Truck Load Rates Halt 8 Week Slide 2.0

I am the one on the defense, don't you think?

 

No. Some times the best thing to say is nothing at all.

 

Except, that in practice, the value for the 2-nd buyer is "imaginary" for the lack of better term. It is most likely a sucker who reads too much euphoric threads on social media like this and will dearly regret the decision sooner than he thinks. So the assessment of the value being 30-40% higher than the original price from 6 months ago does not have any bearing in reality. Also, the artificially increased money supply , made available to 'anybody' makes it all too easy to decide to make such a purchase and it has nothing to do with business oriented mindset. After all, even a fool knows that a new Volvo priced at $277 000 or used up trailer for 40K is not right. These decisions are made under delusionary premises and as far as I am concerned they are completely harmful and demoralizing for everybody in this business/society.

 

So, let met get this back in economic terms.......party “A”, a willing seller, should not sell to part “B”, a willing buyer, for a price they both agree is fair, because part “C”, who is not involved in the transaction, knows what’s best and should have the last say?

 

Oh yes, the economic equation of demand and supply is still working perfectly and the free market paradigm (is it how the economists call it?) is intact, at least in a sense that we cannot prevent such a transaction from occurring, just like parents can/should prevent a child from buying tobacco products when they are under 18.
However, You yourself have mentioned the good of society...is it good for society that such transactions take place? We can assume - the practice tells us - with a high degree of probability that an average prospective buyer won't handle the financing demands of such a egregious purchase, can't we?
Then we have 2008 house market crash analogy, which BTW was not allowed to be resolved on its own. Bail outs. Relief. Bankruptcies. More national debt. Escaping shame and financial consequences is demoralizing and detrimental to society. I am dumbfounded seeing regular people around me buying trailers for $50 000 because they are allured to nothing more than rumors. That's just too easy for them, which makes all it too easy for the sellers too. Mathematically everything agrees but is it generally a good thing?

 

lots of generalities in that statement that can’t really be addressed in economic terms.

I think the crux of your concern comes down to what is called “imperfect information”. Economics assumes all parties have all the knowledge they need to make the economic decision. That, humans being human, is never true, and therefore economic theory is always wrong.

Is a $50,000 trailer too much? Not if “party B” needs it to keep a team running that is generating $20K in revenue a week, and “party A” is keeping it as a spare.

Thing is, information is always incomplete, “imperfect”: but the parties involved have the most knowledge about their situation. Yes, there have been situations where that led to problems. But that needs to be looked at in perspective of the gabillion transactions that did work as intended.

The notion that “Party C” knows better than the parties involved is pretty, what is the word? Presumptuous?

 

Party C in the case discussed has the basis for being presumptuous because it is also empirical and predicting. These are not gazillions, we are discussing rather isolated field where, at this unique time, with some exceptions, it would be rather difficult for a buyer to prove that his purchase decision is not a result of some ignorance or at best a desperate decision and the only winning party is the seller.

But that's not even why I started this talk. I was implying that reselling a brand new truck that was never used was not elegant because the buyer decided not to use it for work but to sell it speculatively. There is no macro - economical merit in that. I even compared it to a parasitic behavior because from the efficiency and social merit view point, we'd prefer that the truck first to come to the hands of the final user without his need to overpay.

 

Back to rates. I find it very strange, that during busiest time of the year, the van freight is significantly dropping in volume and rates reflect that.
Usually there is a lot of Ups, Usps, FedEx, Amazon loads posted on DAT before Christmas, yet there is nothing this year.
I also started to see a lot of $300-500 short haul loads that get booked quickly.
Considering things have been slowing down since October, looks like we are at the turning point to go downhill.

 

$10,461 on 2587 miles last week for a $4.04cpm average. Rates and volume in Midwest dry van aren’t dropping at all

 

Joe...it's called, "Capitalism". It's the foundation and main ingredient that makes this country what it is for better or for worse. When I see greed that hurts others it makes me sick. That's the darkest side of Capitalism. However, FLD is simply buying/selling at a profit. I see nothing wrong with that. He's just using the system the way it was designed.