Legislation that directly benefits independent tire dealers doesn’t come around often. But a new law and a recently introduced bill have the potential to boost many dealers’ bottom lines - and maybe your own. Let’s take a look at them.
The first piece of legislation, the Ocean Shipping Reform Act, was signed into law by President Joe Biden two months ago.
The act - which was championed by the bipartisan Senate Committee on Science, Commerce and Transportation - is designed to crack down on ocean shipping costs, while easing supply chain backlogs.
Sky-high freight costs and excruciating shipping delays have plagued tire dealers, importers and wholesalers - not to mention tire manufacturers and the companies that supply them - for the better part of the last two years.
According to a press release issued by the Senate committee, the new law will provide the Federal Maritime Commission with “the tools it needs for effective oversight of international ocean carriers,” which some tire dealers and importers believe are manipulating the market to their advantage.
According to Drewry, a United Kingdom-based shipping industry consultancy that shares information with MTD, ocean carriers generated $190 billion in annual profits - yes, that’s “billion” - during 2021, with an estimated $56 billion generated during the fourth quarter alone. (In what’s probably an understatement, Drewry officials recently noted that “the ocean carriers’ cash machine is now working at an exceptional level.”)
The Ocean Shipping Reform Act also will try to shift the burden of proof used to justify demurrage and detention charges away from American companies to freight carriers and shippers, which will help both importers and exporters.
And it authorizes the U.S. Department of Transportation to collect data on how long ground transportation chassis, which are used to move incoming containers over the road, are “dwelling” - or in simpler terms, sitting around doing nothing - while you wonder, “Where are my tires?”
All of these things are good and should provide a significant degree of relief for your business.
The other piece of legislation isn’t a law - yet.
This past June, Rep. Tim Ryan of Ohio introduced the Commercial Vehicle Fleet Retreaded Tire Utilization Reinvestment and Recovery Act of 2022, which would provide a tax incentive for trucking fleets to buy retreads.
Specifically, the bill would offer a tax credit towards the purchase of “a qualified retreaded truck tire produced and purchased in the United States,” according to a spokesperson from Rep. Ryan’s office.
What’s a “qualified” retread, you may ask? Ryan’s office hasn’t provided that level of detail, but emphasizes that products must be manufactured in the U.S. in order to make the cut.
“Retreading directly supports more than 51,000 American jobs,” Ryan said in a press release. “By providing a tax incentive for (end users) who purchase retreaded tires, this legislation will support good-paying jobs, level the playing field for American workers and businesses and position our manufacturers to once again lead this industry with American products built by American workers.”
I would think this has to come as a welcome development for tread rubber suppliers, too.
Jason Roanhouse, executive director, Bandag operations, Bridgestone Americas Inc., told me that the bill “will drive awareness of the exceptional quality and reliability of retreaded tires when retreading is performed by manufacturers following strict quality guidelines.
“In addition, should this legislation pass, every state will benefit from additional local jobs created by the retread industry.
“Moreover, increased retreading will help reduce the number of tires that enter the waste stream and the proposed incentive for fleets to engage in a comprehensive tire program inclusive of retreads will lower tire costs and improve fleets’ total cost of ownership”
And, he added, that if enacted, the legislation “will have a positive impact on the prices of goods and services we use every day.”
The Commercial Vehicle Fleet Retreaded Tire Utilization Reinvestment and Recovery Act of 2022 has already been referred to the Ways and Means Committee.
“It is our hope to potentially get it included in a tax-extenders bill that encompasses a number of different tax credit provisions,” notes the representative from Rep. Ryan’s office.
The retread market has undergone incredible consolidation over the years.
Two decades ago, MTD estimated there were 1,070 active medium truck tire retread plants in the United States. That number has since fallen to 640. And while retreaders are arguably more productive than ever - cranking out an estimated 16 million units during 2021 - they could use a leg up.
I think the timing of this bill couldn’t be better. We’ll continue to follow its progress
