VOL. 11 | NO. 4 | Saturday, January 27, 2018

Trucking companies pay one of the highest tax rates of any business sector. According to a study published by New York University, only the 27.28 percent average tax rate in the homebuilding sector was higher, with trucking second at 26.74 percent.

That puts trucking at a higher rate than other transportations sectors, such as air transport (22.9 percent), railroads (22.17 percent), parcel and logistics transportation (17.46 percent), auto and truck (8.14 percent) and shipbuilding and marine (7.3 percent).

Moreover, new federal tax law – and in Tennessee, Gov. Bill Haslam’s IMPROVE Act – are placing additional strain on the trucking industry.

Donnie Caldwell is chief operation officer for Ozark Motor Lines, one of the biggest trucking companies in Memphis, with more than 700 tractor-trailers. Ozark is a huge consumer of diesel fuel, perhaps 25 percent of what is purchased in Memphis each week.

In 2017, Caldwell told The Daily News that just the increase in the state gas tax that went into effect last summer could cost his company upwards of $300,000 a year.

Recently, The Memphis News posed several questions on the trucking industry to Caldwell. Here are his responses, edited only for length and clarity.

Q. So there is a lot of federal and state legislation and taxation having an impact on the trucking industry. Let's take the federal first and the idea that it was necessary to begin addressing the nation's infrastructure. Do you agree with that, and what has the impact been?

Caldwell: I do agree that the nation's infrastructure has to be addressed. The congestion on our nation's roadways cost the trucking industry millions each year in fuel consumption, as well as a loss of utilization of around 5 to 8 percent.

Q. Gov. Haslam's IMPROVE Act is pretty aggressive with its taxation in an effort to repair state infrastructure, such as roads and bridges. What's the impact on the state's trucking industry, short-term and long-term?

Caldwell: We also agree with Gov. Haslam on the IMPROVE Act. While we realize that it will add additional cost with the taxation, we also understand our Tennessee roads have not been adequately repaired and expanded. Our bridges are in need of major repair. Short-term, we understand this will cause many construction delays and much frustration for motorists. But if our state is to continue to expand and prosper, we have to make the long-term investment to improve the state's infrastructure. We must provide the state dollars in order to capture the federal funds to make these improvements possible.

Q. How big of an issue are regulations, day to day, in the industry? How much time and money can be lost to red tape, if you will?

Caldwell: Each year the trucking industry faces new challenges due to government regulations, and they are wide-ranging. We face new environmental requirements every year on our new tractors, which impact the cost of equipment. These clean-air regulations are effective, but not without significant cost. The new electronic logging mandate is the most significant new regulation and will have the greatest impact on our industry. We support the regulation and feel long-term it will have a positive impact on our industry. But again, it does not come without cost. Trucking companies spent millions of dollars to comply and there will be an 8 percent loss on utilization associated with it.

Q. Some Memphis trucking companies have said they were in favor of the IMPROVE Act even though it would mean a heavier tax burden because the need for improvements is so great. For example, Lamar Avenue in Memphis is kind of trucking central here, but the congestion – you, in fact, called it a “disaster” – means a lot of lost time and money and has even led to some truckers leaving the industry. If the money generated meets these types of concerns head-on, how do you see this playing out and the industry possibly benefiting?

Caldwell: We feel like it will not only benefit the trucking industry but every motorist. With the reduction of congestion, it will make our roads safer for everyone. There are several areas I feel like we will see benefits from: driver fatigue, equipment utilization and fuel consumption.

Q. Where is the industry generally, and Tennessee in particular, with the driver shortage issue? Some estimates say the country is almost 50,000 drivers short of what is needed.

Caldwell: The driver shortage is the biggest problem facing the industry today. New regulations have forced many of the older drivers out of the industry, and there are not enough new drivers to replace what is being lost. Our industry is facing an aging workforce and because of the low pay and general image of trucking, not enough people want to drive.

Q. How much have salaries and benefits had to increase to retain drivers? What's going in with recruiting young people into the industry?

Caldwell: Over the last three years, driver pay has increased about 5 percent. I feel like it is going to have to increase another 10 percent to make driving jobs attractive again.

The biggest issue bringing young people into the industry is the age requirements. You cannot drive until you are 21, and most insurance carriers require you to hire drivers that are 23. That leaves high school graduates three years before they can enter the industry and two more years before most carriers can hire them. We are losing a lot of young people to other industries. Until the pay reaches a point that it is worth making an industry change, these young people are not going to enter the industry.

Q. What has been the impact of “sensing” technology in reducing accidents?

Caldwell: We feel like it has had a major impact in reducing serious accidents. While accidents still occur, we feel like it has decreased the serious accidents dramatically. I don't think the industry has ever been safer.

Q. What is the status of automated, self-driving trucks?

Caldwell: They are still in the infant stages. While there are currently several areas testing these trucks, I feel like we are still several years away from seeing an actual impact on the industry. As the automation moves forward, we see it making it possible for the industry to bring in younger drivers, which could have major impact on the driver shortage.