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Plus, getting your motor carrier authority can take a month or more, so by the time you get your DOT number and start your business, you’ll be ready for the spring freight season.

Remember: It takes a month if you don’t hit any delays along the way, but it could take longer. For example, if you needed to change your company name, or something comes up in the registration process, the FMCSA could take extra time before approving your authority. That’s why it’s crucial that you do your research before making the leap.

That goes for both regulations AND your business strategies. Insurance, registration fees, equipment, staffing, taxes – all these expenses are your responsibility once you get your own authority. The risks are high, but so are the potential rewards.

Ready to take the plunge? Here are 9 steps to starting your own trucking business.

  1. Get your commercial driver’s license – Get behind the wheel and get some experience
  2. Make a business plan – What are you hauling? Who are your customers?
  3. Choose a business structure – Choices include LLC, corporation, partnership, sole proprietorship, etc.
  4. Start-up expensesGet authority and save money to cover the first few months until you start getting paid
  5. Plan your operations – Staffing, parking, maintenance, back office – who does what?
  6. Safety compliance – State and federal regulations
  7. Insurance – $750,000 minimum liability
  8. Equipment – What tractor and/or trailer does your business need?
  9. Grow your business –Find loads

Want to get started as quickly as possible? Give us a call at 866-812-3379, and we can take care of the paperwork for you. That way you don’t have to worry about making a mistake that leads to you missing out on the busy season later this year.

You can also send us a message here to get started with your authority or anything else you need to keep your trucking business compliant.

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Industry Trends - Spot Market Industry Trends - Van Industry Trends - Flatbed Industry Trends - Reefer Industry Trends - Fuel Prices
Industry Trends WEEK MONTH YEAR
Jan 15 – 21 vs.
Jan 8 – 14
Dec 2016 vs.
Nov 2016
Dec 2016 vs.
Dec 2015
Spot Market Loads 14% +13% +84%
Spot Market Capacity +13% 9.6% 3.9%
Van Load-To-Truck 26% +22% +80%
Van Rates (Spot) 1.2% +4.2% +0.6%
Flatbed Load-To-Truck 20% +35% +167%
Flatbed Rates (Spot) +0.5% +2.6% +0.5%
Reefer Load-To-Truck 27% +21% +66%
Reefer Rates (Spot) 1.0% +1.0% +1.0%
Fuel Prices 0.4% +2.9% +8.7%
Demand Slows in Mid-January

Prices Dip for Vans and Reefers

Jan 15 – 21 – It’s typical for load counts to start tapering off in the third week of January, which is what happened last week. Load-to-truck ratios declined for all equipment types, but they also started out higher than normal for this time of year. National average rates fell 2¢ for both vans and reefers, but were up slightly for flatbeds.

The chart above depicts national average spot market rates for the past four weeks, including fuel surcharges. Weekly rate snapshots reflect averages for the month to-date, from DAT RateView.

Last update: 1/25/2017 – Next update: 2/01/2017

Fuel Prices
-0.4%$2.57 / gallon
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1. Strong demand

The biggest factor affecting capacity is, of course, the volume of freight that brokers are asked to move and the number of available, qualified trucks to move it. And although demand started out weak at the beginning of 2016, it sure did not end the year that way. Beginning in mid-2016, there began a steady climb in the load-to-truck ratios for vans, reefers and flatbeds. These ratios represent the number of loads posted for every truck posted on DAT Load Boards, and are an indicator of spot market demand relative to capacity.

The December DAT Freight Index revealed that spot market demand increased for six straight months in the latter half of 2016. Comparing December 2015 to December 2016, van freight availability increased 52 percent, reefer demand was up 55 percent, and demand for flatbeds increased 48 percent.

(More info: Spot Market Demand Increases for Sixth Straight Month and 2017 Outlook: The Freight Recession is Over.)

Beginning in May 2016, there began a steady climb in the load-to-truck ratios for vans. Reefers experienced a similar pattern, and flatbeds began their climb in August.

2. ELD Mandate

The ELD mandate is now less than one year away. That means that after December 17, 2017, all heavy-duty trucks (with a few exceptions) must use electronic logging devices (ELDs) to log their hours of service. While large carriers have been using ELDs for years, many small fleets and owner-operators have yet to make the switch from paper logs.

Industry predictions about the reduction of capacity following the mandate vary from 3-5 percent, to 6-10 percent. In our recent blog post Brokers Concerned About ELDs Too, one broker noted that fewer than half of his carriers currently use ELDs. Another said he intends to poll his core carriers to see how many have implemented ELDs—and update the figures monthly throughout 2017. 

3. Increased scrutiny of drivers

In a time when truck drivers are already hard to find and retain, there are a number of new regulations under consideration by the FMCSA that could further chip away at the number of drivers. There are proposals to test drivers for sleep apnea, use hair testing to check for drug use, and to create a database of drivers who have failed a drug or alcohol test.

In addition, the FMCSA recently completed public comment on a speed limiter rule that could force drivers to drive slower than the posted speed limit in certain states. A reduction of even a few miles per hour, multiplied by the thousands of miles a driver logs each year, would be yet another hit to productivity.

4. Rising fuel prices

Diesel prices have risen 59 cents per gallon since February, and analysts are predicting prices to continue to rise in 2017. The Organization of Petroleum Exporting Countries (OPEC) announced that they plan to cut production this year and, at current prices, there’s not much incentive to increase U.S. oil production.

For carriers, the cost of fuel is their second-highest expense, behind personnel costs. When fuel prices rose sharply in 2008, the number of carrier bankruptcies also spiked. Fleets and owner-operators who have hobbled along financially while prices have been low, could be pushed over the edge if fuel prices rise significantly.

 

National average diesel prices have climbed 59 cents per gallon since February, as seen in this graph from DAT RateView.

5. Infrastructure concerns

As traffic congestion increases, productivity decreases. Highway funding bills have hit roadblocks in congress and are often short-term measures that maintain spending at current levels. Although the incoming Trump administration has proposed big increases in infrastructure spending, it’s unclear whether Congress will support the new president’s aspirations.

Underfunded infrastructure exaggerates other trucking problems, such as the lack of parking for truck drivers to take their mandated breaks. This problem will only get worse with the ELD mandate, as electronic logs won’t allow any wiggle room when drivers needs to take their required rest breaks or stop for the night.

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Industry Trends WEEK MONTH YEAR
Jan 8 – 14 vs.
Jan 1 – 7
Dec 2016 vs.
Nov 2016
Dec 2016 vs.
Dec 2015
Spot Market Loads +18% +13% +84%
Spot Market Capacity +34% 9.6% 3.9%
Van Load-To-Truck 16% +22% +80%
Van Rates (Spot) 2.8% +4.2% +0.6%
Flatbed Load-To-Truck 5.3% +35% +167%
Flatbed Rates (Spot) 1.6% +2.6% +0.5%
Reefer Load-To-Truck 15% +21% +66%
Reefer Rates (Spot) 1.5% +1.0% +1.0%
Fuel Prices +0.4% +2.9% +8.7%
Load-to-Truck Ratios Retreat

Prices Dip for Vans, Flats and Reefers

Jan 8 – 14 –Load board activity increased, but load-to-truck ratios declined in the first full work week of the new year. Rates fell for vans, reefers and flatbeds. Severe weather also affected freight movement in many parts of the country.

The chart above depicts national average spot market rates for the past four weeks, including fuel surcharges. Weekly rate snapshots reflect averages for the month to-date, from DAT RateView.

Last update: 1/17/2017 – Next update: 1/25/2017

Fuel Prices
-0.4%$2.59 / gallon
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Tax Tips 2017

Tax Changes for 2017: A Checklist

 Welcome, 2017! As the New Year rolls around, it’s always a sure bet that there will be changes to current tax law and 2017 is no different. From health savings accounts to tax rate schedules and standard deductions, here’s a checklist of tax changes to help you plan the year ahead.

Individuals

For 2017, more than 50 tax provisions are affected by inflation adjustments, including personal exemptions, AMT exemption amounts, and foreign earned income exclusion.

While the tax rate structure, which ranges from 10 to 39.6 percent, remains the same as in 2016, tax-bracket thresholds increase for each filing status. Standard deductions and the personal exemption have also been adjusted upward to reflect inflation. For details see the article, “Tax Brackets, Deductions, and Exemptions for 2017,” below.

Alternative Minimum Tax (AMT)
Exemption amounts for the AMT, which was made permanent by the American Taxpayer Relief Act (ATRA) are indexed for inflation and allow the use of nonrefundable personal credits against the AMT. For 2017, the exemption amounts are $54,300 for individuals ($53,900 in 2016) and $84,500 for married couples filing jointly ($83,800 in 2016).

“Kiddie Tax”
For taxable years beginning in 2017, the amount that can be used to reduce the net unearned income reported on the child’s return that is subject to the “kiddie tax,” is $1,050 (same as 2016). The same $1,050 amount is used to determine whether a parent may elect to include a child’s gross income in the parent’s gross income and to calculate the “kiddie tax.” For example, one of the requirements for the parental election is that a child’s gross income for 2017 must be more than $1,050 but less than $10,500.

For 2017, the net unearned income for a child under the age of 19 (or a full-time student under the age of 24) that is not subject to “kiddie tax” is $2,100.

Health Savings Accounts (HSAs)
Contributions to a Health Savings Account (HSA) are used to pay current or future medical expenses of the account owner, his or her spouse, and any qualified dependent. Medical expenses must not be reimbursable by insurance or other sources and do not qualify for the medical expense deduction on a federal income tax return.

A qualified individual must be covered by a High Deductible Health Plan (HDHP) and not be covered by other health insurance with the exception of insurance for accidents, disability, dental care, vision care, or long-term care.

For calendar year 2017, a qualifying HDHP must have a deductible of at least $1,300 for self-only coverage or $2,600 for family coverage and must limit annual out-of-pocket expenses of the beneficiary to $6,550 for self-only coverage and $13,100 for family coverage.

Medical Savings Accounts (MSAs)
There are two types of Medical Savings Accounts (MSAs): the Archer MSA created to help self-employed individuals and employees of certain small employers, and the Medicare Advantage MSA, which is also an Archer MSA, and is designated by Medicare to be used solely to pay the qualified medical expenses of the account holder. To be eligible for a Medicare Advantage MSA, you must be enrolled in Medicare. Both MSAs require that you are enrolled in a high-deductible health plan (HDHP).

Self-only coverage. For taxable years beginning in 2017, the term “high deductible health plan” means, for self-only coverage, a health plan that has an annual deductible that is not less than $2,250 and not more than $3,350 (same as 2016), and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $4,500 (up $50 from 2016).Family coverage. For taxable years beginning in 2017, the term “high deductible health plan” means, for family coverage, a health plan that has an annual deductible that is not less than $4,500 and not more than $6,750 (up $50 from 2016), and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $8,250 (up $100 from 2016).

Penalty for not Maintaining Minimum Essential Health Coverage
For calendar year 2017, the dollar amount used to determine the penalty for not maintaining minimum essential health coverage is $695.

AGI Limit for Deductible Medical Expenses
In 2017, the deduction threshold for deductible medical expenses remains at 10 percent (same as 2016) of adjusted gross income (AGI). Prior to January 1, 2017, if either you or your spouse were age 65 or older as of December 31, 2016, the 7.5 percent threshold that was in place in earlier tax years continued to apply. That provision expired at the end of 2016, however, and starting in 2017, the 10 percent of AGI threshold applies to everyone.

Eligible Long-Term Care Premiums
Premiums for long-term care are treated the same as health care premiums and are deductible on your taxes subject to certain limitations. For individuals age 40 or younger at the end of 2017, the limitation is $410. Persons more than 40 but not more than 50 can deduct $770. Those more than 50 but not more than 60 can deduct $1,530 while individuals more than 60 but not more than 70 can deduct $4,090. The maximum deduction is $5,110 and applies to anyone more than 70 years of age.

Medicare Taxes
The additional 0.9 percent Medicare tax on wages above $200,000 for individuals ($250,000 married filing jointly), which went into effect in 2013, remains in effect for 2017, as does the Medicare tax of 3.8 percent on investment (unearned) income for single taxpayers with modified adjusted gross income (AGI) more than $200,000 ($250,000 joint filers). Investment income includes dividends, interest, rents, royalties, gains from the disposition of property, and certain passive activity income. Estates, trusts, and self-employed individuals are all liable for the new tax.

Foreign Earned Income Exclusion
For 2017, the foreign earned income exclusion amount is $102,100, up from $101,300 in 2016.

Long-Term Capital Gains and Dividends
In 2017 tax rates on capital gains and dividends remain the same as 2016 rates; however threshold amounts are indexed for inflation. As such, for taxpayers in the lower tax brackets (10 and 15 percent), the rate remains 0 percent. For taxpayers in the four middle tax brackets, 25, 28, 33, and 35 percent, the rate is 15 percent. For an individual taxpayer in the highest tax bracket, 39.6 percent, whose income is at or above $418,400 ($470,700 married filing jointly), the rate for both capital gains and dividends is capped at 20 percent.

Pease and PEP (Personal Exemption Phaseout)
Both Pease (limitations on itemized deductions) and PEP (personal exemption phase-out) have been permanently extended (and indexed to inflation) for taxable years beginning after December 31, 2012, and in 2017, affect taxpayers with income at or above $261,500 for single filers and $313,800 for married filing jointly.

Estate and Gift Taxes
For an estate of any decedent during calendar year 2017, the basic exclusion amount is $5,490,000, indexed for inflation (up from $5,450,000 in 2016). The maximum tax rate remains at 40 percent. The annual exclusion for gifts remains at $14,000.

Ensuring Financial Success for Your Business

 Can you point your company in the direction of financial success, step on the gas, and then sit back and wait to arrive at your destination?

Not quite. You can’t let your business run on autopilot and expect good results. Any business owner knows you need to make numerous adjustments along the way – decisions about pricing, hiring, investments, and so on.

So, how do you handle the array of questions facing you?

One way is through cost accounting.

Cost Accounting Helps You Make Informed Decisions

Cost accounting reports and determines the various costs associated with running your business. With cost accounting, you track the cost of all your business functions – raw materials, labor, inventory, and overhead, among others.

Note: Cost accounting differs from financial accounting because it’s only used internally, for decision making. Because financial accounting is employed to produce financial statements for external stakeholders, such as stockholders and the media, it must comply with generally accepted accounting principles (GAAP). Cost accounting does not.

Cost accounting allows you to understand the following:

  1. Cost behavior. For example, will the costs increase or stay the same if production of your product goes up?
  2. Appropriate prices for your goods or services. Once you understand cost behavior, you can tweak your pricing based on the current market.
  3. Budgeting. You can’t create an effective budget if you don’t know the real costs of the line items.

Is It Hard?

To monitor your company’s costs with this method, you need to pay attention to the two types of costs in any business: fixed and variable.

Fixed costs don’t fluctuate with changes in production or sales. They include:

  • rent
  • insurance
  • dues and subscriptions
  • equipment leases
  • payments on loans
  • management salaries
  • advertising

Variable costs DO change with variations in production and sales. Variable costs include:

  • raw materials
  • hourly wages and commissions
  • utilities
  • inventory
  • office supplies
  • packaging, mailing, and shipping costs

Tip: Cost accounting is easier for smaller, less complicated businesses. The more complex your business model, the harder it becomes to assign proper values to all the facets of your company’s functioning.

If you’d like to understand the ins and outs of your business better and create sound guidance for internal decision making, consider setting up a cost accounting system.

Need Help?

Please call if you need assistance setting up cost accounting and inventory systems, preparing budgets, cash flow management or any other matter related to ensuring the financial success of your business.

 

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Industry Trends - Spot Market Industry Trends - Van Industry Trends - Flatbed Industry Trends - Reefer Industry Trends - Fuel Prices
Industry Trends WEEK MONTH YEAR
Jan 1 – 7 vs.
Dec 25 – 31
Dec 2016 vs.
Nov 2016
Dec 2016 vs.
Dec 2015
Spot Market Loads +17% +13% +84%
Spot Market Capacity +9.5% 9.6% 3.9%
Van Load-To-Truck +9.8% +22% +80%
Van Rates (Spot) +2.3% +4.2% +0.6%
Flatbed Load-To-Truck +6.8% +35% +167%
Flatbed Rates (Spot) 1.5% +2.6% +0.5%
Reefer Load-To-Truck 4.3% +21% +66%
Reefer Rates (Spot) +2.5% +1.0% +1.0%
Fuel Prices +0.4% +2.9% +8.7%
High Load-to-Truck Ratios Kick Off 2017

Demand Stays Strong in New Year

Jan 1 – 7 – Higher volumes and fuel prices led to higher national averages for van rates and reefer rates, though the national flatbed rates declined, compared to the average for December. Prices fell in most major markets, when compared to the highs of the previous week.

The chart above depicts national average spot market rates for the past four weeks, including fuel surcharges. Weekly rate snapshots reflect averages for the month to-date, from DAT RateView.

Last update: 1/10/2017 – Next update: 1/17/2017

Fuel Prices
+0.4%$2.60 / gallon
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While the mandate has the potential to force some small carriers out of business — possibly leading to higher freight rates, if capacity tightens — there are several other proposed rules and regulations could also have major impacts on the trucking industry in 2017.

Here are 5 new regulations that could affect truckers and carriers the most.

ELD Mandate

Any truck driver who’s required to track Hours of Service must do so with an electronic logging device (ELD) by December 16. Some shippers may require the carriers they work with to make the change earlier than that. (Note: Drivers of vehicles manufactured before 2000 are exempt from the mandate.)
More info

Hours of Service

Some portions of the HOS rules that were introduced in July 2013 were lifted again in 2014. The 2013 rules required 34-hour restarts to include two stretches between 1:00 AM and 5:00 AM, and the restart could be used only once per seven days. Those provisions were suspended, and a study by the FMCSA and Virginia Tech University on the rules’ safety impact will determine whether or not that suspension is permanent. According to Overdrive Online, the report is “under departmental review.”
More info

MC Numbers

The Unified Registration System (URS) was scheduled to be fully implemented by January 14, but the FMCSA announced that it’s been delayed. Again. We should learn the new date sometime soon. Once it’s in place, the URS will replace the FMCSA’s old registration system for operating authority, and going forward, all carriers, brokers, and freight forwarders will be identified solely by a DOT number instead of an MC, FF, or MX number.
More info

Speed Limiters

The public comment period closed last month on a proposed rule that would require speed limiters on vehicles that weigh more than 26,000 lbs. The FMCSA hasn’t suggested what the top speed on the limiters would be. A large segment of those who participated in the public comment period argued against speed limiters, although some large carriers supported a 65 mph limit.
More info

Overtime Pay

New overtime rules were set to take effect last month, but a lawsuit filed in October by 21 states put the rules on hold. Current law says that any salaried employee making more than $23,660 per year is exempt from overtime pay. The new rules, if implemented, would push that limit up to $47,476 per year. It also would allow for 10% of commission or bonus pay to be counted toward the employee’s total compensation, but only if paid at least quarterly. Most drivers are paid by the mile, but dispatchers, salespeople, and other salaried employees could be affected.
More info

Need helping keeping your trucking company compliant with the new rules? Contact our Fleet Services team.

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Industry Trends - Spot Market Industry Trends - Van Industry Trends - Flatbed Industry Trends - Reefer Industry Trends - Fuel Prices
Industry Trends WEEK MONTH YEAR
Dec 25 – 31 vs.
Dec 18 – 24
Dec 2016 vs.
Nov 2016
Dec 2016 vs.
Dec 2015
Spot Market Loads 17% +13% +84%
Spot Market Capacity 29% 9.6% 3.9%
Van Load-To-Truck +9.4% +22% +80%
Van Rates (Spot) +1.2% +4.2% +0.6%
Flatbed Load-To-Truck +27% +35% +167%
Flatbed Rates (Spot) +0.5% +2.6% +0.5%
Reefer Load-To-Truck +19% +21% +66%
Reefer Rates (Spot) +1.0% +1.0% +1.0%
Fuel Prices +1.9% +2.9% +8.7%
Load-to-Truck Ratios Soar, Heading Into Holiday

Rates Rise Ahead of Christmas

Dec 25 – 31 – Spot market freight rates soared between Christmas and New Year’s Day. A combination of tighter capacity and urgency to move freight before the end of 2016 led to some of the highest prices of the year, while load-to-truck ratios surged. The national averages for both reefer and flatbed rates were up 2¢, while van rates added 1¢.

The chart above depicts national average spot market rates for the past four weeks, including fuel surcharges. Weekly rate snapshots reflect averages for the month to-date, from DAT RateView.

Last update: 1/3/2017 – Next update: 1/10/2017

Fuel Prices
+1.9%$2.59 / gallon
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