Musicman |
10-29-2012 05:18 AM |
Quote:
Originally Posted by Tristan Paul
(Post 518232)
You're right, I don't have a college quality amount of knowledge when it comes to business and the market and supply versus demand and so on. I came into this with the knowledge I already had from personal experience. However, I would imagine that the cost of freight would be HIGHER right now when taking supply vs. demand into consideration. It's quickly becoming the christmas season and naturally because of that theres much more freight than usual. So why wouldn't the cost of freight be higher instead of lower?
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You don’t need college level education in macroeconomics to understand that the more common something is, the less it’s worth. The East Coast has a dense population that requires a lot of goods to support, but in comparison to what they consume, the populace produces very little. The result is that inbound rates are high because trucks are in high demand to move all that freight into the area. The problem is that once all those trucks deliver their freight, there are very few loads for that large number of trucks to haul. As trucks compete for loads, the price is driven down until it is so low that many would rather deadhead instead of pull the loads. It is at that point that price equilibrium is reached. Often that price is a dollar a mile or even less for van freight, no matter what the economy is doing.
Yes, we’re moving into the holiday season, but the economy is stalled, and (my opinion) everybody with money is holding his breath to see what kind or president we’re going to have for the next four years. Even Obama himself claims that corporations have about two trillion in cash reserves, more than ever before in history. ( PolitiFact | Obama says companies have nearly $2 trillion sitting on their balance sheets) It’s estimated that there is between one to three trillion dollars sitting on the sidelines (not invested) between business and private investors because the only thing certain about our economic future is that it is uncertain. Business owners don’t know whether or not they will have to deal with ObamaCare, higher tax rates (not only on earned income, but capital gains and inheritance tax) and a whole group of other penalties for financial success threatened by the current administration.
Liberals will claim the above paragraph is untrue, but it really is inarguable. They can say that Obama isn’t anti-business and anti-success, but the fact remains that even if they are correct, most investors think otherwise and, in the financial world perception is everything. I’m sure there are even some who are worried about what Romney will do to our country and economy, so they are probably holding back as well.
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