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Business<br />

February 15-28, 2021 • 17<br />

Both freight rates and volumes could falter if economy does<br />

Cliff Abbott<br />

cliffa@thetruckermedia.com<br />

Freight numbers rose in December as rates<br />

continued their upward climb. The American<br />

Trucking Associations (ATA) For-Hire Truck<br />

Tonnage Index rose 7.4% in December following<br />

a 3.2% increase in November. The index<br />

came in at 120 for the month, meaning reported<br />

freight volumes in December were 20% higher<br />

than they were in the baseline year of 2015.<br />

After a similar gain in September, the index<br />

fell in October before rallying for the final two<br />

months of the year.<br />

“Tonnage ended last year on a high note,”<br />

said Bob Costello, chief economist for ATA.<br />

“The index not only registered the largest<br />

monthly gain since June, but it also had the first<br />

year-over-year increase since March.”<br />

The index was 2.3% higher than in December<br />

2019. The year-over-year comparison,<br />

however, wasn’t as positive. For all of 2020,<br />

the index was 3.3% lower than the full year<br />

2019. Considering the dismal second quarter of<br />

2020, a 3.3% decline is smaller than most of the<br />

analysts predicted.<br />

“Because of the pandemic, 2020 was obviously<br />

a very challenging year for the economy<br />

overall, and that is reflecting in the tonnage<br />

index’s dip from the previous year,” Costello<br />

said. “Despite that, truck tonnage clearly outperformed<br />

the broader economy as freight continued<br />

to move in the face of a myriad of COVIDrelated<br />

challenges faced by the country.”<br />

Costello noted that consumer consumption,<br />

inventory restocking by retailers and singlefamily<br />

home construction helped keep shipment<br />

volumes high. He also credited the recent<br />

stimulus checks and the possibility of another<br />

iStock Photo<br />

Van rates ended 2020 with an average $2.46 per mile for December 2020, while refrigerated<br />

rates fell by three cents to $2.67. Flatbed rates averaged $2.48 on DAT load boards.<br />

payout for helping keep freight levels high during<br />

December and into 2021.<br />

ACT Research also publishes For-Hire<br />

Trucking Indexes that measure both volume<br />

and freight rates reported in surveys of their<br />

customers. Index scores above 50 indicate the<br />

market grew, while scores below 50 show a<br />

contracting market.<br />

ACT’s Volume Index came in at 55.5 in December,<br />

down from 60.4 in November. In the<br />

prior six months, the index averaged 67.4, so<br />

freight volumes, though slowing, were positive<br />

for a total of eight consecutive months.<br />

On the rate side, the Pricing Index for December<br />

was 64.2, down 3.6 points from November<br />

but still well into positive territory.<br />

Lack of capacity continued to buoy rates,<br />

although the rate has been slowing for three<br />

months now. The ACT report credits driver<br />

hiring and pay increases with helping the industry<br />

seat more trucks, creating more capacity<br />

and slowing rate increases. The release<br />

notes, however, that additional rounds of<br />

stimulus and increased unemployment benefits<br />

could reduce the number of available<br />

drivers, tightening capacity and pushing rates<br />

upward again.<br />

ACT also issues a Driver Availability Index,<br />

which reached its lowest point ever in December<br />

at 28.1. It was the sixth consecutive month<br />

of deteriorating driver availability. Rising driver<br />

pay and vaccinations may help alleviate the<br />

shortage of drivers in 2021, but likely will not<br />

be enough.<br />

Cass Information Systems publishes an index<br />

too, and like ACT, the breakouts report by<br />

volume, rates and other factors. A key difference<br />

is that the Cass Freight Index incorporates<br />

shipments from different modes of transportation,<br />

including rail, ship, barge, air and even<br />

pipeline.<br />

In December, the Cass Freight Index for<br />

shipments was 1.12, 6.7% better than December<br />

2019 and 1.1% better than November on a<br />

seasonally adjusted basis.<br />

Cass also measures freight rates calculated<br />

by customer spending and shipping volumes.<br />

In December, rates grew faster, 6.0% better<br />

than in December 2019. November numbers<br />

also bested last year’s November, by 3.0%<br />

Economists at ACT Research, a partner of<br />

Cass Information, are predicting a 3.9% growth<br />

in GDP for 2021.<br />

See Falter on p18 m<br />

Tax liability may differ this year for both owner-operators and company drivers<br />

iStock Photo<br />

Some trucking business received loans under the Paycheck Protection Program (PPP).<br />

Those loans contained provisions that allowed the borrower to forego repayment if the<br />

funds were used for specific purposes, such as employee pay.<br />

Cliff Abbott<br />

cliffa@thetruckermedia.com<br />

As if 2020 didn’t bring enough problems,<br />

your tax bill for the year could be impacted.<br />

Consulting a professional tax preparer — one<br />

that is familiar with trucking — is always a<br />

good idea. It’s an even better idea between<br />

now and April 15.<br />

Whether you operate your own trucking<br />

business or drive for someone else, your tax liability<br />

could be different this year. Since many<br />

drivers suffered a reduction in income for 2020,<br />

a tax surprise when filing could be devastating.<br />

First, the good news. Any economic impact<br />

payments you received aren’t taxable unless<br />

your total income was more than $75,000<br />

(single) or $150,000 (married). That includes<br />

both the $1,200 per person payments sent out<br />

in April and the second payment of $600 that<br />

was distributed in December. You’ll see spaces<br />

for those payments on your tax return, but also<br />

spaces where they’re listed as credits. In fact,<br />

if you qualified for the payments but did not<br />

receive them, you may be able to claim them<br />

on your return.<br />

There’s more good news for those who<br />

pay self-employment tax. This combination<br />

of employer and employee contributions for<br />

Social Security and Medicare taxes represents<br />

15.3% of the payer’s income. Under the<br />

CARES Act, up to 50% of the amount earned<br />

between March 27,2020, and Dec. 31, 2020,<br />

can be deferred.<br />

Because so many people worked from home<br />

during the pandemic, you may also be able<br />

to claim a deduction for using a part of your<br />

residence for work. There’s a potential catch,<br />

however — and it could be a big one — if you<br />

claim residence in another state. Each state has<br />

its own laws about establishing residence, such<br />

as occupation for a certain number of days or<br />

months. If you record the number of days you<br />

worked at “home,” and that home is in a state<br />

other than your usual state of residence, the<br />

state you worked in could claim you are now<br />

See Liability on p19 m

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