greg334
Veteran Expediter
Again we are not a commodity, we are part of a service chain.
A commodity is a good for which there is demand, but which is supplied without qualitative differentiation across a market. Commodities are often substances that come out of the earth and maintain roughly a universal price.
A commodity is fungible, that is, equivalent no matter who produces it. Examples are petroleum, notebook paper, milk, copper, and realty.
The price of copper is universal, and fluctuates daily based on global supply and demand. Stereo systems, on the other hand, have many aspects of product differentiation, such as the brand, the user interface, the perceived quality etc. And, the more valuable a stereo is perceived to be, the more it will cost.
In contrast, one of the characteristics of a commodity good is that its price is determined as a function of its market as a whole. Well-established physical commodities have actively traded spot and derivative markets. Generally, these are basic resources and agricultural products such as iron ore, crude oil, coal, ethanol, salt, sugar, coffee beans, soybeans, aluminium, copper, rice, wheat, gold, silver, palladium, and platinum. Soft commodities are goods that are grown, while hard commodities are the ones that are extracted through mining.
There is another important class of energy commodities which includes electricity, gas, coal and oil. Electricity has the particular characteristic that it is either impossible or uneconomical to store, hence, electricity must be consumed as soon as it is produced.
Commoditization occurs as a goods or services market loses differentiation across its supply base, often by the diffusion of the intellectual capital necessary to acquire or produce it efficiently. As such, goods that formerly carried premium margins for market participants have become commodities, such as generic pharmaceuticals and silicon chips.
Think of it this way, we are not an inventories product sitting on the shelf waiting to be used and when it is used, it is no longer in that form but we are contracted where we are called upon to fulfill an obligation of the carrier, hence part of the service chain and the most important part of it.
Under Marx and some of the 20th century economist, there is supposed to be some sort of connection to a commodity and labor through a number of theories, but it doesn't seem to apply here.
The bold statement apples to our work which confirms that we are not a commodity. By using a negotiated rate between the carrier and contractor, not a market price, our services are provided based on that negotiated rate. When we consider that the market price is driven by the shipper and flat rate is used to move the freight, we are not anywhere near a commodity. Even when we have a case where percentages are used, it is still considered a negotiated rate due to the relationship between the carrier and the contractor.
A commodity is a good for which there is demand, but which is supplied without qualitative differentiation across a market. Commodities are often substances that come out of the earth and maintain roughly a universal price.
A commodity is fungible, that is, equivalent no matter who produces it. Examples are petroleum, notebook paper, milk, copper, and realty.
The price of copper is universal, and fluctuates daily based on global supply and demand. Stereo systems, on the other hand, have many aspects of product differentiation, such as the brand, the user interface, the perceived quality etc. And, the more valuable a stereo is perceived to be, the more it will cost.
In contrast, one of the characteristics of a commodity good is that its price is determined as a function of its market as a whole. Well-established physical commodities have actively traded spot and derivative markets. Generally, these are basic resources and agricultural products such as iron ore, crude oil, coal, ethanol, salt, sugar, coffee beans, soybeans, aluminium, copper, rice, wheat, gold, silver, palladium, and platinum. Soft commodities are goods that are grown, while hard commodities are the ones that are extracted through mining.
There is another important class of energy commodities which includes electricity, gas, coal and oil. Electricity has the particular characteristic that it is either impossible or uneconomical to store, hence, electricity must be consumed as soon as it is produced.
Commoditization occurs as a goods or services market loses differentiation across its supply base, often by the diffusion of the intellectual capital necessary to acquire or produce it efficiently. As such, goods that formerly carried premium margins for market participants have become commodities, such as generic pharmaceuticals and silicon chips.
Think of it this way, we are not an inventories product sitting on the shelf waiting to be used and when it is used, it is no longer in that form but we are contracted where we are called upon to fulfill an obligation of the carrier, hence part of the service chain and the most important part of it.
Under Marx and some of the 20th century economist, there is supposed to be some sort of connection to a commodity and labor through a number of theories, but it doesn't seem to apply here.
The bold statement apples to our work which confirms that we are not a commodity. By using a negotiated rate between the carrier and contractor, not a market price, our services are provided based on that negotiated rate. When we consider that the market price is driven by the shipper and flat rate is used to move the freight, we are not anywhere near a commodity. Even when we have a case where percentages are used, it is still considered a negotiated rate due to the relationship between the carrier and the contractor.
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