Monday, March 26, 2012

Driver Wages - Really Going Up or "Signaling"?

An interesting article trying to quantify what driver wages would have to hit to be at the equilibrium point.  However, this data is meaningless unless you determine what the target price is for transportation services?  At what point to shippers move to substitutes to offset transportation increases?

Some may think substitutes are only in the mode of transportation however that is the least efficient way to substitute.  Shippers are always tweaking around the edges with mode transfers etc. however the most efficient and biggest impact areas for shippers to evaluate are activities such as mfg site selection, load ability, inventory trade offs etc.

At what point do transportation rates get so high that the shipper changes their operational methodologies?  Until you know the answer to this question it is hard to determine what wage rate will be the equilibrium / market clearing wage rate.

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