Insider Secrets to Successful Freight Brokering

The Highway Bill

The Highway Bill is making its way (or is it?) through the halls of Congress. There is the Senate and the House version with a lot of uncertainties involved in both versions.

The Federal government has, in the past, been the primary force in constructing and maintaining our highways, bridges and other surface needs. Most of the funding comes from the gas taxes which have been dwindling over the past several years due to several reasons: less driving and better gas mileage are two of them.

There are billions of dollars needed just to maintain our infrastructure without even looking at new construction. Needless to say, there is a short fall between what revenues are projected against these sky-high estimated costs.

Proposals to make up the shortfall range from taxing the rich (as always) to opening up the Keystone pipeline and generating additional revenues that will then be taxed.

Then some suggest we stop “federalizing” our infrastructure and go the opposite way. They say gasoline tax monies should be given back to the states in block grants and let the states deal with their intra state needs.

State and local governments are so strapped for money that tax receipts returned to them could be used in better more efficient ways. For example, Governor Mitch Daniels leased the states highway problems to private investors for 75 years. The state gets $3.8 Billion dollars and, in turn, the private investors are responsible for all road operations and maintenance.

After all, why should the federal government get so absorbed in the economy the way it has in the past? There are so many inefficiencies when the Feds get involved and, perhaps, the worst being the political pressures that evolve.

Decisions have often been made on “political” bases rather than “economic” ones.

Instead of designing programs that make economic sense in needy areas, the government all too often creates programs that waste billions on projects that suit political purposes rather than real needs.

What can you and I do about this? First of all, get familiar with some of the issues. Then, this coming election, get people in power who understand that the Fannie Mae and Freddie Mac ways of “regulating” our economy are not paying off. Worse yet, they are the precursors to economic inefficiencies and downturns.

Which Is First? Chicken or Egg? Egg or Chicken?

You hear a lot of talk from politicians and others about creating jobs. They say that this is the single most important factor in getting our economy back on track. And, job growth has been lackluster despite what some are saying.

One thing that I don't hear much about is creating consumers. Consumers create demand for products and that in turn drives the need for new jobs.

Wait a minute - is it the other way around? Jobs provide dinero so families can buy the things they need (and some of the things they don't exactly need as well). So, which comes first? Jobs can't be created unless there is demand; consumers can't purchse items unless they have a job.

Will someone stand up and clarify all this! Please! Make your comment below here.

Will Inflation Work without Hurting Freight Industry?

Most adult Americans know that our country is in debt like never before. And it is getting worse. The sad fact is that the US government borrows about 42% of every dollar we spend - and the government spends ALOT!

In the middle of 2008, there was a huge spike in government spending. Since then, the trajectory of spending has increased its ascendancy. That is, not just an increase, but the rate of increase has steepened.

Some experts feel that the only way to reduce our debt is to ensure that inflation rises. This would result in, among other things, our government paying back debt with cheaper dollars. We would get more of a paydown by repaying debt with cheaper dollars.

For example, a dollar of repaid debt a year from now might be worth only 94 cents. But our debtors would be writing off the $1.00 instead of 94 cents.

Of course, many people want to cut the dragon's head off and get to the source of the problem - ever increasing government spending.

Cutting spending may be painful; yet, increased inflation will have painful results also. How will this affect freight and transportation?

Taxing the rich is not a solution as some assume. You could take ALL the income that the wealthy receive and it would not put a scratch in our debt.

I have no solution and am no different than most Americans. But it certainly makes no sense to attack those who want reduced government spending. Afterall, that is the source of the problem. Government spending WILL increase but can we find alternate sources of income to fund these increases?

Can we reduce the rate of increase? Can we learn to rely less on borrowed money?

What is YOUR opinion? Both amature and expert opinions welcome.

My How Things Change .....

An interesting article appeared on the Internet illustrating how things have changed since 1940. This is 72 years ago. Yes, you would expect some change and dramatic ones at that. So here are some facts:

The number of college graduates over 24 yrs of age leaped six fold. Washington DC, Massachusetts, Colorado, Maryland, New Jersey and Virginia hold the largest percent.

The number of employees in the workforce tripled. No surprise.

But here is something to make note of - the MAKE UP of the workforce has changed dramatically.

Years ago, manufacturing and agriculture made up 42% of the workforce. These individuals often had hard labor, working by the sweat of their brows.

Nowadays, nearly 35% of the workforce consists of educational, healthcare, and social services as well as retail trade. These are hard working people, for sure - but sometimes not by the sweat of their brows.

I hear political commentators talk about the shrinking middle class, the "poor" hardworking individuals, who are being taken advantage of by the "haves". It's the "haves" vs the "have-nots" in their opinion. This is bunk.

The middle class is alive and well and probably a third of those will go on to the upper middle class while a whole lot more of the lower class will be moving into the middle class.

Social mobility is the reason and some political commentators get hung up on looking just at the statistical categories which will never change - but the make up of those inside them will change.

Freight Brokers Stuck in the Middle

Freight brokers operate in an envoronment of constant change and constraints. Freight brokering is no different than any other business in this respect.

Some of these changes and constraints come from the government, both state and federal. Specifically, increasing governmental regulation at the state level has far reaching effects and may actually backfire against the intended results.

There is an economic term called "elascity of demand" which measures how the demand for a product changes as the price changes. Some products with price changes have little effect on demand for the product. Some have a gigantic effect.

Then let's look at an example: the state of California. They have become increasingly burdensome on business by over regulating. So, the price of doing business goes up. The elascity is high because companies start relocating to states where there are fewer regulations and constraints. Fewer regulations mean lower costs which means a lower elasticity, so to speak.

In those states with a more pro business environment, like Texas for example, the effect of over regulation in other states is gaining new business due to others fleeing the highly regulated states.

It apalls me that those in power cannot see the effects of their actions. Regulators are trying to achieve certain effects (like going green) but they end up biting the hand that feeds them. It doesn't make sense.

We are in a time of very, very crucial balances where one slip one way or the other will upset the cart and new businesses and old will be reeling to find a foothold.

The end result, businesses will scramble to relocate to those areas of fewer constraints. And everyone gains but not after a struggle.

Freight Brokers Dealing with High Fuel Costs – Part VI

In Part V, we mentioned some problems in deciding how to fund future highway spending. Normally, fuel taxes make up the biggest portion for budgets and spending. Yet, fuel taxes have been decreasing since 2007. So, the never-ending problem remains: do you raise taxes or cut spending or both?

There is another aspect in deciding how to fund spending. There is the controversy between federal or state responsibility. Who should possess the bulk of the responsibility for our highways and byways?

Today, the House Republicans are proposing a spending program of about $260 billion over the next 4 ½ years. There are portions of the bill which will certainly face opposition such as giving the states greater power than the feds over how the money will be spent.

There is also a gap between projected fuel tax receipts and proposed expenditures. Part of the solution provided by the House Republicans is to expand oil and natural gas drilling.

There is such a backlog of needed repairs and maintenance in addition to maintaining current needs that something bold is needed. New revenue sources seem to be a logical option. Rather than pushing for higher taxes, House Repubs plan on sustaining the highway fund by proposing these new revenue sources.

It is further estimated that for each $1 billion in transportation related spending about 30,000 jobs are supported. You do the math. $260 billion times 30K is about 8 million jobs that are supported over a four year period.

The Democrats are working on their own version of a highway bill for spending $109 billion over the next two years. But the Dems have not given any details as of yet.

Part VII will be the final part and we will look more specifically at freight brokers.

American Radicalism and Social Mobility Part 3 of 4

You might be a truck driver, a plumber, a furniture upholsterer, or a police man. Or maybe a butcher, a baker, or a candlestick maker – whatever. And, you may never have had a chance to go on for a higher education. You are sacrificing for your kids in ways that only you and God know about. You want your kids to get into college and find a better life – something you were never able to do.
There are millions of young people right now in high school and college who have big dreams. They have mentors who are helping them shape their future. Some of these young people are struggling and making their own sacrifices because they are hoping for a better future.
And, yes, some of these young people will go on to achieve immense success. They will become worth millions and perhaps billions.
Except for exorbitant college costs, the playing field is more level than it ever has been. Grants and scholarships are available for those who qualify and are aggressive. School/work programs are available for those who do their homework.
As a result, upward social mobility is alive and well. Success crosses every racial and social segment of America. All of this can be achieved but usually not without hard work and, again, sacrifice.
Yet, some individuals want to impose penalties on these successful, upward social movers. They want your successful son or daughter or nephew or niece to transfer some of their success. They want these successful individuals to “pay their fair share”.
Equally bad, they encourage the “have-nots” to look to others for support.
Let me tell you, you could read story after story of how successful and powerful individuals have turned much of their fortunes over to public causes, including the poor, the helpless and those without education.
And they did it without government intervention. They did it without increasing the debt and more dependence on foreign money sources. They did it despite paying their share of taxes.
What will be the course of things over the next few months? Look for Part IV.

American Radicalism and Social Mobility Part 2 of 4

In my first year in college (many years ago), my roommate introduced me to an author named Saul Alinsky. I read Saul's book, "Reveille for Radicals". I liked it. I went on to revere Cesar Chavez who helped organize the poor and helpless farm workers.

My impression was that each of these individuals, Saul Alinsky and Cesar Chavez, sought to help people empower themselves - to enable them to breakdown entrenched inequalities and downright immoral obstacles.

It was the little man, the helpless and the poor learning how to organize and confront powerful deterrents. I loved it. People became "radicals" and revolutionaries just like during the time of our forefathers. They began to build roads to improve their plight and to get ahead.

People could dream of, and achieve, better things for their lives and for their kids as well. This is raw Americanism at its best.

But something went astray over the years. Nowadays, instead of empowering individuals, progressive liberals want to empower the government, making the small person, the poor, and the helpless become more dependent on the government.

Radicalism nowadays is focused on turning people away from self-help and individualism. It is turning honest, hard-working people into bitter, mistrusting people. What are they bitter about? Whom do they mistrust?

They are bitter toward, and they mistrust, ANYONE who has achieved various degrees of success. Now wait a minute. ….

The idea for radicalism in the first place was to help people achieve a better life for themselves and their kids? To allow them to become independent where they could forge new and better inroads into mainstream society, creating more and more opportunities? Each individual chooses for him or herself whether they want to make the effort and endure the sacrifice to better themselves.

If we are waiting for the government to "give" us a peachy life, we end up destroying our liberties and replacing them with horrible consequences that our fore fathers and the Constitution never envisioned. 

In Part 3, we will explore this further.

The Keystone Pipeline

I have first-hand knowledge of how the boom in North Dakota is benefiting thousands. The Keystone Pipeline would have continued this boom. But, for now, it's kicked to the side. What is your opinion? You can take action here.

Freight Brokers Dealing with High Fuel Costs – Part V

There will be a great deal of squabbling among our politicians over the next several months as they prepare to deal with the Highway Trust Fund, fuel taxes and other related transportation needs.

These issues can get quite complicated and this series of blog posts will in no way attempt to dissect these issues.  Nevertheless, the Highway Trust Fund has two components – a portion of revenues is for highways and the other portion is for mass transit. The highway portion takes up the bulk of the trust fund.

Spending on projects is not automatically triggered by revenues credited to the trust fund. Funds have to be “obligated” and “appropriated” and there are limits on these obligations, appropriations and ultimate disbursements.

The fact is current federal taxes on fuel are not enough to fund current needs. As mentioned in an earlier post, gas demand has fallen and this results in fewer dollars going into the trust fund. Better fuel efficiencies also mean decreasing the amounts going to the government.

There has not been an increase in fuel taxes since October of 1993 and this may provide some incentive to enact another increase to help cover funding needs.

But there may not be a lot of support to raise taxes in an election year (unless the proponent is not up for re-election).

Certain segments within the trucking industry are clamoring for more funding for the near bankrupt highway trust fund. Yet, they themselves will bear a large brunt of higher fuel taxes.

It’s a tricky scenario for everyone. It’s “I’ll be hanged if I do and I’ll be hanged if I don’t”.

Some of the opposition to higher fuel taxes is the fact that some of the current funding is diverted from roads and bridges. For example, some monies are spent on bike paths and other non-related and non-essential projects.

In Part VI, I will give some opinions on where I think this is all going.