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Yes, but the niche providers flourish when the market is good, but they're the first to get killed off when it's bad. The post-2008 economic collapse saw mass c
by kyllo 7y ago
Yes, but the niche providers flourish when the market is good, but they're the first to get killed off when it's bad. The post-2008 economic collapse saw mass consolidation in the industry as smaller players either went bankrupt or got bought up by competitors.
There's also a big difference between asset-owning and non-asset-owning carriers.
You can start a logistics company with very little capital--just licensing, bonding, and insurance. In that case, you're basically a travel agent for freight. Some of these agents have grown into very large companies, however, because they help big customers allocate freight across many asset-owning carriers and mitigate their risks, and they handle dealing with international customs and compliance regimes. They're like an outsourced supply chain operations department.
In air and ocean, the niche asset-owning carriers generally have some statutory protection. A good example is Jones Act carriers--there's a law called the Jones Act that requires that only American flagged carriers can transport freight between any two American ocean ports. That means there are only a couple of ocean shipping companies that are allowed to go to places like Hawaii, Alaska, Guam and Puerto Rico.
- sokoloff 7y agoThey are allowed to go to Puerto Rico (or AK/HI/Guam), but they couldn’t then continue to Miami or Norfolk (or Long Beach) or another US port from there, which makes it uneconomical for them to stop in PR/AK/HI due to the Jones Act.
- Itaxpica 7y agoInterestingly, similar laws come in to play with cruise ships - non-US-flagged passenger ships that depart from a US port aren't allowed to return to a US port without first stopping at a foreign port. Almost all American cruise ships are flagged in countries outside of the US. The practical effect of this is that the many cruises that travel between the west coast and Alaska all have to stop over in Canada before they can return to the west coast, which is a major driver of tourism to Victoria, BC - since that happens to be the largest port city between Alaska and the mainland US.
- 0xffff2 7y agoIANAL, but I don't think it's "similar" laws, but the exact same law. Cruise ships are just (very inefficiently) transporting human cargo.
- BurningFrog 7y agoThe Jones Act is such a shit show. Almost no one in the mainland US knows about this Crony Capitalist act than enriches a tiny group of people, but makes life in Puerto Rico, Guam, American Samoa etc quite seriously more impoverished than there is any need for it to be. https://reason.com/tag/jones-act/ https://reason.com/tag/jones-act/
- repiret 7y agoThe problem with the Jones Act isn’t so much that the ships have to be US flagged - that’s a natural requirement for a domestic operation. The problem is that it requires them to be US built but the US no longer has a competitive shipbuilding industry.