Selling Transportation Equipment When Crude is Rock Bottom

DALLAS - April 14, 2015 - PRLog -- With crude hovering around $50 per barrel, prices are the lowest they have been since 2009.  As a result, used oil field equipment is going for bottom dollar at a time when companies are having to offload their inventory.  Businesses have a number of venues to choose from when selling their tractors, trailers, and other equipment and those can be classified roughly into three mediums: sell by owner, use a dealer, or send to auction.

Sell by Owner

Considering your standard owner will be familiar with their equipment, they should be able to sufficiently inventory, specify, and price the product.  The most obvious and prominent perk of selling by owner is taking the full dollar amount of the equipment without having to cut in a third party.

While that is a large benefit, the downsides are substantial as well; such as a limited purchasing audience, fielding calls, showing the equipment, and limited awareness of market changes for price point.

Auctions

There are a number of equipment auctions to choose from, but the big players in the game are Richie Brothers, IronPlanet, and Auctiontime.  As with any of the other avenues, the auctions have their advantages and disadvantages.

The biggest benefit of using an auction is the seller is guaranteed to get the equipment moved one way or another.  One drawback of an auction is the seller will get the equipment moved at “market price”.  There are horror stories of the deals where equipment has gone for a fourth of its value. Richie Brothers has a no-minimum bid or reserve pricing policy, leaving the seller stuck once they commit.

Auctions can also come with some hefty fees.  Depending on whom the seller chooses and how much equipment is in their inventory, the commission rates can range from 8% up to 25%, with 15% being the most common.  Then there is the inspection,  lien, and possible cancellation fees that need to be taken into account.

Auctions are a sure way to get your equipment moved, but typically at the expense of larger fees and a lower selling price.

Dealers

Dealers such as Barrgo LLC (http://www.barrgo.com/) are a good medium between self-selling and auctions.  A dealer will have industry connections and be familiar with the various marketing channels necessary to move the equipment.

This avenue has few variables that would be considered negative, in respect to other selling options.  A dealer may not be able to move the seller’s trucks, trailers, and equipment as quickly as an auction and will also be taking a cut of the sale.

The upside of a dealer is they typically do not take as large of a commission rate as an auction.  They have little to no fees, and can get sellers closer to retail price, rather than market price, as the ability is there to request a bottom dollar.  A dealer will also be more likely to get a better price per unit; so even if the commission were the same as an auction, the seller would net more.

In summary, sellers need to decide how much of the legwork they want to engage in and what the reach of their network is.  If they can easily move the used equipment to an affiliate, then that is their best option.  If time restraints are the biggest concern, then an auction works.  Should a seller want a better return and to not have to deal with all the ins and outs of the process, then a dealer will be the best bet.