Overdrive Magazine

June 2019

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June 2019 | Overdrive | 23 A bill introduced into the U.S. House is drawing praise from trucking industry groups for its attempt to repeal the federal excise tax levied on most new heavy-duty trucks and trailers. The Modern, Clean and Safe Trucks Act of 2019 – H.R. 2381 – was introduced by Rep. Doug LaMalfa (R-Calif.) and Rep. Collin Peterson (D-Minn.) and would repeal the 102-year-old FET that was created to help finance World War I. LaMalfa said that since the FET was introduced, it has quadrupled from 3 to 12 percent, contribut- ing to inflated acquisition costs that have chased would-be new- truck customers out of the market. The tax generally adds $12,000 to $22,000 to the cost of a new truck purchase. "The FET discourages truck buyers from purchasing the new- est, safest and cleanest trucks and trailers available," said Jodie Teuton, chairwoman of the American Truck Dealers. "This tax is as outdated as biplanes and trench warfare." H.R. 2381 was referred to the House Ways and Means Committee for further consideration. Over recent years, similar bills introduced to repeal the FET ultimately have stalled out. Owner-operators' miles were down 7.3% in the year's first quarter compared to the same period in 2018, no surprise after freight demand began slipping late last year. Yet net income averaged among all operators suffered little in that span, according to averages reported by ATBS, the largest financial services provider for owner-operators. "It will be nearly impossible to beat the benchmarks set in 2018, because it was such an extraordinary year," said Todd Amen, ATBS president and chief executive officer. Net income for the quarter dropped 1.5%, or $240, year over year for all operators. Independents saw net income fall less than 1%. The changes were more pronounced among leased seg- ments. Dry van and flatbed haulers both saw income drops of about 4%, approximately $650. Refrigerated, which had plenty of room to play catchup with other segments, saw net income rise 7.6%, or $959. ATBS 2018 data showed leased reefer haulers with average net income of $53,798, trailing leased dry van at $66,655 and leased flatbed at $77,720. Independents averaged $64,219. Revenue per mile for all owner-operators rose 8 cents from a year earlier, but with fewer miles run, total revenue declined 2.5%, or $967. "Don't be overly picky on loads," Amen advised. "We anticipate lower miles and rates compared to last year. Take what you are offered if it provides reasonable revenue." That will minimize the drain of fixed costs such as insurance and truck payments, which need adequate revenue to cover their share of your operation, he said. In this softening market, Amen also recommends concen- tration on costs overall. "If you generate a dollar of revenue, only a fraction of that dollar makes it to your pocket as profit. If you cut a dollar of cost, 100% of that dollar goes in your pocket." Owner-operator income resilient in cooling market B U S I N E S S BY MAX HEINE Partners in Business tip: A penny saved is $1,300 earned The Partners in Business program, produced by Overdrive and financial services provider ATBS, is spon- sored by TBS Factoring Service. If you drive 130,000 miles annually and can save just one penny per mile, it will cut $1,300 a year from annual expenses. Many practices, such as maintaining proper tire inflation and reducing average highway speeds, can combine to save much more than a penny per mile. Bill would kill truck excise tax Refrigerated hauling was the only major segment showing an increase in net income from a year ago. Bruce Smith

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