Trucking equipment ABS assets remain vulnerable to operating cost pressures, especially from soaring diesel prices because of the conflict in the Middle East, according to Fitch Ratings. Higher freight rates and generally firm used-equipment values support U.S. trucking equipment ABS borrower cash flow and reduce loss severity. However, a prolonged period of elevated diesel prices could offset the benefit carriers are receiving from higher freight rates and temper the margin improvement that would otherwise be expected from tighter trucking capacity.
Fitch Ratings does not anticipate equipment ABS ratings changes because transaction structures and credit enhancement provide strong protection from asset performance deterioration. Trucking equipment ABS transactions are either fully composed of transportation assets or may also contain related “mid-ticket” assets, such as construction and manufacturing equipment.
The trucking sector has benefited from higher freight rates, although rates are driven by reduced trucking capacity rather than a broad improvement in freight demand. In the near term, the ability of carriers to offset elevated diesel and other operating costs with higher pricing will be key to protecting margins. As of Oct. 5, 2026, U.S. diesel prices are up 67% year over year to $6.20 per gallon on average. If Middle East tensions ease and fuel markets normalize, declining fuel costs could support supply-led freight growth and gradually improve carrier margins, even as rates moderate.
Cash flow pressures are likely to be greatest among owner-operators and smaller fleets. These carriers are often more reliant on spot-market freight, where fuel costs are included in the negotiated all-in rate rather than recovered through a separate contractual fuel surcharge. If freight demand softens while diesel costs remain elevated, these operators may be unable to pass through higher fuel expenses to protect margins. Lower margins could lead to an increase in borrower delinquencies and defaults. However, even if asset performance deteriorates, we expect trucking equipment ABS ratings to be stable due to transaction structures that provide for quick deleveraging and robust levels of credit enhancement.
Data from Sandhills Global indicate used heavy-duty truck values modestly decreased in July following slight improvement in the first half of the year, while semi-trailer values continue to rise after several years of weakness. Stronger secondary market values boost equipment recoveries following defaults. However, if borrower defaults increase, an oversupply of repossessed equipment would place renewed pressure on used-truck values and reduce recovery proceeds.
New equipment demand has strengthened as carriers regain profitability and replace aging equipment. This is generally positive for equipment financing and future ABS origination, although continued cost pressure could slow purchasing by more vulnerable fleets.
