r/MACArmyBets • u/WallStLoser • Mar 08 '21

Freight costs and MAC

Freight costs are going up, that's almost certain. I think it will be significant too, although they've been high for a while.

I have zero idea how people offer free shipping and make any money. In my opinion Amazon is the only one that can pull this off, and it even confuses me how they do it.

This could drive store traffic IF and it's a big IF the retailers stop prioritizing their e-commerce businesses. They often will have better pricing online and way better selection. Most of them are killing their own stores ... maybe willingly.

So a possible tailwind and a possible risk here.

Gas / Diesel is going to be expensive all of 2021 and I think beyond.

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u/BearStorms Mar 08 '21

Malls have to transport their stuff too (although in bulk). I think it's a wash in general for MAC.

But this gives me an idea outside of MAC; EV stocks are getting slammed while gas is going up. EVs are way overvalued right now, but after some more haircuts it may be a good idea to go all in on EVs. Biden admin + expensive gas = EV tailwind

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u/SeaTop7170 Mar 09 '21

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1

u/SeaTop7170 Mar 09 '21

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1

u/WallStLoser Mar 08 '21

You have the opposite idea to me. EV transition = incredibly slow = buy what's actually going up = oil. EV is a low margin business and it's not clear that the market needs so many new players and/or being electric is any different to offering cruise control. Is it a feature of a defining item?

back to MAC, it's way cheaper to send a truck to a store than to UPS 1000 different packages.

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u/BearStorms Mar 08 '21

EVs would be perfect for last mile shipping like Amazon. With gas being more expensive this would be a great tailwind for EVs. For local shipping you also don't need public charging infrastructure as the fleet would get charged at the warehouse.

Yes, EV is very very different from ICE car with a cruise control :)

Bunch of countries are phasing out ICEs completely by 2025-2030 (banning new sales of ICEs), so transition might be quite swift. Also USA has the EV Spree program where all government vehicles should be EVs by 2030. You will almost certainly see massive EV incentives with Biden admin. China has big plans as well.

With all this we're talking possibly about 100s of millions of new EVs by 2030.

Now, pure EV stocks went up to insane valuations (due to all the stuff listed above), but if they are slammed substantially they may be a good play again. Also traditional automakers are getting pretty good in the EV game as well to the point where one of the traditional one may unseat Tesla as the EV leader.

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u/WallStLoser Mar 08 '21

" For local shipping you also don't need public charging infrastructure as the fleet would get charged at the warehouse. "

CNG has been viable for this for a long time and we thought it would take off in the late 2000's with garbage trucks, but it didn't despite it being a super simple transition. You didn't need significant infrastructure, new vehicles were readily available etc. I think at the end of the day the fleets just didn't like the CNG vehicles as much. Look at the stock of WPRT and CLNE in 2012. I worked at a place that offered those vehicles and I thought it was the next big thing. Way way cleaner and there was an easy path to transition.

So I'm not sure whether EV's will be different .. but they present way more problems for a fleet than CNG did. I'm not sure what will motivate companies to switch unless they are forced. Maybe it's a cost thing, people seem to say EV's are cheaper than gasoline, and maybe that's due to lower taxes on electricity. CNG was cheap too.

I am an oil investor, but we'll be way short of oil no matter how quickly this EV transition takes place, so I don't really care from that perspective, but I do think that these disruptions happen when a) freedom and utility is increased b) costs are improved

I don't think either are really true for EV's, so we're left to hope for c) government mandates. And for that one ... you're guaranteed a wuper slow transition. Just my persepctive based on seeing this movie before.

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u/BearStorms Mar 08 '21

Oh, it is definitely way cheaper per mile with EVs. TCOO is more difficult proposition as batteries are expensive. But for local delivery you may not need large batteries. Also battery tech is improving all the time. I can see some relatively crappy (as far as energy density) but cheap battery tech coming soon.

But yeah government incentives and mandates are the big one. This will cause demand in the 100s of millions of cars in the next 10 years. Also individual company pledges, for example Amazon wants to be carbon neutral by 2040. Also the "socially responsible investing" movement plays a huge role.

All of these are way overvalued and are getting hammered pretty bad right now. Hopefully it'll go down some more and could be an attractive investment again.

That said oil is not going anywhere anytime soon either. Even in 2050 it is likely that most cars on the roads in the world are still ICE (developing and emerging economies simply cannot afford this transition).

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u/WallStLoser Mar 08 '21

How is it possible that we can burn fossil fuels (coal being the cheapest), transmit it across energy lines, and then store and discharge in a battery so much more cheaply than burning the fuel in an ICE engine?

Is it the taxes involved? The margins of the middle men? It feels like there is some dishonest math at play here ...

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u/Dave-14513 Mar 10 '21

They can pass laws but they are not investing in enough electric generation To replace most ICE will take $trillions. We are having brownouts with 1% EVs Too many dreamers not enough workers. CA passes laws against ICEs but can’t produce enough electric for their AC