If there are financing difficulties with independent owner-operators as well as small to midsize fleets, there was no evidence in the quarterly earnings report of Canadian bank BMO.
BMO (TO: BMO) is a major lender to the trucking industry. The precise size of its customer base is not public, but it is believed to be well into five figures and possibly more.
The data it releases for its transportation group each quarter is seen as a strong indicator of the health of the trucking industry. The base of financial activity contributing to the numbers is far bigger than that of large publicly traded trucking companies that report their earnings each quarter and gets down to the independent owner-operator level.
Write-offs in BMO’s transportation sector in its fiscal second quarter ending April 30 fell about as low as they can go — to CA$1 million (US$780,000). That marked a decline of CA$1 million from the prior month.
Although there are non-trucking activities in BMO’s transportation sector, trucking is believed to account for roughly 90% of its book of business.
But what’s remarkable is the road it has taken to get down to that CA$1 million figure. In the second quarter of 2020, which was the height of the pandemic, write-offs in BMO’s transportation sector were CA$35 million. They dropped to CA$30 million in the third quarter and have been down or flat every quarter since then, ranging from CA$12 million to the latest CA$1 million.
But write-offs are the end of the process that usually begins with a company’s debts being considered troubled enough that a bank takes an allowance for potential losses.
In that category, once again, the second-quarter numbers do not reflect a troubled industry. Allowances declined CA$2 million to CA$12 million in the second quarter. Similar to write-offs, allowance numbers have either been down or flat in every quarter since 2020’s third quarter, when they were CA$36 million. They are now a third of that.
The data reported by BMO also suggests that the bank is not pulling back from the industry. Gross loans and acceptances for transportation came in at CA$13.6 million. That is the highest in recent history, even exceeding the CA$13.4 million recorded in the second quarter of 2020, when many clients pulled down all or part of their revolving credit lines as they faced the uncertainty of the pandemic. Paying back those loans brought the size of the book down to CA$12.2 million in the second quarter of 2021, but it has since rebounded about CA$1.4 million.
More articles by John Kingston
Writeoff in BMO’s growing trucking book of business plunge
BMO numbers suggest trucking enjoying exceptional financial health
Lender’s transportation sector writeoffs flat, size of impaired loans down
Freight Fraud Symposium
Double brokering. AI deepfakes. Identity theft. Freight fraud is an existential threat to the industry. Get ahead of it.
Supply Chain AI Symposium
Past the hype. Join operators, founders, and enterprise leaders figuring out how to deploy AI in supply chain.
Future of Rail Symposium
Reshoring is rewriting freight demand. Join shippers, rail executives, and government officials to shape the next decade.
Double brokering. AI deepfakes. Identity theft. Freight fraud is an existential threat to the industry. Get ahead of it.
Rock & Roll Hall of Fame • Cleveland, OH Register NowPast the hype. Join operators, founders, and enterprise leaders figuring out how to deploy AI in supply chain.
The Old Post Office • Chicago, IL Register NowReshoring is rewriting freight demand. Join shippers, rail executives, and government officials to shape the next decade.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register Now
Ken Plyler
The truck sectors is not getting any better.As you can see trying to sell trucks at retail is a big mountain to climb.If it was me I would put them in one place and try to retail as hard as possible.