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12 • JULY 2022 PERSPECTIVE THETRUCKER.COM Specializing in Truck Driver Taxes for Over 17 Years FULL SERVICE TAX SOLUTIONS Our Tax Pros are 100% dedicated to protecting the rights of truckers! ✔ Back Tax Preparation! ✔ Bookkeeping – You focus on the road; leave the books to us! ✔ Fixing owed tax debt – Completely! ✔ Preventing or Stopping wage garnishments! ✔ Offer in Compromise and Hardship Programs! Make sure your life spreads encouragement, light to others CHAPLAIN’S CORNER REV. MARILOU COINS Have you ever thought about how your life impacts other people? I’d like to start this month off with a Bible verse and then explore its meaning a bit to help you understand how our lives impact each other. Matthew 5:14-17 says, “You are the light of the world. A city that is set on a hill cannot be hid. Neither do men light a candle and put it under a bushel, but on a candlestick, and it gives light unto all that are in the house. Let your light so shine before men that they may see your good works and glorify your Father which is in heaven.” How many of you carry a flashlight with you when traveling? Well, let’s suppose you’re using that flashlight and the light goes dim, or just stops working. Do you throw the flashlight away? No! You change its batteries. The same could be said of people. When someone messes up or finds themselves in a dark spot, do you ignore them or write them off ? Of course not! You help them see the brighter side of things. In essence, you help them “change their batteries.” Some folks may need AA batteries (attention and affection) and some may need AAA (attention, affection and acceptance). Others may need C (compassion) or D (direction). If none of these options help them shine, they may just need someone — someone like you — to sit with them quietly and share your light. Your impact on others is bigger than you think. Do you realize that someone may just think about something you said and giggle? Or that a compliment you gave to someone brings a smile to their face when they think of you and what you said? The advice you pass on to someone might just make a difference in their life. The support and love you offered and shared may just make a difference in someone’s day. Your impact and opinions may have made someone think twice before they act. You’re not insignificant or forgotten. Whether you see it or not, you may have made a positive impact on someone else’s life. There is nothing better than giving others the best of who we are. Good people are like the street light of life. They don’t shorten the distance, but they light up the path and make the walk through life worthwhile for others. Let’s all try to be a “flashlight” for those who are hurting, needing direction and wanting to share their thoughts and troubles. Share your light with them. Don’t ignore those that really want to just talk. Be a listener. Share your light with them. You may never know how much it may make a difference in someone’s life. Keep your flashlight bright and share your light. Don’t hide it; share it! Pass the light of Christ around. This world needs more flashlights and refreshed batteries. Remember this childhood song? “This little light of mine, I’m gonna let it shine, let shine, let it shine.” Never hide your light. Instead, pass it around so others can see it and bask in its glow. Only you can make the difference in this world, one flashlight at a time. Are you ready to shine your light so others may bask in the glow? Have a blessed and safe Fourth of July, and may all of us be a light unto others as we go through the month. Best of the roads and all gears forward in Jesus. 8 We have a dedicated department that focuses on owner-operators. You can count on the experts at PTS to help you get organized, make more money, and pay less in taxes every year. OTR cont. from Page 6 • An “OTR Solutions Forum” where carriers can trade notes best practices with their industry colleagues, identify opportunities, and find new ideas for growing the success of their business. • Expanded availability of OTR’s fuel advance app to allow carriers to receive advance financing in today’s high fuel cost environment; and • The $9 Lumper Advance, which for a low and flat fee of $9 will provide advance financing of lumper fees. In the coming months and years, Owens said, OTR will be expanding its menu of additional services in its continuing quest to help carriers and brokers succeed. 8 Tax Resolution & Advisory Specialists Matthew.Sturm@practicaltaxsolutions.net https://practicaltaxsolutions.net/irs-tax-help/ 866.995.0002 iStock Photo OTR Capital has changed its name to OTR Solutions, a change they say better reflects the company’s mission.
THETRUCKER.COM BUSINESS JULY 2022 • 13 Survival games DRIVERS SCRAMBLE FOR LOADS AS TRUCKING PENDULUM SWINGS TO DOWNCYCLE CLIFF ABBO<strong>TT</strong> | SPECIAL CORRESPONDENT Things are tough all over. There is still freight to haul, but there’s more competition for it. In the meantime, expenses are up and rates are down — and it’s likely to get worse before it gets better. The American Trucking Associations (ATA) reported a decline of 2% in freight hauled by member carriers in May. The ATA release said freight levels had climbed for eight consecutive months prior to the April decline. “It is important to note that ATA’s forhire tonnage data is dominated by contract freight with minimal amounts of spot market loads,” said Bob Costello, chief economist for ATA. “The spot market has softened more than for-hire contract freight, as the market transitions back to pre-pandemic shares of contract versus spot market.” Costello is referring to economic conditions that saw a surge in retail products during the COVID-19 pandemic, many of which are shipped on the spot market. Much contract freight hauled goes to the manufacturing industry, which suffered shutdowns and slowdowns during the pandemic. Today, consumer spending on retail items is slowing, with higher gasoline prices and inflation taking up more of the family dollars. The Cass Freight Indexes, published by Cass Information Systems, showed an April decline in shipments of 2.6% over March and 3.5% compared to April 2021. The Cass Index measures multiple modes of transportation including rail, air, ship and pipeline, in addition to trucking. The Cass Index for May reversed the trend, showing a 5.4% increase in total shipments. The expenditures index, however, went in the other direction: Total shipping expenditures fell by 4.9% from April. The Cass release stated, “After a nearly two-year cycle of surging freight volumes, two key drivers of growth for the freight cycle — goods consumption and inventory restocking — are faltering.” Another factor reported in the Cass report is the ACT For-Hire Trucking Survey: Supply-Demand Balance. For this metric, available freight represents demand and capacity, and the number of available trucks represents supply. The ACT index has been showing more demand than the trucking industry could provide trucks to haul for 21 consecutive months. That changed in March, with a change to the supply side. There is less freight and more trucks to haul it. One reason there are more trucks is that there are more drivers; the driver shortage many large carriers have complained about is seeing some relief. Avery Vise, vice president of trucking for FTR, explained one of the reasons. “Net revocations of for-hire authority approached 9,300 (in May) and were more than double the number recorded in April, and were a record,” he said in a June 6 podcast. Vise explained that it takes time to revoke authority, which often occurs when the owner’s insurance lapses. Because there’s a 30-day grace period for premium payment, revocations that occurred in May were carrier businesses that failed in March or April. As spot rates rose over the past two years, record numbers of drivers bought trucks and sought their own authority to take advantage of the high rates. Now it seems the opposite is beginning to happen: Lower rates and high expenses are causing some to sell (or surrender) their trucks and take jobs as company drivers. According to the Bureau of Labor Statistics, trucking added more than 27,000 jobs in April and May. Not all of them were driving jobs, of course, but a large percentage of them were, allowing carriers to put trucks that were previously parked back on the road. When the number of trucks increases and the amount of freight decreases, spot rates suffer first. Where spot rates are generally posted for loads that are currently available, contract rates can be negotiated months in advance and may not always represent current market conditions. Contract rates usually follow spot rates, but the results take longer to show up because carriers must negotiate new rates with their customers before changing them. “While I expect contract freight to outperform spot market freight, the rate of growth will be slower than in 2021,” added ATA’s Costello. “Most contract carriers are still struggling with maintaining enough capacity, both equipment and drivers.” As spot rates continue to decline, as they have for the past four months, carriers that depend on the spot market will continue to struggle with higher fuel prices and increased inflation. According to the latest DAT Trendlines, spot rates for van loads have fallen more than 10% since March, when the average rate per mile was $3.02. That rate fell to $2.79 in April and then to $2.71 in May. The report notes that van rates typically rise by eight cents per mile in iStock Photo The national average price for a gallon of diesel fuel reached $5.72 in mid-June, 47 cents higher that it was at the end of March, according to the U.S. Energy Information Administration. Prices easily topped $6 per gallon on the West Coast, reaching an average of $6.89 in California. June, but it hasn’t happened this year. Refrigerated freight followed a similar trajectory, dropping from $3.41 in March to $3.15 in April and then to $3.07 in May for a total decline of just under 10%. The bright spot in the trend goes to the flatbed sector, which may be benefiting from seasonal changes as construction activity picks up. Flatbed rates have climbed from $3.40 in March and were up two cents per mile in April; rates reached $3.45 in May and had climbed to $3.48 by mid-June. The bad news, however, is the cost of fuel. The national average price for a gallon of diesel fuel reached $5.72 in mid-June, 47 cents higher that it was at the end of March, according to the U.S. Energy Information Administration. Prices easily topped $6 per gallon on the West Coast, reaching an average of $6.89 in California. When a fuel surcharge (or equivalent amount) is subtracted from spot rates, it is evident that rates have fallen much farther. Truckstop.com, in conjunction with FTR, reported that dry van rates from its load board, posted in the second week of June, were 10% lower than June 2021, but about 29% lower is an “imputed” fuel surcharge is factored in. Refrigerated loads were 28% lower. Even flatbed rates, which have risen, are 4% lower when fuel surcharge is factored. It was only a matter of time until the trucking upcycle ended. Belt-tightening and judicious management will be needed for the downcycle to come. 8
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