Last year, the trucking equipment sector faced operating cost pressures from uncertainty around tariff policies. Now conflicts in the Middle East, beginning with the war with Iran that have sent diesel prices soaring are compounding those challenges.
While asset performance is expected to deteriorate, asset-backed securities (ABS) tied to trucking equipment should remain stable, thanks to robust credit enhancement built into the deal structures, according to the latest sector note from Fitch Ratings.
The rating agency’s exposure is limited to deals from the Daimler Trucks Retail Trust and Volvo Financial Equipment shelves, analysts said. The Daimler transactions are supported by substantial credit enhancement and remain well insulated from further deterioration, while the Volvo deals tend to have higher credit quality overall, Fitch said.
The latter also shows stronger resilience to environmental pressures, Fitch said.
Carriers are enjoying higher freight rates and tighter trucking capacity, Fitch said. On the surface those are good. Yet there has been no broad improvement in freight demand, the rating agency said.
As for diesel fuel prices, they were $6.20 per gallon on average, up 67% on a year-over-year basis, according to the rating agency. For now, carriers can offset higher diesel costs with higher pricing to protect their margins.
Should the Middle East conflicts ease and normalize fuel market costs, which could support supply-led freight growth and gradually improve margins for carriers, Fitch said. A prolonged period of higher diesel prices could offset those benefits that are benefiting carriers, however.
Diesel prices are just a more recent challenge facing the trucking industry to emerge in 2026. Last year U.S. tariff policy, combined with slower economic growth caused Fitch to see the trucking equipment sector as ‘deteriorating.’
Also, the trucking industry has been meaningfully affected since the onset of COVID, according to Fitch analysts. A strong early start led to an influx of entrants—too many for the market, analysts said.
At the onset of freight rate fluctuations, the owner-operator borrowers felt the pressure most acutely, Fitch said.
“They are more exposed to freight rate fluctuations than larger fleet-based borrowers, who often have contracts in place,” the rating agency said. They can also hedge fuel costs, Fitch added.
