Originally appeared in Monitor Daily
Patrick Gaskins, senior vice president of fleet solutions at Corcentric and Ray Ellingsen, senior vice president of syndication and operations at Corcentric discuss the details from the company’s latest conference including discussion topics and what is just over the horizon.
The most dedicated banking partners in America deserve a big thank you. During the week of November 7th, Corcentric held its annual funding conference in Pompano Beach, Florida. Corcentric calls out the location because the event was held on the beach, and we were all staring at hurricane Nichole! Corcentric hosted more than 25 dedicated banking professionals as well as one of its premier OEM suppliers. Thankfully, all we had to endure were some windy and rainy conditions.
The conference was kicked off with comments from Corcentric’s Chairman and CEO, Doug Clark, followed by president and COO, Matt Clark. Corcentric had a full agenda for a half-day meeting and discussed the unprecedented market conditions that are currently influencing its business.
It seemed almost as if Mother Nature set the theme for the conference. As we all know, inflation has had a significant impact on the cost of equipment, fuel prices are through the roof, interest rates have increased by more than 400 basis points and the Class 8 used truck market has cooled from the first quarter of this year and is now back to normal.
With turbulent commodity prices and monetary inflationary volatility and ongoing global supply chain constraints, the conference focused on the importance for fleets to have an asset intelligence/TCO program. Discussions revolved around how having current real-time, point-and-click asset performance details is no longer a luxury, but a necessity in making intelligently informed mission critical capital equipment expenditures and ongoing asset investment management decisions. One question that was raised is how do you see the surge in interest rates effecting capital acquisition and equipment finance down the road?
Corcentric’s conference touched on the current and forecasted market conditions. The need for an even closer eye on data analytics and the role it plays in asset replacement strategies. Corcentric also looked at the future of electric and hydrogen powered vehicles and the current and future state of used equipment values and sales.
The finance industry continues to evaluate battery electric vehicles trying to determine the useful life of the new technology. Collectively, Corcentric felt the OEMs will need to provide some form of support for the residual value of the asset either through extended warranties or some other program until there is market data about the used value of these assets.
The softening of spot freight rates and the higher cost of fuel have negatively impacted the Class 8 used tractor market. However, the cost of new vehicles is having a positive effect. The small fleet operator cannot afford new vehicles, so they must purchase low mileage used tractors to satisfy business growth. We have not seen a big jump in the used equipment inventory due to the continued slow pace at which new units are being delivered. So, for now used tractor prices are staying steady.
The current market conditions are very windy, and some might say rainy. Lately, Corcentric has heard we are all living in unprecedented times. These seem like code words for, ‘no one knows how, why or when our current financial and operating environment may return to “normal.”
So, where do we go from here? With economic and geopolitical questions abounding, the general conference consensus revolved around the need to control what you can control.
When the market presents us with so many challenges it is key to have exceptional business partners. Now is the time where we all live in the grey area — not the black and white. Because we are challenged with delays in new equipment deliveries and the used equipment market is softening, we need to lean on each other to navigate today’s market conditions.
The key to success in our current market is to have business partners that understand the need for flexibility and that have the willingness to work together on mutually agreeable business outcomes. To draw hard lines regarding equipment return will have a negative effect for all parties.
At Corcentric, we stand ready to help any fleet bridge that gap. To learn how we can help, contact Corcentric today.