As rates have crashed and freight volumes have dried up — unless you are hauling grocery or other essential goods — trucking companies across the country are at increasing risk of failure. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was designed to protect just these types of businesses. Unfortunately, many are falling through the cracks, according to KeepTruckin, which is why the company has started a petition drive asking Congress and the Trump administration to extend financial assistance included in the CARES Act to truck leases, loan payments and insurance payments.
The CARES Act authorized the Paycheck Protection Program (PPP), which grants small employers, typically those of 500 employees or fewer, that maintain their payrolls eight weeks of cash-flow assistance through federally guaranteed loans.
“If we fail to preserve and protect our trucking capacity for post-COVID-19, our economic recovery will suffer and that is not an acceptable option,” Tavis Baskin, head of regulatory affairs for KeepTruckin, told FreightWaves. “The PPP contains oversight measures to ensure that funds are used in the manner intended.”
Those funds, though, are limited when it comes to helping small trucking companies and owner-operators. PPP funds can be used to cover payroll costs, interest on mortgage obligations, rent and utilities in forgivable loans. Under the terms of the PPP, employers can borrow up to $10 million at a calculation of 2.5 times payroll at terms that are described as extremely generous to nonexistent. There is no requirement to pay back the loan if certain criteria regarding keeping people employed are met.
Three-quarters of the loan money must be paid out in payroll, explained Randy Hooper, partner at the transportation consulting firm of Katz, Sapper & Miller.
However, PPP doesn’t address some of the key costs that small fleets and owner-operators have, KeepTruckin said.
“The PPP is a strong first step toward providing economic relief for small businesses. However, it does not address the fixed-costs burden that is unique to the trucking industry — truck and trailer lease/purchase payments and insurance costs,” Baskin said. “Without targeted relief in the form of forgivable loans, many trucking companies will not be able to weather this storm.”
Baskin compared trucking to other businesses.
“A leased or financed truck with valid insurance is the trucking equivalent of a rented or mortgaged workplace with utilities: The truck is the shop and insurance is the utilities allowing the truck to be productive,” he said. “However, payments for a truck and insurance are not forgiven under the PPP, which puts the economic burden on the borrower by requiring repayment. We are asking lawmakers to extend the kind of forgivable relief that helps restaurants, hotels, plants, shops and other brick-and-mortar businesses to cover the trucking equivalent of rent/mortgage and utilities: truck payments and insurance.”
Baskin said some insurers and borrowers are acting in good faith and assisting truckers, but a more formal, federal response is needed.
“We have seen many examples of lenders and insurance companies proactively helping their customers; however we can’t leave this to goodwill,” he said. “We need coordinated action at the federal level to ensure that our trucking companies can see through the next few months and be available and online when industrial production rebounds and freight needs to be moved.”
The petition calls for action from legislative leaders in any future COVID-19 legislation.
“In the next legislative vehicle relating to COVID-19, the federal government must address the unique needs of this essential industry by providing forgivable loans that target the two major fixed costs that trucking companies face — truck and trailer lease/loan payments and insurance costs,” the petition states. “This aid is critical to protecting America’s trucking capacity and supply chains, today and into the future.”
In the petition, KeepTruckin said it has observed a 24% decline in vehicle utilization over the past 30 days in its network, which has 250,000 for-hire trucks.
“The impact has not been evenly distributed,” it added. “In the West Coast and Northeast, regions that enacted shelter-in-place first, we have seen a 38% and 31% decline in activity.”
The carriers that are operating are also seeing declining rates, yet their fixed costs remain stable. In the Keep Truckin survey, 37% of respondents said they had serious concerns about their ability to meet truck lease and loan payments or insurance payments over the next three months.
There is another program available to small businesses. The Economic Injury Disaster Loan (EIDL) program offers economic relief to businesses that experience a temporary loss of revenue. When first launched, the program was designed to supply loans of up to $2 million, but the website now states it offers loans up to $10,000. Politico reported last week that the program has received applications for $372 billion in funding but only had appropriations for $7.3 billion.
The EIDL program is open to independent contractors.
The Small Business Administration administers both PPP and EIDL.
“Without targeted economic and regulatory relief, many trucking companies will default on their lease or loan payments and risk losing their trucks. And those who fail to cover their insurance payments will lose their DOT authority,” the petition notes. “This is not an acceptable outcome. Preserving our nation’s trucking capacity is critical to our economic recovery post COVID-19. It is essential that when industrial production rebounds, trucking capacity is not constrained. We cannot allow America’s trucking companies to fail or we jeopardize the broader recovery.”
Keep Truckin is asking that the federal government provide “economic relief that addresses the unique circumstances that trucking companies face and recognizes the essential nature of their work. This includes basing federal loans on not just payroll, but also fixed cost obligations. And providing forgiveness for truck and trailer lease/loan payments, and insurance costs.”
James fleming
It’s time everyone takes a hard look at how we all spend our money instead of saving for the hard times 1000.00 phones 200.00 on cable new cars more house than we need and on and on we have forgotten what we were hard working SELFRELIENT Americans everyone needs to get off the tit and do what’s needed pride lost in doing something below you to make it through this is far less than the pride of a self made man
Noble1
Trump encouraging chaos ! What a great president , NOT ! LOL !
Quote :
“Trump appears to back those protesting social distancing measures
President Trump on Friday appeared to back protesters in three states with Democratic governors who are gathering in opposition to extended stay-at-home orders and other restrictions meant to limit the spread of the coronavirus.
One day after Trump reportedly told governors they would “call the shots” in determining when to lift social distancing guidelines in their states, Trump heightened tensions between demonstrators and the Democratic governors in Minnesota, Michigan and Virginia.
“LIBERATE MINNESOTA!” Trump tweeted, followed quickly by a call to “LIBERATE MICHIGAN!”
“LIBERATE VIRGINIA, and save your great 2nd Amendment. It is under siege!” Trump tweeted, a reference to the state’s expanded background checks and limits on gun purchases signed into law last week.”
End quote .
UNBELIEVABLE TRUMP ! UNBELIEVABLE !
I wouldn’t be surprised if he was behind those protests in some shape or form .
But wow , what a sad president !
In my humble opinion ……………
Art
No.
Industry has too many trucks.. low rates.
Excess capacity must exit.
These bailouts are prone to abuse costing honest payers.
The reckless must suffer. Do not punish financially responsible people.
Thanks
I hope the illegals running cheap go bust.
Noble1
The “bailouts” are attempting to prevent a 1929 déjà vu ! There were no “bailouts” back then ! However, the current US president is sleeping at the helm ! He should be doing a lot more for his people !
The COVID-19 pandemic isn’t the typical economic contraction that typically clears out the “malinvestments” and or financially irresponsible . It’s weighing on the financially responsible too and much harder than the economic contractions that we’re used to experiencing . Businesses aren’t being shut down due to malinvestments . They’re being shut down due to being forced to do so based on a health emergency preventive measure in an attempt to curtail a life threatening virus from spreading .
A lot of those financially responsible honest workers that you’re speaking about are lining up at food banks to survive ! So while the US is bailing out , they’re doing a very poor job so far concerning the general US population . Rather than line ups at soup kitchens like in the 1930’s , we’re seeing massive lineups at food banks !
This is a disgrace !
Prisoners are treated better !
Come on man , a little empathy is called for in this particular matter . Most are not suffering due to their fault per se in this case .
On another note : Typical economic contractions/recessions harm in some shape or form the majority of hard working people , not all , but most ! A recession couldn’t careless if one is honest or not .
Not helping out the majority due to fear of a few that may abuse does not justify holding back .
In my humble opinion …………..
.
Not this guy
WTF are you talking about. go back to cnn, the china news network @ss
Noble1
Quote:
“WTF are you talking about.”
REALITY EINSTEIN !
Now you’re seeing protests too ! Get your head out of your azz and take a look around !
In my humble opinion ………
Noble1
Not this guy
REQUOTE myself ,
“The “bailouts” are attempting to prevent a 1929 déjà vu ! There were no “bailouts” back then !”
Now follow along !
Quote:
April 15 2020
Recession or depression? Canada’s economy is in for a rough spring
” Rosenberg pointed out that the Great Depression lasted for 12 years and was characterized by a real reluctance on the part of government to get involved.
‘We’re going to use the United States as the microcosm,” said Rosenberg. “The Great Depression really began in late 1929, but it wasn’t for another four years really until after F.D.R. [President Franklin D. Roosevelt] got elected that there was really an aggressive policy response.”
Decades later in Canada, the federal government and Bank of Canada moved quickly to respond to the impact of COVID-19, pouring tens of billions into the economy, while slashing interest rates.
While the stimulus will significantly add to Canada’s debt load, the financial pain for Canadians could be much worse without it.”
Interesting article :
Quote:
March 23 2020
David Rosenberg: It’s time for investors to start saying the D-word — this economic damage could be double 2008
“I find it fascinating that so many pundits are willing to tell their clients to stay the course after more than a 30-per-cent market meltdown. They have been saying the same thing the whole way through, and my wager is that they will tell you the same claptrap through the next 30 per cent decrease
It’s amazing to me that these people never seem to be accountable. At least bears will help you preserve your capital; the bulls will only destroy your capital”
End quote .
Said so back in late 2019 on this site , the upcoming economic contraction would make 2008 look like a picnic in comparison ! End of January 2020 I stated on this site that the upcoming collapse was confirmed . 13 Fibonacci calendar days later it began !
So far , so good . What have you contributed to the ones reading this site apart from demonstrating your ignorance ???
In my humble opinion ………
Stephen Webster
This needs to be done across Canada as many trucking companies, taxis companies cannot afford insurance and plates in this transport market. I was camped out at queens park in January, February and the first half of March. Many truck taxis drivers said they were having a rough time before C 19 came. If this is not available to small trucking companies many close and head into other types of work as they are interested in driving for 60 cents cd per mile or48 cents U S per mile plus unpaid wages for dock time with no benefits.
Mike Wallace
Does Travis Baskin know Carol F*****g Baskin?
Dave
We deserve it. Everyone else is getting their free fed money and forgivable loans. Come on Trump… our hardworking drivers and us carriers run into the hot zones daily without ANY extra $ or danger pay.
We deserve some help. We NEED a break.