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Trucking is a very low margin business. These guys live and die based on controlling costs. Quoting $700B total industry revenue and saying there's room to spe

by cb18 11y ago

Trucking is a very low margin business. These guys live and die based on controlling costs. Quoting $700B total industry revenue and saying there's room to spend on safety is meaningless... Would love to see a more in depth analysis on the issue from a financial perspective. And fta: The industry also bases its opposition to safety-rule changes on money, saying that increasing costs will hurt profits Excuse my bluntness, but this is a terrible argument. Saying that safety measures are too costly is ridiculous, because what is happening is that all the other road users are bearing the cost in death and dismemberment when the trucking companies should be bearing the cost in dollars spent on the available safety measures. Trucking companies absolutely should not be seeking out slightly higher profits on the back of death and destruction. It's a net negative for the entirety of society. You have the truck companies sucking out this little bit of extra profit through their regulatory capture at a much greater cost to the rest of society. Think about the slight difference improved safety measures would make to the bottom lines of these companies. Then think about all the years of life they are destroying through negligent safety measures, and think about all the things those years of life could have contributed to the world. The more I type this out the more I realize how absolutely indefensible this argument is, "Yeah, we'll just carry on killing people, because preventing it would cost us a little bit of money..." That is just stomach churning in its crass indecency.

Retric 11y ago
In an Efficent market it's to buyers not the industry that pays for regulation. The only way raising rates hurts an industry is when it reduces demand. Full disclosure I have relatives that own and operate a fairly large shipping company they really don't care about industry wide effects like fuel costs. Thinks like software integration with their customers are compeditive advantages, regulation just gets passed along. Though, the overall economy is also important as people don't avoid shipping a PC because transportation is adding an extra 1/20th of a percent to the cost, but of nobody is buying then there is no need to ship.
- cb18 11y ago
  I'm not exactly sure what you're saying. Regulatory capture and efficient markets can't coexist. (My impression of regulatory capture on this matter comes from the OP, it's the first I've really heard of this safety issue.) I already explained in my above post that it is society at large that is currently paying for this with death and destruction on the highways. And that's why this is such a barbaric position. Say that the needed measures are put in place and this problem is alleviated. And during the implementation of the needed measures, costs get passed along the line and a few extra cents are tacked on to consumer products. Well, significantly reduced highway deaths and people paying a little extra for whatever is obviously the preferred situation. But then what will likely happen is that somewhere in the cost chain someone will improve/innovate something that lowers the cost of some particular element in the cost chain, then what the market will bear will adjust and we'll be back to the same or lower consumer product prices plus reduced highway deaths. What's blocking this process from happening is, according to this article, the short-term thinking and profits over lives stance of the trucking companies.
  - Retric 11y ago
    Suppose the industry margin averages out to 3%. Suppose 1/3 of shipping cost is fuel and suddenly that increases by 100%. That's a 33% increase in cost. And with 3% margins no shipping company can eat that. So, the industry raises prices by 33%. OMFG that's got to have a huge impact right? Now step back, If a 3 percent of a TV's cost is shipping that increases 33% to 4% then the TV now costs ~1% extra which has minimal impact on demand. So, people are shipping about as many TV's. Net result increases in costs only impact customers when shipping is a major component in the total cost. Which is fairly rare. In the end the industry is tied to the overall economy much more than there specific costs.
    - robryan 11y ago
      As long as there is enforcement, so your competitors can't simply ignore or not properly implement changes and gain a pricing advantage.

by cb18 11y ago

Retric 11y ago

In an Efficent market it's to buyers not the industry that pays for regulation. The only way raising rates hurts an industry is when it reduces demand. Full disclosure I have relatives that own and operate a fairly large shipping company they really don't care about industry wide effects like fuel costs. Thinks like software integration with their customers are compeditive advantages, regulation just gets passed along. Though, the overall economy is also important as people don't avoid shipping a PC because transportation is adding an extra 1/20th of a percent to the cost, but of nobody is buying then there is no need to ship.

cb18 11y ago
I'm not exactly sure what you're saying. Regulatory capture and efficient markets can't coexist. (My impression of regulatory capture on this matter comes from the OP, it's the first I've really heard of this safety issue.) I already explained in my above post that it is society at large that is currently paying for this with death and destruction on the highways. And that's why this is such a barbaric position. Say that the needed measures are put in place and this problem is alleviated. And during the implementation of the needed measures, costs get passed along the line and a few extra cents are tacked on to consumer products. Well, significantly reduced highway deaths and people paying a little extra for whatever is obviously the preferred situation. But then what will likely happen is that somewhere in the cost chain someone will improve/innovate something that lowers the cost of some particular element in the cost chain, then what the market will bear will adjust and we'll be back to the same or lower consumer product prices plus reduced highway deaths. What's blocking this process from happening is, according to this article, the short-term thinking and profits over lives stance of the trucking companies.
- Retric 11y ago
  Suppose the industry margin averages out to 3%. Suppose 1/3 of shipping cost is fuel and suddenly that increases by 100%. That's a 33% increase in cost. And with 3% margins no shipping company can eat that. So, the industry raises prices by 33%. OMFG that's got to have a huge impact right? Now step back, If a 3 percent of a TV's cost is shipping that increases 33% to 4% then the TV now costs ~1% extra which has minimal impact on demand. So, people are shipping about as many TV's. Net result increases in costs only impact customers when shipping is a major component in the total cost. Which is fairly rare. In the end the industry is tied to the overall economy much more than there specific costs.
  - robryan 11y ago
    As long as there is enforcement, so your competitors can't simply ignore or not properly implement changes and gain a pricing advantage.