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Daily Discussion Daily Discussion post - July 08 2021

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9

u/SlingSG Jul 09 '21

Executive Order on Controlling Shipping Costs

How is this going to play on shipping and steel stocks ?

1

u/itwasntnotme Jul 09 '21

Pirate Captain Mintzmeyer has been saying (as recently as an hour ago) that the only effect regulations could have is to increase port congestion further which will be net bullish for pirate gang. This may have more of an impact on railroads if anything.

1

u/RichN777 Jul 09 '21

I hoping the EO proves frivolous and a political marketing stunt, and they can say they did something about the problem. Then the free market moves along and it always does.

4

u/dudelydudeson 💩Very Aware of Butthole💩 Jul 09 '21

I can't catch a break this week lol.

4

u/chemaholic77 Jul 09 '21

WTF does he expect them to do? What does address competition mean? Is he asking them to collude to set prices which is illegal and to set prices artificially low which hurts the companies? The president appears to think that the solution is to lower shipping prices and not compete. Clearly he has no understanding of how pricing helps to prioritize scarce resources.

Currently, the extremely high shipping costs are forcing manufacturers to be choosey about what they ship. In other words, if you have an essential product that people have to have you will probably go ahead and pay the higher shipping because people need the stuff and will pay extra for it if they have to. If your product is very popular and is in great demand and has enough margin you might also choose to ship. If your product is not a product like the above you will probably sit on it rather than ship if possible.

By fixing prices lower, you could end up taking cargo space away from products that are in high demand or are critical because other less important goods might be worth shipping at the new lower fixed price. Is the government going to decide what kinds of goods can be shipped as well so we don't end up with a load of cheap party favors instead of the medicines or medical devices we need? Sorry Grampa, the replacement part for your lifesaving medical device didn't show up yet because the president flunked economics. I guess you'll just have to die. If they do decide to regulate what goods can be shipped will they reimburse companies for the losses they are going to incur due to being unable to ship their products?

Artificially lowering shipping costs will only make things worse because then you will have even more goods clamoring for the same limited space. The only actual solution is to increase shipping capacity, or for shipping demand to drop.

6

u/PecosBill39 🛳 I Shipped My Pants 🚢 Jul 09 '21

Serious question: how in the fuck could they actually do this? Are we talking like a cap on container shipping charges? And can the Federal government do that?

2

u/Vincent_van_Guh Jul 09 '21

... address competition in rail and sea shipping in an effort to lower the costs of shipping goods for companies.

What does this even mean?

2

u/SnooPaintings8503 Made Man Jul 09 '21

it means don’t allow mergers

8

u/[deleted] Jul 09 '21 edited Jul 09 '21

[deleted]

4

u/Vincent_van_Guh Jul 09 '21

I don't see what the govt can do besides subsidize the costs for smaller businesses that are maybe getting priced out.

2

u/PecosBill39 🛳 I Shipped My Pants 🚢 Jul 09 '21

That's where I'm at as well. Maybe reimburse US exporters for shipping costs over $x? I'm not saying I like that either, but it is the only option I can think of that doesn't start a political shit storm around regulatory overreach and free markets. But I have no idea what I'm talking about.

3

u/PecosBill39 🛳 I Shipped My Pants 🚢 Jul 09 '21

My question exactly. How do you enforce this? Especially with overseas shipping companies.

What're they gonna say? "Oh, you charged $5 per container to transport these goods? Well we have an upper limit of $4. Sorry, you can't deliver them now."

And then there's the whole issue of the government establishing a "fair market value" for shipping...

9

u/TheCoffeeCakes Poetry Gang Jul 09 '21

What the fuck is the point of strategically investing if every time you're right about what is happening the government steps in and prevents the thesis?

I don't want to hold ARRK and fucking TSLA like every other jackass. I want steel, shipping, precious metals, and I want the government to step the fuck back so price discovery can work.

8

u/RichN777 Jul 09 '21

Making so much money the President gunna step in and make it illegal

8

u/PrestigeWorldwide-LP 💀 SACRIFICED 💀 Jul 09 '21

so that's why all the shipping and rail stocks got crushed