The Tax Cut and Jobs Act of 2017 and the Logistics Market

Posted on February 26, 2019

New tax reforms were implemented in 2017 to lower taxes for businesses and individuals. The Tax Cuts and Jobs Act (TCJA) lowered the corporate tax rate from 35% to 21%. The intent of the reform is to help businesses lower expenses (Wunderlin, 2018). Many professionals such as Chris Spear, the CEO of the American Trucking Associations (ATA), view this change positively. Spear has been promoting the benefits of the new tax reform and believes it will boost investments, increase jobs, and improve the bottom line of supply chain businesses. (Berman, 2019)

There are several significant aspects of this bill that will promote company growth. The TCJA allows businesses to fully expense the cost of property and inventory. Thus, businesses now have an incentive to spend on maintenance, new equipment, and expansion.  Russell Norris, the senior manager and logistics practice leader at Grant Thornton LLP, stated that “expensing is a big provision that is going to help people. Maybe they haven’t invested the way they wanted to historically, but you get a full write-off now. It’s very beneficial.” (Berman, 2019) Grant Thornton LLP is the sixth largest accounting and advisory organization in the United States that works heavily with all industries across the US, including Transportation. (CPA Associates, n.d.)

Other logistics leaders share the same sentiment that these reforms will be good for the industry. Richard Armstrong, the chairman of Armstrong & Associates, believes that the TCJA has motivated logistical businesses to improve services and create more capital for themselves. Armstrong & Associates is a third-party logistics marketing and research company and has become internationally recognized as a leading company for 3PL market research and consulting. (Armstrong & Associates, n.d.) (Berman, 2019) These deductions would help domestic transportation service providers and freight brokers by allowing their companies to more efficiently allocate their funds. (Berman, 2019)

Companies in the logistics industry are optimistic that the tax reforms will be beneficial and lead to cost savings. However, current events such as the US government shutdown, trade tension with China, and increased tariff rates have the potential to increase prices enough to negate the benefits of the tax reform. While the truth remains unseen, many logistic companies and consulting firms like Armstrong and Associates and Grant Thornton still predict a positive outlook for the reform and continue to believe that the TCJA will help the economy in 2019.

Contributor: Jonathan Heiland 


References: 

Armstrong & Associates. (n.d.). About Armstrong & Associates. Retrieved from https://www.3plogistics.com/about-armstrong-associates/

Berman, J. (2019, Janurary 16). Impact of tax reform on logistics is solid but comes with questions over long-term impact. Retrieved Janurary 22, 2019, from Logistics Managment: https://www.logisticsmgmt.com/article/impact_of_tax_reform_on_logistics_is_solid_but_comes_with_questions_over_lo/3pl

CPA Associates. (n.d.). TOP INTERNATIONAL NETWORKS, ASSOCIATIONS AND ALLIANCES. Retrieved from accountancyage: https://www.accountancyage.com/wp-content/uploads/sites/27/cnt-import/accountancy-age/digital_assets/All_int_charts_2013_v2.pdf

Wunderlin, A. (2018, March 30). Tax Reforms Impact on the Logistics Industry. Retrieved Janurary 22, 2019, from Food Logistics: https://www.foodlogistics.com/risk-compliance/blog/20998279/tax-reforms-impact-on-the-logistics-industry


About Allyn International

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North and South America, Europe and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China and Prague, Czech Republic. For more information, visit www.allynintl.com.


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