Well, kinda sorta.
YRC Trucking is a survivor as well as being a significant railroad customer. It's a combination of two former giants in LTL trucking, Roadway and Yellow Freight.
The LTL system was designed by Federal bureaucrats attempting central economic planning when trucking came under Federal economic regulation. (Regulation imposed for absolutely no valid economic reason.) The system was hopelessly inefficient but it survived and prospered because similar Federal bureaucrats protected it from competition. This included rail competition. The Feds literally killed the railroad's LCL operations.
Roadway and Yellow combined their companies and survived, barely. Other LTL carriers died like flies with trucking deregulation. They simply could not compete while saddled with their inefficient, government designed, operations.
But! A few years ago YRC was also in trouble. They made it through by basically giving the company to its creditors. That kept them going until the COVID-19 shut downs. They've had to do things such as quit paying their health insurance premiums for their employees' health coverage. They asked the insurance companies to maintain the coverage without getting the premiums. AFAIK, the insurance folks went along with it, but they weren't going to do that forever.
Enter the Federal Government once again. They've given YRC a $700 million "Loan." In return for this "Loan" the Feds now have a 29.6% ownership of YRC.
Nationalized trucking?
greyhoundsNationalized trucking?
Don't laugh, but the US government owned and ran the Mustang ranch brothel 32 miles east of Reno. Nevada. They ran it for about 18 monthes until it was sold to anothe brothel owner.
Gotta keep the girls employed, right? Seriously, is that true about the Mustang Ranch? I recall reading about it many years ago.
Yes it is. Joe Conforte who owned the Mustang Ranch was convicted of tax evasion in 1999. It was forfited to pay back taxes. Run by the US Marshalls Service until sold. BTW: Joe Conforte fled to Brazil and lived out the rest of his life down there. What I like most is that a federal law enforcement agency wa running a brothel!!!.
Well, as Reagan said, Government's view of the economy could be summed up in a few short phrases. If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
YRC stock up a whopping 74.9% today. Just think.. had you bought $1 million in shares yesterday you'd be $749,000 richer today. Insiders who knew this bailout was coming are happy campers today no doubt... and likely selling first thing tomorrow morning to lock in their good fortune.
greyhounds when trucking came under Federal economic regulation. (Regulation imposed for absolutely no valid economic reason.) The system was hopelessly inefficient but it survived and prospered because similar Federal bureaucrats protected it from competition. This included rail competition. The Feds literally killed the railroad's LCL operations. Roadway and Yellow combined their companies and survived, barely. Other LTL carriers died like flies with trucking deregulation.
Thank you for the additional information regarding YRC's lineage. In the account I read earlier, it was mentioned that the YRC is considered essential to this country's defense by the pentagon, and that is a big reason for the bail out. I guess there was also some misgivings about this company's history, given prior accusations of having bilked the government on some of it's contracts.
Question though regarding the text I've highlighted above. You say that regulation served no valid economic purpose, yet go on to mention that in the wake of deregulation that many ltl carriers "dropped like flies".
I remember well your personal long standing disfavor for regulation, but wouldn't it be fair to say that regulation must have been serving the economic interests of those carriers who subsequently failed in it's absence?
Convicted One I remember well your personal long standing disfavor for regulation, but wouldn't it be fair to say that regulation must have been serving the economic interests of those carriers who subsequently failed in it's absence?
Thanks to Chris / CopCarSS for my avatar.
Convicted OneQuestion though regarding the text I've highlighted above. You say that regulation served no valid economic purpose, yet go on to mention that in the wake of deregulation that many ltl carriers "dropped like flies". I remember well your personal long standing disfavor for regulation, but wouldn't it be fair to say that regulation must have been serving the economic interests of those carriers who subsequently failed in it's absence?
Protecting a company from competition is not a valid economic action by the government. It simply allows such a company to charge more and offer poorer service. The customers, by goverment edict, have no viable alternatives when such alternatives would otherwise be readily available. This allows the protected firm(s) to generate monopoly level profits. (That's what was going on with the LTL carriers.) The LTL carriers fought like Hell against deregulation because they wanted to keep their sweet deal.
It's important to know the truism "End users bear all costs." If someone buys a can of tomato soup and eats the soup that person pays for everything involved. They pay for the tomatoes, the can, the label, the productiion, the transport, stocking the shelf, etc. It's all in the price of the soup.
It harms the consumers of the general population when the government acts to artificially create and protect monopoly level profits for any member of the supply chain that gets the soup on the shelf.
Yes, the LTL truckers were better off under regulation. But it was to the detriment of everybody else.
I don't buy this "Essential to the Pentagon" thing. The DOD may use YRC a lot, but if they shut down tomorrow other carriers would be standing in line to move the freight.
I will bend on one thing. YRC has 30,000 employees with health care and retirement benefits, etc. 26,000 of these employees are Teamsters. It would be a harsh blow to these employees, and their families, to suddenly be out of work in this economic environment. If the government can limit the economic pain with a "Loan" that will be paid back I can readily support such action.
Murphy SidingI'm going to say yes, it did serve those that couldn't compete any other way but that wasn't a good thing for everybody else.
Okay, ...but bare with me for a second. We all know what happens to an industry after just a handful of heavyweights come to dominate it.
So, by keeping more players in the game, couldn't this conceivably be considered "preserving" competition?
The regulations might have artificially preserved 20% margins for dozens of competitors, whereas if the industry is dominated by only a couple, they might eventually carve up the market between them such that they each enjoy "spoils" that afford them each 40% margins .
You might loosely call this latter arrangement "private regulation"......or more concisely "collusion".
I realize that with trucking there is not as significant a barrier to entry as there might be with some other modes. So you invariably have some hope that if the market was dominated by just a few,....a new start up comes on-line as a "white knight". Perhaps the operators kept in business by the regulations were seen as "pre-emptive" white knights? Just a thought.
Convicted One Murphy Siding I'm going to say yes, it did serve those that couldn't compete any other way but that wasn't a good thing for everybody else. Okay, ...but bare with me for a second. We all know what happens to an industry after just a handful of heavyweights come to dominate it. So, by keeping more players in the game, couldn't this conceivably be considered "preserving" competition? The regulations might have artificially preserved 20% margins for dozens of competitors, whereas if the industry is dominated by only a couple, they might eventually carve up the market between them such that they each enjoy "spoils" that afford them each 40% margins . You might loosely call this latter arrangement "private regulation"......or more concisely "collusion". I realize that with trucking there is not as significant a barrier to entry as there might be with some other modes. So you invariably have some hope that if the market was dominated by just a few,....a new start up comes on-line as a "white knight". Perhaps the operators kept in business by the regulations were seen as "pre-emptive" white knights? Just a thought.
Murphy Siding I'm going to say yes, it did serve those that couldn't compete any other way but that wasn't a good thing for everybody else.
I'm also a big believer that very little happens for no reason.
To this end, I have to suspect that in most cases,... regulation was precipitated by abuse of some form, that the regulation was intended to remedy.
I spent an inordinate amount of time trying to decide if the phrase is "bare with me" or "bear with me". Then I started thinking about bears,and then I remembered that I need a vacation.
Convicted One Okay, ...but bare with me for a second. We all know what happens to an industry after just a handful of heavyweights come to dominate it. So, by keeping more players in the game, couldn't this conceivably be considered "preserving" competition? The regulations might have artificially preserved 20% margins for dozens of competitors, whereas if the industry is dominated by only a couple, they might eventually carve up the market between them such that they each enjoy "spoils" that afford them each 40% margins . You might loosely call this latter arrangement "private regulation"......or more concisely "collusion". I realize that with trucking there is not as significant a barrier to entry as there might be with some other modes. So you invariably have some hope that if the market was dominated by just a few,....a new start up comes on-line as a "white knight". Perhaps the operators kept in business by the regulations were seen as "pre-emptive" white knights? Just a thought.
No way. The government, stupid as they are and always shall be, would not allow competition.
There was one rate, charged by all regulated motor carriers. To deviate from this rate was to violate a Federal law. The carriers were flat out required to act in collusion. The whole purpose was to protect a selected few at the expense of many.
Convicted One I'm also a big believer that very little happens for no reason. To this end, I have to suspect that in most cases,... regulation was precipitated by abuse of some form, that the regulation was intended to remedy.
Murphy Siding. That doesn't seem like it could turn out well for anyone exept those being propped up.
Well, I don't wish to come across as argumentative, but I'm highly skeptical that any market dominating entity will have altruistic motives, either.
Murphy Siding I spent an inordinate amount of time trying to decide if the phrase is "bare with me" or "bear with me"
I was stuck in the same quandry. But since I believe I was exposing the truth, I chose "bare".
Convicted OneWell, I don't wish to come across as argumentative, but I'm highly skeptical that any market dominating entity will have altruistic motives, either.
How in the Blazes would any firm get to be "Dominating" in trucking (or railroading) unless the government throws up barriers to entry? Which is what happened.
Do you honestly believe all government actions are founded in reason? Hell, in this same time period they were trying to regulate the price for cleaning and pressing a dress shirt. FDR's follies weren't beat back until the US Supreme Court rulled the government couldn't set the price for live poultry bought in New York City.
Consumers would buy live chickens for home consumption in NYC. The Federal government, doing its best to imitate the Soviet Union, said the price of each chicken would be 25 cents. Period. The merchant and customer couldn't bargain. The merchant couldn't put the chickens on sale. Nothing. The customer couldn't even select his/her chicken. He/she had to blindly reach in and just grab a live chicken sight unseen.
Some brave and determined merchants of NYC took this to the US Supreme Court. And won.
It was an overriding article of false faith that the wise men and women of government knew best. We were all just better off submitting. Kind of like we were house pets.
Truck economic regulation (and railroad economic regulation) came from a faith, not reason.
Convicted OneI'm also a big believer that very little happens for no reason. To this end, I have to suspect that in most cases,... regulation was precipitated by abuse of some form, that the regulation was intended to remedy.
Nothing happens without somebody having an agenda! Most of the time we don't know who is pressing the agenda or necessarily what the agenda really is.
Never too old to have a happy childhood!
greyhoundsDo you honestly believe all government actions are founded in reason?
No, just for the record, I do not believe that at all. In fact I would say that the bigger part of me is very anti-establishment.
I respect your expertise in this area, and really don't want to get into a tarpit over this. Peace to you and yours.
PS: I also don't believe that unbridled capitalism is always the best solution either. Sometimes the rest of the world deserves protection from the 2% who see a very different world as they awake each morning.
Convicted One Murphy Siding . That doesn't seem like it could turn out well for anyone exept those being propped up. Well, I don't wish to come across as argumentative, but I'm highly skeptical that any market dominating entity will have altruistic motives, either.
Murphy Siding . That doesn't seem like it could turn out well for anyone exept those being propped up.
Murphy Siding I'd bet money that those entities that benefitted from regulationalso where regular doners to the political campaigns of those lawmakers who helped write, maintain and alter those regulations.
I'm sure that did happen. I've also read accounts where market dominant entities finessed regulations geared towards creating a barrier to entry, expressely to keep "low overhead start-ups" from upsetting their gravy train.
But, if you look at Greyhound's intial post, he mentions larger carriers who survived de-regulation, while many smaller LTL outfits got wiped away.
So to me, anyway, it sounds like regulations that kept smaller operators in business, were preserving options in the market place. Preventing the ruthless 2% from becoming the Tyranosaurus Rex of trucking. Maybe that's not the message he was trying to get across, but that is the way it read to me.
Once they were deregulated, the bigger companies that survived had to compete with each other, something they really didn't have to do before because they were a protected species.
Convicted One Murphy Siding I'd bet money that those entities that benefitted from regulationalso where regular doners to the political campaigns of those lawmakers who helped write, maintain and alter those regulations. I'm sure that did happen. I've also read accounts where market dominant entities finessed regulations geared towards creating a barrier to entry, expressely to keep "low overhead start-ups" from upsetting their gravy train. But, if you look at Greyhound's intial post, he mentions larger carriers who survived de-regulation, while many smaller LTL outfits got wiped away. So to me, anyway, it sounds like regulations that kept smaller operators in business, were preserving options in the market place. Preventing the ruthless 2% from becoming the Tyranosaurus Rex of trucking. Maybe that's not the message he was trying to get across, but that is the way it read to me.
Twenty years ago, YRC and its component companies were essential. With their shrinkage, not so much anymore.
Unbridled Capialism is not the best answer. I agree with that.
I submit Soically Responsible Capitalism is the best answer.
Sociallism discourages individual initiaitive and puts too much power in the hands of too few people who may not have the uncderstdanding to weld that power.
Within the auto industry itself, there is and was Socially Responsible Capitalsim. At times, one of the Big Three has an exclusive new development, but quickly made it available both to the other two and the small firms. Bus manufacturing in Europe today is similar. Mercedes, in particular as one example, supplies diesels to several of its competitors in bus manufacturing. They still make the best transit diesel bus, and it is the most expensive.
But, to me, a good example of Unbridled Capitalism was of course the destruction of the North American street railway industry. It was by no means whatsover a conspiracy, but it was Unbridled Capitalsim ln many cases. And I am not saying that all streetcar lines and systems should have survived, nor that all new light rail systems and modern streetcars make senses economically or transpotation-wise.
This is an aside: back when I was working, an occasional shipment came in by Yellow; it seemed after every time I handled such a shipment, I found yellow chalk on my pants.
Johnny
I also believe that USA freight railroading is an excellent example of Socially Responsible Capitalism, not perfect, but generally good, with the tilt more towards the Socially Responsible before HH, and still very strong at BNSF. And it is dominated by the big seven. But there are successful regionals and shortlines as well.
Murphy SidingBut what options did they have? Ship with big company at a fixed price set by the government or ship on a smaller firm for the exact same rate.
Thus potentially avoiding an industry comprised of players deemed "too big to fail"?.........
At least in the regulated model, the operation is supported by the end user. Whereas in the "too big to fail" model, we know who gets stuck holding the bag......fast forward to today.
I guess trying to get back on track, do you think the government will ever be able to sell it's stake in YRC, or are were stuck there? It would be interesting to see another "Conrail" type thing, but would the gov't have to first own it all to do such a thing?
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