Trucking fleets that delayed equipment purchases during the prolonged freight recession are beginning to return to the market, prompting TFS Financial and WEX to launch a new financing program aimed at helping carriers acquire trucks, trailers and other transportation assets.
Vancouver, British Columbia-based TFS Financial announced Monday the launch of “Equipment Financing Powered by TFS,” a program that provides equipment financing to WEX Over-the-Road customers across North America.
“I would love to be the fastest and friendliest transportation finance company in the U.S.,” Aaron Case, president of TFS Financial, told FreightWaves. “Ideally, we become the one-stop shop for transportation finance.”
The initiative gives WEX carriers access to TFS’ multi-lender financing platform, which matches borrowers with financing providers based on factors such as credit profile, asset type and loan terms.
The collaboration comes as many trucking companies continue to grapple with high operating costs, rising equipment prices and tighter lending conditions after more than three years of freight market weakness.
“We’ve been asked a lot about financing equipment, especially this year,” Noel Glasgow, vice president of sales for WEX’s Over-the-Road business, told FreightWaves.
“Because of the economic impact that trucking has suffered over the past few years, a lot of folks have not purchased equipment. Most trucking companies are looking at replacing equipment on a three-, four-, five- or six-year basis, and a lot of them have extended that timeframe because of the freight recession.”
Portland, Maine-based WEX (NYSE: WEX) is a provider of payment processing and information management services to the commercial vehicle fleet industry.
Glasgow said fleets that normally would have replaced equipment on a regular cycle are now facing a backlog of purchases.
“In a normal year they’re buying X amount of vehicles. Now they might need to buy 2X because of what they have done over the past few years,” Glasgow said.
Carriers finally returning to the market
Case said TFS is also seeing tangible signs that fleet confidence is improving after several difficult years.
“It seems like I’ve been on the road quite a bit meeting with a lot of these fleets, and I’d say the level of confidence in the last eight weeks has really skyrocketed,” Case said.
“The conversations with the CFOs of all the largest top-100 carriers — people seem to think transportation is back now.”
Case said truck and trailer dealers are beginning to see order books fill as fleets move forward with replacement purchases that were postponed during the downturn.
“People extended their replacement cycles as long as they really could,” Case said. “They held off on replacing units until they knew they had the work, and now it seems like they’re starting to replace, which is a great sign for the economy.”
The financing program is available to fleets of all sizes, from owner-operators purchasing a first truck to some of the largest transportation companies in North America.
According to Glasgow, the offering can be used to finance Class 8 tractors, trailers, light-duty trucks and mixed fleets.
“The ultimate goal is to finance any type of equipment that the carrier needs,” Glasgow said. “It’s not just trucks. It’s also trailers. It can be a mixed fleet.”
Match Engine connects borrowers to lenders
At the center of the program is TFS’ proprietary Match Engine Technology, which uses a network of more than 70 lending partners to connect carriers with financing options that fit their business profile.
Case said the system allows TFS to accommodate a broad range of trucking companies that may not fit a traditional bank’s underwriting model.
“We’ve been a transportation lender for over 40 years, so we’re extremely familiar with transportation,” Case said.
“If a trucking company has been around for 50 years and they’ve never missed a payment, we’re going to match that with a large bank. If it’s a two-truck fleet that’s had some hard times recently, we’re going to match that up with a different type of lender.”
Case said one financing source alone cannot effectively serve the diversity of customers operating in trucking.
“We understand that there are so many different types of customers that one financing source can never approve all of them,” he said.
Glasgow added that some traditional lenders remain cautious about transportation despite improving market conditions.
“Some of those institutions are not all in on getting back in the transportation space right now,” Glasgow said. “They’re waiting to see. Our relationship allows for a transportation-focused company to provide a solution now.”
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