Primary-B usiness Test

What is Primary-B usiness Test?

The Primary-Business Test is a crucial evaluation conducted by the International Chamber of Commerce (ICC) to ascertain the legitimacy of a trucking operation as bona fide private transportation. This test serves as a means to differentiate between private trucking operations and those that are not genuinely engaged in private transportation.

To understand the Primary-Business Test, it is essential to grasp the concept of private trucking operations. Private trucking refers to the transportation of goods using trucks that are owned and operated by a company solely for its internal purposes. These trucks are not available for hire to the general public or other businesses. On the other hand, non-private trucking operations involve the provision of transportation services to external customers.

The Primary-Business Test acts as a litmus test to determine whether a trucking operation is genuinely engaged in private transportation or if it is merely a front for a non-private trucking business. According to the ICC, for a trucking operation to pass the Primary-Business Test, it must meet the following criterion: the private trucking operation must be incidental to and in the furtherance of the primary business of the firm.

In simpler terms, this means that the primary focus of the company must lie in a different line of business, and the private trucking operation should be a secondary activity that supports and enhances the primary business. The private trucking operation should not be the main source of revenue or the core function of the company.

For example, consider a manufacturing company that produces and sells furniture. If this company also operates its own fleet of trucks to transport its furniture to various retail stores, it would be considered a bona fide private trucking operation. The primary business of the company is furniture manufacturing, and the private trucking operation is incidental to this primary business.

However, if a company primarily operates as a trucking business and offers transportation services to external customers, it would not pass the Primary-Business Test. In this case, the private trucking operation is not incidental to another primary business but rather the core function of the company itself.

The Primary-Business Test is crucial in distinguishing between private and non-private trucking operations as it helps prevent companies from disguising themselves as private trucking operations to evade regulations or gain unfair advantages. By ensuring that private trucking operations are genuinely incidental to and in the furtherance of the primary business, the ICC maintains a level playing field in the logistics industry.

In conclusion, the Primary-Business Test is a vital evaluation conducted by the ICC to determine the legitimacy of a trucking operation as bona fide private transportation. By assessing whether the private trucking operation is incidental to and in the furtherance of the primary business of the firm, this test ensures fairness and transparency in the logistics industry.