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Originally Posted by poster
I was wondering what the proof is for the belief that rates will go up when capacity of trucks goes down?
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History is the proof that rates will go up when capacity goes down. Everything runs in cycles. Economies go up and down. Depressions and recessions come at regular intervals as does inflation and prosperity. Supply and demand will dictate current pricing. I have seen some of this today. I was offered loads today at rates that I haven't seen in several months. It could be the tide is turning, the holiday coming up or more capacity leaving the market or simply being in the right place at the right time. More capacity means that there is more competition. When freight is sparse and capacity is high the result is that competition will drive prices down until one of two things happen. Either freight and shipments will increase to a level which capacity cannot handle it or enough capacity will be taken out of the market to push prices up. Capacity has been taken out due to so many taking freight at too cheap rates to be profitable.
Quote:
Originally Posted by poster
How do we know that the amount of freight won't go down in the same proportion that the truck capacity does; like as freight volumes go down it knocks out trucks? Like the whole country is traveling in a handbasket and what is this hope of better trucking times based on?
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The proportion of decrease in freight will not likely match the decrease in truck capacity although there will be some parody. On the other hand, it is entirely possible and probable that there will continue to be a decline in capacity. Those who are attempting to operate at or below operating costs will not survive. At some point capacity will decrease below demand. Again, history shows us that this is true. What is not known is the time factor. When external forces interfere with the natural order of economics then the time line can and will change. For instance, the government has interfered with the natural cycle of the world economy by taking over a big portion of the financial markets and is currently planning on taking over two of the largest auto manufacturers in the world. Market forces are not allowed to work. This will skew the way the market works and will ultimately result in these companies failing if they continue on the current path.
If you want to know whether the economy will improve then all you need do is look at our history. And based on history the next likely major even we should see is inflation. With all this debt the government is accumulating they will need to print more money. With the last spending spree they call the stimulus bill our taxes are expected to take 60% of our earnings. The people cannot pay much more in taxes. The only way the government can sustain this fallacy is to print more paper money. Since there is nothing to back up the money inflation will raise it's ugly head. I know this will happen because it has happened before.