Trucking is a commodity. Service is not.
BY CRAIG FULLER, CEO OF FREIGHTWAVES
I have been around trucking for 42 years – literally my whole life. My grandfather and father founded trucking companies. I began to learn about trucking when I was very young, because I grew up in a trucking family. Family dinners and vacations revolved around trucking. It would be unusual for my family to go through a single dinner without something about trucking coming up.
I learned about economics from my father, but rather than talking about the broader economy, his lessons about the economy were all grounded in the trucking market. When I was in college, I started to learn about the broader economy, economic theory, and financial markets. I also learned the meaning of commodities.
The definition of a commodity, according to Investopedia, is:
A commodity is a basic good used in commerce that is interchangeable with other goods of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers.
In trucking terms, if the providers of trucking services are “interchangeable,” meaning that comparisons between one trucking firm and another are nearly impossible; therefore it meets the definition of interchangeable. Or to borrow a market term – “fungible.” I have been around trucking for 42 years – literally my whole life. My grandfather and father founded trucking companies. I began to learn about trucking when I was very young, because I grew up in a trucking family. Family dinners and vacations revolved around trucking. It would be unusual for my family to go through a single dinner without something about trucking coming up.
I learned about economics from my father, but rather than talking about the broader economy, his lessons about the economy were all grounded in the trucking market. When I was in college, I started to learn about the broader economy, economic theory, and financial markets. I also learned the meaning of commodities.
The definition of a commodity, according to Investopedia, is:
A commodity is a basic good used in commerce that is interchangeable with other goods of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers.
In trucking terms, if the providers of trucking services are “interchangeable,” meaning that comparisons between one trucking firm and another are nearly impossible; therefore it meets the definition of interchangeable. Or to borrow a market term – “fungible.”