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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 659.00+1.0%Nov 21 4:00 PM EST
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To: flatsville who wrote (39711)2/11/2000 9:33:00 AM
From: donald sew  Read Replies (1) of 99985
 
Flatsville,

>>>>> In an interview a regional trucking broker claimed that another month of this would put him out of business and his truckers would have problems with making payments on their rigs. This leaves me wondering why they haven't just jacked-up their rates accordingly so they can run at a profit? Why they've decided to let the inflation buck stop with them so to speak? <<<<

I use to be in the transportation biz, and had much exposure to the trucking industry. The problem with increasing rates is that many of the rates are locked up in contracts which normally lasts 1 year. This does not mean that all traffic is locked up in contracts but that the contracts makes it very difficult to raise rates for the non-contract biz. Lets say that I had negotiated a rate for 25,000 containers to move at a certain rate, and I fulfilled my contract. The amount above 25,000 can then be charged the higher rates. Guess what, if the trucking company said to me that I had to pay higher rates I would go elsewhere. Can they afford to take the chance of losing 25,000 containers worth of biz. This keeps the prices low and hard to negotiate. Frankly, I always felt sorry for the truckers when we negotiated, since we always had the advantage over them and we knew it.

seeya
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