Trailer Leasing Shows Incremental Growth
Trucking Fleets Pull Back in Prolonged Freight Slump
Key Takeaways:
- Trailer leasing industry’s growth has slowed to 8.3% this year.
- Last year, the growth was 17.7% year over year.
- Tariffs on steel and aluminum have increased new trailer prices 15%-20%, according to Jake Jacoby of the Truck Renting and Leasing Association.
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Amid a prolonged freight recession, the trailer leasing industry is still growing, albeit incrementally as fleets are cautious about spending.
of the , said the industry’s growth has slowed to 8.3% this year compared with last.
That would seem to be a healthy increase, but it’s half the previous year’s 17.7% year-over-year growth. Jacoby said the percentage difference “indicates decelerating expansion.”
“We have seen a boom in the percentage of leased vehicles/equipment/trailers over the past 20 years in large part due to the complexities of the modern truck, the cost of purchasing a new truck and the fact that full-service leasing has become the go-to avenue for more and more fleets,” he wrote in response to emailed questions.
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Jacoby added that although there was a mini-boom post-COVID after years of leasing equipment growing year over year, it hasn’t been enough. “The 8.3% growth is much less than what has been seen over the past decade before the freight recession hit two-plus years ago.”
Jacoby said the utilization rate in the industry, which often was 95% during the pandemic, has fallen to 80% to 85% for leasing and about 70% for rentals. Current rates reflect a “more normalized, albeit depressed, market” compared with the 2021-22 boom.
Premier Trailer Leasing said his company is at 94% utilization versus 98%-99% in 2023, describing the market as hypercompetitive.
The company manages 69,000 trailers at 42 locations. For large customers, such as UPS and FedEx, it provides a seasonal service during the heavy fourth-quarter months along with doing business with them year-round.
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at TEN, said carriers during the COVID pandemic were willing to sign long-term leases when leasing companies had no extra capacity. Once those leases started coming due in a slower market, the carriers took a hard look at what they needed. Now, they are asking for shorter terms and newer equipment.
TEN is the unified brand of Star Leasing, CTL and several other leasing companies with more than 86,000 trailers in 49 locations.
The decelerating expansion in the leasing industry is occurring even as trailer sales remain slow. reported that U.S. trailer orders in September fell 5% year-over-year to 11,300, although year-to-date net orders have increased 20% to nearly 121,200 units. Backlog levels and build-to-order ratios are down to 3.3 months, which is significantly below normal. ACT describes the U.S. trailer market as remaining in “‘stay afloat mode as fleets continue their wait-and-see strategy.”
Leasing Advantages
Instead of buying expensive new trailers, fleets are extending trailer life cycles.
“Most carriers are trimming operations/fleets all together, so [they are] not leasing more or buying more,” Jacoby wrote. “Currently, fleets are focused on cost control rather than growth. The leasing market is likely to remain challenged in the short to medium term [through 2025 and into 2026] given continued freight softness and cost pressures.”
TEN is the unified brand of Star Leasing, CTL and several other leasing companies with more than 86,000 trailers in 49 locations. (TEN)
Customers were pausing in the middle of the year as the tariff picture was growing more uncertain, TEN’s Smith said, in fear of agreeing to anything at a time of unknown demand. The company has been leasing more to cross-border customers, with demand stronger for outbound exports.
Meanwhile, TEN’s rental business has increased with customers renting trailers for storage because of warehouse inventory built up in anticipation of the coming tariffs.
The tariffs on steel and aluminum have increased new trailer prices 15%-20%, Jacoby said. Carriers taking delivery this year may need to recoup some or all the costs.
The uncertainties in the tariff environment can be both an advantage and a disadvantage to leasing companies. It makes carriers more reluctant to buy a trailer, but it also slows the overall business environment.
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“Uncertainty helps us in the fact that nobody’s going to want to buy a trailer, but nobody’s going to want to produce,” AuBuchon said. “We move product when people want to produce something, so I guess the question is, are people going to want to produce stuff if they think that the cost of production when you sell it at the end game is going to be higher?”
Most industry leaders agree that one of the best advantages of leasing a trailer is the reduction of the customer’s required investment. It also improves cash flow and allows fleets to scale up or down quickly.
It also gives fleets access to specialized equipment to address short-term needs without requiring a major purchase. Leasing can help carriers keep pace with regulatory changes by allowing them to cycle newer, compliant trailers into their operations. Leasing also gives customers the flexibility to lock in their maintenance costs using the leasing company’s established networks so they can deploy their capital elsewhere. TEN employs 400 mechanics, and Premier has vendors across the country.
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Fleet behavior depends in part on fleet size. Larger fleets have more trailer capacity. They lease more strategically to balance their owned-versus-leased assets and to optimize tax and depreciation benefits, looking for specialty trailers for short-term commitments so they don’t have to make a major capital expenditure. Smaller fleets lease to preserve cash and avoid the risks of ownership. They are more crunched on capital, and succumb to tighter bank lending rules and higher rates.
“We’re kind of a bank for smaller to medium-size trucking companies,” AuBuchon said, adding that leasing can be a good option for fleets that do a lot of spot rate business by helping to ensure they aren’t paying for unused assets.
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“If you own a hundred percent of your trailers, and you’re chasing spot rate, then you have a lot of trailers sitting that you’re not using,” he said.
Smith described a good leasing experience as one in which the customer receives a well-maintained trailer with a good network that can answer the phone at any time. A responsive company will provide whatever options the carrier needs. As a trailer lessor in his previous career, Smith said a fleet must understand what kind of trailer it will be getting and what will happen at the end of the lease, including the trailer’s expected condition when it’s returned. It will need to be clear what it considers to be normal wear, and what it considers to be damage.
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AuBuchon said Premier won’t just rent its $40,000 trailers to anyone. It requires carriers to have been in business for two years and to operate 10 trucks.
“We love to be a partner with a trucking company that’s going to grow, and we can be a part of it, so the question for us is that who has great relationships with customers, who is using us for the right reasons? Are you using us to grow? Or are you using us because you have run out of money, and we’re the last option?”
TEN also is cautious with its credit risks. It has not added any requirements for its new customers during this freight recession. The key is making sure customers can make their lease payments.
“I’ve been through several of these cycles,” Smith said. “This is obviously longer than most, but those are the things you want to brush up is make sure your receivables and everything there are clear.”
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