Editorial: Invisible Hands at Work
This Editorial appears in the Nov. 28 print edition of Transport Topics. Click here to subscribe today.
Watching markets at work does not have the attention-grabbing ability of championship sports or, say, the recent presidential election, but it is a worthwhile pastime for what it reveals about human ingenuity and problem-solving through subtle adaptations. Consider . . .
Beleaguered trucking, beset by mushy freight volumes, is suddenly competitive with mighty freight railroads (story, p. 3). Rail shippers told a curious stock analyst that trucking companies eager for business are offering trucks, fast service and appealing rates to bulk commodity shippers.
This may not be the juiciest way to get paid for operating a truck, but it certainly beats standing idle while a bank demands monthly payments.
Some shippers use the trucks for making complete deliveries, others for shorthaul trips to skip Railroad A in favor of hooking up with a preferred Railroad B.
Clever folks those shippers, and kudos to the truckers for helping them — even doing so without a government grant or study.
More than two centuries ago, Scottish philosopher Adam Smith, the father of modern economics, said people would seek out economic opportunities as if led by “an invisible hand.” This doesn’t always work, but you’d be amazed at how often it does.
In our front-page tonnage story, American Trucking Associations economist Bob Costello said one of the main reasons demand for freight transportation has been slow is that inventories became bloated. Shippers did less shipping and cleaned off their shelves.
As a result, “there has been enough improvement that the negative [inventory] drag on tonnage shouldn’t be as large going forward,” he said.
Our truck registrations story, also on the front page, provides details on calculations made by executives at Knight Transportation on which events must happen and when decisions must be made to operate profitably. It all makes perfect sense, but it’s useful to see the process dissected so precisely.
Cross-border trade under the terms of Nafta is another example. Millions of private decisions get made on what to produce or buy, when and where to do it, and then how to move all of these goods.
Imports and exports to and from Canada and Mexico generate large levels of employment and consumer happiness across North America. It’s a particularly good business for trucking, which ATA says moves more than 75% of the freight involved.
North American trade has made good livelihoods for many people, including a lot of Americans. Politicians should tread carefully before changing the current arrangement.
