Letters: More on Brokers, Harmonized Sales Tax, Cap and Trade

These Letters to the Editor appear in the Sept. 28 print edition of Transport Topics. Click here to subscribe today.

More on Brokers

This is regarding the letter headlined “Brokers, Shippers” in the Sept. 7 issue (click here for previous letter).

Over the past 25 years of running a freight brokerage operation, I have seen numerous commentaries in Transport Topics written by disappointed and disgruntled carriers putting down the brokerage industry.

Perhaps in the infancy of brokerages in the early 1980s, the letter writer’s views of unscrupulous individuals had merit. Today, however, excess carrying capacity coupled with lower-than-normal freight flows have put extreme downward pressure on freight rates.

For the record, the majority of us in brokerage strive to achieve margins in the range of 15%, not the 30% to 50% the letter writer suggests.

From that sought-after 15% comes what we call operating income that pays wages and commissions to the hardworking men and women largely responsible for generating and ultimately coordinating the movement of same on asset-based carriers.

No doubt, we all are in agreement that freight rates are at an all-time low for the past quarter-century, in spite of equipment and fuel prices at or near all-time highs. However, from our perspective, it is most often larger asset-based carriers — not brokers — that have exercised predatory pricing on previously enjoyed lanes of traffic we once handled.

May I suggest this to any dissatisfied carrier: Before accepting freight that you cannot afford to haul in the future, seek out one of the many Transportation Intermediary Association-certified property brokers who will do their best to provide asset-based companies competitively priced traffic in the lanes they wish to travel.

By the way — by selecting TIA-member brokers, you no doubt will not experience the downside of the current depressed economy as Nationwide did last year and our carriers did not: Eat $98,000 in unpaid freight charges because of bankruptcy filings from three separate companies with 96 to 98 A+ credit ratings.

William Meyers
Nationwide Transportation Services Inc.

Grand Rapids, Mich.

Harmonized Sales Tax

The harmonized sales tax is going to give the Canadian trucking industry a boost in improving truck safety and reducing harmful smog and greenhouse gas emissions. Those are two reasons the British Columbia Trucking Association supports the HST, in addition to the oft-cited public policy rationales of improving the province’s competitiveness, stimulating job creation and enhancing our economic future.

The total tax on items and services will be 12% (5% federal plus 7% provincial), but all of it will be collected by the federal government and the provincial portion handed over to the province.

So, what’s the link? Simply put, the availability of input tax credits associated with the HST will reduce the effective tax on new investments in British Columbia by 40%. The tax credits, in turn, will encourage trucking companies to invest — in trucks, trailers, safety and energy-efficient technologies.

By the time the HST is introduced in July 2010, many trucking companies will have deferred investments in new equipment for several years because of recessionary pressures. Because the economy will be recovering — and there will be pent-up demand for new equipment — the HST will grease the wheels of renewal.

The timing of the HST couldn’t be better for trucking. Trucks manufactured on or after July 1, 2010, will have to meet a new emissions standard that will make them virtually smog-free. Most of the new engines also will be more fuel-efficient, thus reducing greenhouse gases.

Input tax credits also make several expensive energy-efficient technologies, such as aerodynamic devices and low-rolling-resistance tires, more affordable.

Similarly, there are new, ad-vanced safety technologies such as vehicle stability systems that reduce rollovers and electronic onboard recorders that monitor driver hours of work that will be more affordable.

Safety technologies and energy efficiency devices aren’t limited to new purchases. These also can be installed on existing equipment.

“Input tax credits” sounds technical and boring — and not particularly useful or productive. But in the hands of the trucking industry, they will be parlayed into sound investments in new technologies, equipment and facilities that will help us to be safer and greener while improving our productivity and efforts to help the British Columbia economy to rebound.

BCTA represents more than 800 truck and bus fleets, operating more than 13,000 vehicles in British Columbia. BCTA operating members employ 26,000 people in the province and generate more than C$2 billion in revenue in the province annually.

Paul Landry
Chief Executive Officer
British Columbia Trucking Association
Langley, British Columbia

Cap and Trade

How can we have an honest argument about climate change, formerly known as “global warming,” when the entire premise is a lie? The simple truth is that numerous natural occurrences affect weather more than man does, including ocean currents, volcano eruptions and the sun.

I could cite many other examples demonstrating the fallacy of climate change/global warming, but I don’t want to digress too far from the point of this letter.

Our deceitful government — both political parties — does not want anybody to understand the actual tax effects of the “cap and trade” legislation. They want to deceive us and try to claim that if industries and companies do the “right things” — as defined by the government — we will curb our use of energy products, reduce greenhouse gas emissions and pay little or no additional taxes.

Because of the complexity of the legislation, the amount of the tax is hard to quantify, thereby hiding the effect it has on fuel prices.

However, this legislation has a bigger and more evil purpose: With this type of tax, we give our government the power to effectively blackmail certain companies, industries or even individual people under the cloak of protecting our planet. The government would have the ability to raise taxes at will — without any votes or debate — for specific groups, companies, industries or even individuals.

I do not think you could design a system more open to corruption and abuse of power. The government gains incredible power under the guise of protecting the environment.

If this wasn’t the purpose, why hide behind this complex monstrosity of a bill? Why not do as the climate change religion’s spiritual leader, Al Gore, said in one of his books: Raise the taxes on fuel and coal to increase the price and encourage people to conserve.

These taxes already exist, so very little has to be done. It is simple, straightforward and quantifiable. We would know what we were paying in taxes and how much the price of fuel was affected by the tax.

The word “transparency” comes to mind. It also is fair. Companies, industries or even individuals would pay more as they used more and, conversely, pay less tax if they used less.

American Trucking Associations’ analysis is correct: Fuel costs will rise as a result of this legislation, and the rise will be in addition to any increase in fuel costs caused by other factors. It is irrelevant that “other factors” affect fuel pricing more than tax increases do.

Even this last approach has its pitfalls. First, it pulls money out of an economy already on the ropes.

In fact, I would encourage a delay of the 2010 engine requirements for a couple of years to give our economy a chance to recover.

In addition, because the money will be controlled by our federal government, our elected officials will attempt to control which alternative fuel technologies should be funded, rather than let the market determine the right technology.

Finally, unless China and India agree to go along with U.S. efforts, the effect on greenhouse gases released in the atmosphere would be negligible, at best. Even with Chinese and Indian cooperation, the effect on world temperatures and greenhouse gases would be minimal.

I do have a regret that “global warming/climate change” is a fallacy. I live in Tennessee, and I was looking forward to having some beachfront property in the next couple of years. I guess I’ll just have to live without it.

This power-grabbing bill by our federal government is an atrocity.

Marc Stewart
Former Owner of Shippers Transport
Nashville, Tenn.


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