Sunday, December 20, 2015

Deflation in Trucking? Then Just Make Things Worse!

In yet another stupid move, the hegemon is dealing with the fallout of bad policies with more bad policies.  What do you do when your economic policies lead to overcapacity in freight?  Slow the vessels and trucks down.
Vessels are now operating at an average of 9.69 knots, compared with 13.06 knots seven years ago, according to data compiled by Bloomberg.That means Nike sneakers and Barbie dolls made in China can now take two weeks to arrive in Los Angeles and a month to reach Le Havre, France — a week longer than if the ships were moving at full speed. And there's scope for ships to go even slower, according to A.P. Moeller-Maersk.
Not only ships, but trucks...
The rule would require the installation and use of speed limiters on heavy trucks, though FMCSA hasn’t said what the governed speed would be.
Now ocean freight rates, contrary to what they teach in schools, are pretty much irrelevant in int'l trde of specialty goods.  They are critical to the "get big or get out" mass merchandiser welfare-queen businesses like walmart, petc, toys-r-us, etc.

When it takes 10% longer to deliver goods, it takes 10% more capacity to deliver all the goods.  That truck taking 22 days to deliver instead of 20 cannot carry any other freight while it is taking its first load.

So invite misallocation and malinvestment thru lending credit at usury, and then put an unwarranted stress on the economy when the harm manifests.  Crazy policies.

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