posted on Oct, 21 2012 @ 02:53 PM
Originally posted by dogstar23
reply to post by herrw
Really interesting post and perspective. S&F for that. Not sure I agree with your outlook, though the premise is solid. I'm looking forward to
delving further into the thread, though I will add this from a point of knowledge - currently, transportation costs for goods average about 2%. Should
diesel fuel rise from the current $4.15 average in the US to $12.45 (tripling), transportation costs for goods will rise to more like 4% (assuming the
cost of those goods doesn't change.) doubling the transport coats is a big deal, but moving $500,000 in goods from LA to NYC currently runs about
$5000 by truck, less by train. Its not as big of a deal as you'd think.
Excellent response. I used to believe the same thing, until I delved further into the transportation industry and the conditions under which it
Consider the following:
Large carriers transport goods on a contractual basis. Worded into the contracts is a fuel surcharge, usually, which is figured weekly. The price at
which the shippers feel they can sell their goods determines the total transportation cost which they can absorb. Smaller carriers tend to have fewer
contractual relationships and instead rely upon brokerages to generate business. The brokerages bid on truckloads of goods, with the understanding
that their maximum rate is dictated by the cost of goods less the cost of transport. In the end, it comes down to what the market will bear.
Now, add into the mix hyperinflation. If hyperinflation begins on a monday, and fuel prices are tabulated on mondays, then the large carriers must
absorb the hyperinflating cost of fuel for a week before they may again yield a profit. Even then, the profit will only be earned for a single day,
after which they will return to unprofitablity. For smaller carriers, there is not enough gold in their war-chests to absorb the costs. The small
carriers will fall first, much like Arrow did a few years ago. Companies such as Swift and Werner and JB Hunt would survive for one or two weeks
before they exhausted their reserves and were forced to park their trucks. Smaller companies would, I expect, cease transport altogether within the
first few days. Independent owner-operators would simply go out of business because the market for trucks would likewise fall through the floor.
After this, the government would be forced to nationalize the transportation industry, or allow city-dwellers to starve. Once the nationalization
takes place, how does the government trade for fuel? Under hyperinflation the only means to do so would be to print more money, thus causing further
inflation. See the nasty cycle? Soon you have to nationalize the food outlets, establish curfews and/or martial law, and then the S really does
HTF--if only because the United States is a country with idealized roots in armed resistance.