BMO Trucking Credit: The END of Transparent Data? | FreightWaves

The trucking industry is losing a critical source of credit insight as BMO sells its transportation finance unit. FreightWaves’ John Kingston, who pioneered tracking BMO’s unique data, reveals how trucking credit quality is finally strengthening just as this transparent data source disappears. He also dives into rising diesel prices, heating oil’s election impact, and the overlooked risk of refinery maintenance season.

BMO’s transportation lending unit — widely considered one of the largest truck lenders in the U.S., possibly the biggest — is set to be sold to Stonepeak and is expected to close in the fourth quarter. That transaction will almost certainly end the quarterly disclosure of truck credit metrics that FreightWaves has tracked for six to seven years, eliminating what has been a rare, transparent look at loan quality across the trucking cycle.

The BMO data includes not just the size of the lending book but also write-offs, provisions, allowances, and gross impaired loans — forward- and backward-looking metrics that together paint a detailed picture of credit stress in trucking. The most recent quarter showed meaningful improvement: gross impaired loans fell from well over $500 million to roughly $440 million, and allowances dropped significantly. Write-offs were essentially flat, down about $1 million, but that metric lags market conditions by design.

“The P in PE stands for private. Okay? So that takes care of it. Look, this was just a really, really unique situation. It’s a publicly traded bank. They’re very much out there as a lender to the trucking industry.”

The improvement marks a turning point after a brutal downturn. In BMO’s worst quarter roughly a year ago, write-offs reached $43 million — compared to as little as $1 million in a single strong quarter — illustrating the extreme cyclicality that may have contributed to BMO’s decision to exit. BMO acquired the transportation lending portfolio from GE Capital in 2015, and the reporter noted the sale appears timed near a cyclical trough: “It seems to me that they sold at the bottom.”

Stonepeak declined to confirm any intention to continue publishing the data. FreightWaves is now calling on other trucking lenders to step forward with comparable transparency. Mitsubishi Credit, which appeared on FreightWaves the day before this broadcast, was floated as one potential candidate to fill the void.

On the diesel market, the DOE Energy Information Administration’s weekly retail diesel price — the basis for most carrier fuel surcharges — hit its highest level since military action began in the Middle East, coming in at approximately $5.643 per gallon. The diesel crack spread has remained elevated, and the average retail diesel price has risen roughly 40 cents in the past month while gasoline prices have been flat, according to AAA data cited in the discussion.

Refinery maintenance season adds further pressure. Some facilities have scheduled maintenance programs booked two to three years in advance, involving hundreds of contractors, making deferrals difficult even as crack spreads incentivize maximum run rates. Drone attacks on Russian refinery infrastructure were also cited as an underappreciated driver of diesel tightness, with the direct Russia-Ukraine supply disruption to European markets rippling back into U.S. diesel prices through the global distillate market.

• BMO’s gross impaired trucking loans fell from over $500 million to roughly $440 million in the most recent quarter, signaling improving credit conditions.
• The pending Stonepeak acquisition of BMO’s transportation unit will likely end the only public quarterly disclosure of truck loan credit quality data.
• The DOE EIA weekly diesel price hit its highest level since the start of Middle East military action, rising roughly 40 cents in the past month while gasoline prices held flat.

This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above.