The COVID-19 pandemic is one of the major sectors that hit the transport industry. With travel restrictions, lockdowns, and social distancing measures in place, the industry faced significant challenges in keeping up with the demand for transportation services. So, what is Employee Retention Credit for the Transportation Industry?
Decrease In Demand in Employee Retention Credit for Transportation Industry
One of the biggest challenges that the transport industry faced during the pandemic was a severe drop in demand for transportation services. With people staying at home and travel restrictions in place, airlines, railways, and bus companies saw a sharp decline in bookings and revenue. This resulted in many companies reducing their capacity and even suspending their operations, causing significant financial losses.
According to the Bureau of Transportation Statistics, the number of passengers on U.S. airlines in 2020 was down 60% in contrast to 2019. This led to a loss of approximately $35 billion in revenue for the U.S. airline industry alone. In addition to airlines, the pandemic also had a significant impact on the trucking industry. Many trucking companies faced a shortage of drivers due to COVID-related illnesses, quarantine restrictions, and closures of rest stops and other facilities.
The shipping industry also experienced major disruptions as factories and ports around the world closed or reduced their operations. The global supply chain was severely impacted, with delays and shortages of critical goods, such as personal protective equipment, medical supplies, and even food. As a result, the cost of shipping goods skyrocketed, and many companies had to search for alternative transportation options.
Health and Hygiene Issues
Moreover, the pandemic brought a whole new set of challenges to the transport industry in terms of health and safety. Transport companies had to adapt quickly and implement strict hygiene measures to prevent the spread of the virus. This involved regular sanitization of vehicles, wearing masks and gloves, and enforcing social distancing protocols among passengers.
ERC credit fund to the rescue
The COVID-19 pandemic caused significant financial losses for the transportation industry, with many companies struggling to stay afloat. However, the Economic Recovery and Relief Credit (ERC) program has been instrumental in providing much-needed financial support to the industry.
The ERC, valuable for transport firms recovering from the pandemic, offers a refundable payroll tax credit. Eligible businesses can offset wages and healthcare costs if they experience significant revenue declines or suspended operations due to COVID-19. ERC funds enable companies to cover salaries, and benefits, and invest in new technologies, sustaining operations and facilitating expansion.
In 2021, the ERC program was extended and expanded, making it even more beneficial for transport companies. The program grants up to $33,000 per employee in payroll tax credits, making it highly attractive for pandemic recovery.