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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