Buy, sell or hold: Is clinging to old equipment the best option in a recession?

This story is part of a four-part series on how the recession, changing regulations and evolving equipment have changed equipment trade life cycles for fleets. Click here to see all of the stories.

A lot of credit has to be given to the industry’s maintenance professionals for keeping aging trucks on the road.A lot of credit has to be given to the industry’s maintenance professionals for keeping aging trucks on the road.

In many ways, the experiences of Steve Hampton – operational manager for San Marco, Texas-based Redbird Trucking – reflect the industry at large. When the economy tanked, Hampton says Redbird did what seemed to be the only logical thing at the time.

“We stopped buying new equipment,” he says. “Previously, we’d been on a three- to three-and-a-half-year trade cycle. Suddenly we made the decision to go out to close to five years before trading. We were putting almost 200,000 more miles on these vehicles than we used to.”

As with other fleets, Redbird’s maintenance department responded accordingly. “It was a huge learning curve for us, but we worked through it,” Hampton says. “But what eventually happened was we realized we’d managed the assets out so far that they were costing us more money to operate than was practical.”

Compliance Safety Accountability was what drove that realization home for Redbird. “We’d gotten to the point where the maintenance and upkeep on the vehicles was costing us more money out of pocket to keep them on the road,” Hampton says. “That was without adding the overtime our technicians were putting in just to keep them rolling.”

Armed with this knowledge, Hampton began upgrading Redbird’s equipment before the economic upswing was well defined. “We’ve traded out most of our older equipment,” he says. “The oldest truck in the fleet today is a 2010 model, and we’re looking to cycle them out before too much longer.”

Today, Redbird largely has migrated back to an asset life and trade cycle that mirrors its pre-downturn policy. “The used truck market is really strong right now, and new equipment reliability has improved dramatically,” Hampton says. “On the other hand, the price of the new equipment goes up every year, so it’s still a huge balancing act for us to get right. Figuring out where that break-even point is – that’s still the hardest part for us.”

Still, Hampton says the life and trade cycle Redbird adopted during the downturn has been helpful. “It helped us get through some very tough times,” he says. “Also, we now know how to handle things if another major downturn hits. We’ll know the right things to do to keep the equipment rolling.

“The other thing it taught is that before we were trading in our equipment too early,” he says. “We still had life left in those assets before it was time to trade them out. So we actually have a better life and trade cycle model today than we did before the downturn.”

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