Here’s an update above of my periodic comparisons of one-way U-Haul rates for a 26-foot truck going in two opposite directions for matched cities. As can be seen, there is a huge premium for trucks leaving California for Texas and a huge discount for trucks leaving Texas for California. I’ve argued before U-Haul’s one-way truck rental rates are market-based to reflect relative demand and relative supply.
Pricing Reflects Relative Demand and Supply
In California there’s a relatively low supply of trucks available and a relatively high demand for trucks destined for Texas; in Texas there’s a relatively high supply of trucks and a relatively low demand for trucks going to California. Therefore, U-Haul charges three to four times more for one-way truck rentals going from San Francisco or LA to Houston or Dallas than vice-versa based on what must be a huge net outflow of trucks leaving California (leading to low inventory) and a net inflow of trucks arriving in Texas (leading to high inventory).
When relative demand is significantly different there’s a huge imbalance in truck inventories, which leads to the dynamic pricing.
In an ideal world for U-Haul, it would likely prefer to have a close balance in the flows of one-way truck rentals between any two major cities (or states) to maintain balanced truck inventories in both locations, and would probably then charge the about the same one-way rental rates for trucks going in either direction. But when relative demand is significantly different, that’s difference is reflected in a huge imbalance in truck inventories (over-supply in one location, under-supply in the other), which then leads to the dynamic, market-based pricing displayed above.
The last time I did the same analysis as above was about in 2016 and the ratios for the same matched cities were much smaller, 2.2 to 2.4 to one, suggesting that the outbound migration from California to Texas as reflected in one-way U-Haul truck rental rates must have accelerated over the last three years.
This article is republished with permission from the American Enterprise Institute.
