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Numbers That Count

By Mike Manges

A helping hand from Uncle Sam

NEW LEGISLATION WILL BOOST TIRE IMPORTERS, RETREADERS

Legislation that directly bene ts independent tire dealers doesn’t come around o en. But a new law and a recently introduced bill have the potential to boost many dealers’ bottom lines, including your own. Let’s take a look at them. e rst piece of legislation, the Ocean Shipping Reform

Act, was signed into law by President Joe Biden two months ago. e 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 e ective 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 pro ts — yes, that’s “billion” — during 2021, with an estimated $56 billion generated during the fourth quarter alone. (In what’s probably an understatement, Drewry o cials recently noted that “the ocean carriers’ cash machine is now working at an exceptional level.”) e Ocean Shipping Reform Act also will try to shi 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 signi cant degree of relief for your business. e other piece of legislation isn’t a law — yet. is 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 eets to buy retreads.

Speci cally, the bill would o er a tax credit towards the purchase of “a quali ed retreaded truck tire produced and purchased in the

United States,” according to a spokesperson from Rep. Ryan’s o ce.

What’s a “quali ed” retread, you may ask? Ryan’s o ce 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 eld 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 Twenty years ago, MTD estimated there were 1,070 as a welcome development for active medium truck tire tread rubber suppliers, too. retread plants in the United Jason Roanhouse, executive director, Bandag operations, States. That number has since fallen to 640. Photo: MTD 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 bene t 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 eets to engage in a comprehensive tire program inclusive of retreads will lower tire costs and improve eets’ 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.” e 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 di erent tax credit provisions,” notes the representative from Rep. Ryan’s o ce. e 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. at 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. ■