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The Black Market Is Becoming The Dominate Marketplace
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<blockquote data-quote="MrFedEx" data-source="post: 937335" data-attributes="member: 12508"><p>I'll re-state my point so you can hopefully understand. Prior to deregulation in the 1980's, trucking rates and airline ticket prices were basically fixed by tariffs. All of the major motor carriers operated out of the same book and life was good for the big carriers. Same with the airlines. The CAB set fares, and the major airlines were doing quite well.</p><p></p><p>After deregulation, it was a free for all, as rates were slashed to the point of barely being profitable. This was a win/win for shippers and a lose/lose for motor carriers. Big Business had just been handed a huge gift in the form of defacto subsidized freight rates. Many carriers folded, and lower cost firms sprang-up, willing to cut corners on safety to keep rates low. The same for airlines. Unions were the biggest losers because ultra-low fares weren't sustainable by many carriers, who also folded, merged, or slashed union agreements. Breaking-up the unions and reducing membership was another gift to Corporate America.</p><p></p><p>This is like manna from Heaven for Libertarians, because this is the "free market" at play. Never mind that Reagan killed-off many middle class jobs while busting the unions. But since Reagan manipulated the market, it really wasn't any more free...just rigged in favor of business and against labor.</p><p></p><p>Anyway, in today's environment trucking companies and airlines have very high operating ratios, with slim profit margins. One one hand, transportation has become a relative bargain, and many more people can afford to fly. On the other, the middle class has been reduced, and trucking companies have 70-80% driver turnover because they can't afford to pay competitive wages. They also particpate in the rate wars I mentioned, which drive down costs to business but have created other associated problems, especially in the area of truck safety.</p></blockquote><p></p>
[QUOTE="MrFedEx, post: 937335, member: 12508"] I'll re-state my point so you can hopefully understand. Prior to deregulation in the 1980's, trucking rates and airline ticket prices were basically fixed by tariffs. All of the major motor carriers operated out of the same book and life was good for the big carriers. Same with the airlines. The CAB set fares, and the major airlines were doing quite well. After deregulation, it was a free for all, as rates were slashed to the point of barely being profitable. This was a win/win for shippers and a lose/lose for motor carriers. Big Business had just been handed a huge gift in the form of defacto subsidized freight rates. Many carriers folded, and lower cost firms sprang-up, willing to cut corners on safety to keep rates low. The same for airlines. Unions were the biggest losers because ultra-low fares weren't sustainable by many carriers, who also folded, merged, or slashed union agreements. Breaking-up the unions and reducing membership was another gift to Corporate America. This is like manna from Heaven for Libertarians, because this is the "free market" at play. Never mind that Reagan killed-off many middle class jobs while busting the unions. But since Reagan manipulated the market, it really wasn't any more free...just rigged in favor of business and against labor. Anyway, in today's environment trucking companies and airlines have very high operating ratios, with slim profit margins. One one hand, transportation has become a relative bargain, and many more people can afford to fly. On the other, the middle class has been reduced, and trucking companies have 70-80% driver turnover because they can't afford to pay competitive wages. They also particpate in the rate wars I mentioned, which drive down costs to business but have created other associated problems, especially in the area of truck safety. [/QUOTE]
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