expected to grow at a compound annual rate of 3.4% over the next five years. Growth is the result of GDP growth, the aging demography of the populations worldwide, and the growth in international tourism. Many fleets are due for replacement, as despite the 40 year plus life cycle of semi trailers new fuel saving and autonomous technologies are requiring new semi trailers. The primary technology factors include the rapid adoption of semi trailer platooning, the use of electric tractors, and the promotion and growth of autonomous tractor-trailer rigs.

Over 380,000 semi trailers were manufactured by 250 companies in 2022, with over 100,000 used trailers sold. Leading OEMs include Wabash, Utility, Hyundai, Vanguard, Stoughton, and Great Dane. There are over 200 trailer manufacturers globally, manufacturing trailers for a dozen standard applications, including dry van, reefer, tank, drop deck. 

1.4 Equipment Description: Semi Trailer Fleet

The subject equipment consists of 5,133 semi trailers, including dry vans, reefers, pup vans, drop deck trailers, and other trailers. The subject trailers are 90% tier one vendors Wabash, Utility, Great Dane, and Fruehauf, with other equipment from respectable OEMs Monon, Pines, Lufkin, Stoughton, Strick, Trailmobile, and others. The trailers are vintage 1992 – 2018, with a few slightly newer. 

According to Client records, the purchase price of the 5,133 trailers was $12,763,265, approximately 14% of the estimated new price of the trailers. The estimated total new price of the trailers was $124.7 million. 

1.5 Secondary Market for Semi Trailers

The semi trailer market is large and diverse and international, with thousands listed and sold each year on popular trading websites including truckpaper.com and commercialtrucktrader.com. As of 3/1/2023 there were over 2,600 Wabash trailers listed for sale on truckpaper.com, with similar numbers on other websites. Utility and Great Dane are other tier one trailer OEMs with similar numbers. 

2.0 Valuation

2.1 Methodology

The three recognized approaches to the determination of value are the sales comparison approach, the cost approach, and the income approach.  All three of these approaches must be considered when appraising machinery and equipment, though the approach which is most appropriate for a given appraisal project depends on a number of factors and variables relative to the Property, the market, and the project.

  • Sales comparison (or market) approach – the market approach to value uses comparable sales, dealer offering prices, and interviews with brokers involved in the used market sales of equipment comparable to the subject Equipment. 
    The appraiser adjusts the prices that have been paid, or offered, for assets comparable to the assets being appraised.  Adjustments are made to the comparable sales to reflect their age, condition, configuration, and salability relative to the subject asset. 
  • Cost approach – the appraiser adjusts the replacement cost (new) of the subject asset for the loss in value due to physical deterioration, functional obsolescence, and economic obsolescence.  The cost approach is based on the principle of substitution:  a prudent buyer will not pay more for an asset than the cost of acquiring a substitute property of equivalent utility.   
  • Income approach – the appraiser determines the present value of the future economic benefits of owning the property.  

All three approaches were considered for this engagement.  

2.2 Procedures

This valuation was performed in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by the Appraisal Foundation and within the machinery and equipment valuation guidelines set forth by the American Society of Appraisers.

2.3 Conclusion of Value

2.3.1 Market Approach

The market for used semi trailers such as the subject Equipment is very large and global, and the equipment has long 40 plus year useful service lives, hence there are always hundreds for sale of 10-20+ year old trailers for 20% – 30% of original price. The average FMV for 10-20 year old trailers, most of the subject trailers, is 45% – 55%, with level to slightly lower values for the reefers.

All Client trailers after purchase receive a “rent ready” refurbishment, and many have added liftgates which add $16,000 to the value. All the subject trailers are well maintained and in excellent condition, so should be readily sellable at relatively high prices to the comps. The overall purchase price of the trailers was 14% of original new prices, but given the upgrades and rent ready refurbishment, the subject trailers are all worth 35% – 50% of original price, depending on age and hours.

The semi trailer market has been a huge rollercoaster through the pandemic with supply chain issues, semiconductor shortages, and the huge increase followed by the large retraction in freight rates during 2020-2023.

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