SoylentNews is people
SoylentNews
Alan Minter writes at Bloomberg that between 1955 and 1975, the average volume of a container ship doubled -- and then doubled again over each of the next two decades. The logic behind building such giants was once unimpeachable: Globalization seemed like an unstoppable force, and those who could exploit economies of scale could reap outsized profits. But it is looking more and more like the economies of scale for mega-ships are not worth the risk. The quarter-mile-long Benjamin Franklin recently became the largest cargo ship ever to dock at a U.S. port and five more mega-vessels are supposed to follow. But today's largest container vessels can cost $200 million and carry many thousands of containers -- potentially creating $1 billion in concentrated, floating risk that can only dock at a handful of the world's biggest ports. Mega-ships make prime targets for cyberattacks and terrorism, suffer from a dearth of qualified personnel to operate them, and are subject to huge insurance premiums.
But the biggest costs associated with these floating behemoths are on land -- at the ports that are scrambling to accommodate them. New cranes, taller bridges, environmentally perilous dredging, and even wholesale reconfiguration of container yards are just some of the costly disruptions that might be needed to receive a Benjamin Franklin and service it efficiently. Under such circumstances, you'd think that ship owners would start to steer clear of big boats. But, fearful of falling behind the competition and hoping to put smaller operators out of business, they're actually doing the opposite. Global capacity will increase by 4.5 percent this year "Sooner or later, even the biggest operators will have to accept that the era of super-sized shipping has begun to list," concludes Minter. " With global growth and trade still sluggish, and the benefits of sailing and docking big boats diminishing with each new generation, ship owners are belatedly realizing that bigger isn't better."
(Score: 3, Insightful) by RamiK on Tuesday June 21 2016, @07:32AM
You know how you can tell a bullshit economics story? No tally. The article throws around insurance estimates, and fuel consumption figures... Some higher, some lower... And then it concludes those big ships are just not worth it based on... What exactly? Where's the breakdown? Where's the spreadsheet comparing both options?
This last decade, there were no big shipping disasters. Fuel efficiency for smaller vessels didn't increase. Insurance didn't increase. Docks always needed new cranes. Staff was always necessary. And yet, the orders decreased...
It's not "sluggish growth" or "slowing down". We all know what it is.
Just say it: Recession.
Was that so hard?
compiling...
(Score: 2) by shrewdsheep on Tuesday June 21 2016, @07:56AM
It seems to me that there is another aspect. With continued productivity increases and raising fuel prices (as we will see shortly again) there seems to be a tendency to bring production home which will be the cheapest option long run. I would also expect not much growth perspective for these mega-ships although there is obviously room for some. As said before, that is not a point raised by TFA.
(Score: 0) by Anonymous Coward on Tuesday June 21 2016, @08:16AM
We can turn them into offshore wind farms...
(Score: 1, Insightful) by Anonymous Coward on Tuesday June 21 2016, @09:00AM
You use more fuel driving to the store to pick it up than it takes to ship it 1/2 way round the world. Start walking to the shops it you want to make a difference.
(Score: 4, Interesting) by VLM on Tuesday June 21 2016, @12:17PM
I agree that we're in the early months of a modest recession and for political election reasons the economic reports all show we're numerically in one but no one will admit to it. The logic behind that cover up is dubious at best.
I would propose there is at least some long term effect, although what fraction is unclear. Container ships are for middle class junk tier consumerism crap. Poor people don't buy consumerism crap at the rate of middle class, and rich people transport their caviar across the ocean in their private jet. So once enough of the middle class is wiped out, you no longer need container ships. Or as much, anyway.
I'm not going extremist and saying all container ships are going to stop sailing or the last middle class person finally lost their job last week. But the long term trend and establishment economic policy is to intentionally and methodically wipe out the American middle class, there's certainly no debate about that and they've been pretty successful over the last generation or two. So eventually that's going to bump into "bigger container ships every year for eternity" and I'd propose we've reached that point. The factory and office workers that were shopping at the mall in the 80s are now unemployed or have mcjobs where they can't afford recreational shopping anymore, etc. Or they are part of the lucky minority who have great jobs but whereas my student loans peaked at about $5K theirs are $150K and they'll never afford recreational shopping. So no need for increased shipping.
Also you are correct that an economics story with no numbers is BS, but I've found stories about this topic (sorry no links) with actual numbers on the topic of dredging. So its cheap and easy to make bigger ships (more or less) but an order of magnitude harder to dredge deeper harbors and the cost of dredging comes from port fees for big ships. So past a certain "too big" scale the ports you can stop at shrink to some ridiculous number like 10 across the whole planet, AND the staggering cost of dredging is mostly paid for by port fees which can ruin the simplistic financials for a giant ship.
Giant ships being more profitable is like being EBIDTA positive. That's nice that you're EBIDTA positive and it is a step along the path to real profitability. But you're still closing / going bankrupt unless you pay your bank interest and taxes. "We aren't making any money but if we stopped paying our bank loan we'd be making money" Thats nice, real participation trophy and golf clap worthy, but...
Finally there's an obvious engineering problem, that is obvious to me, but not to economists that is the classic surface area to volume ratio is not happy with giant ships. And the volume is how long it takes to empty and load, and the surface area is where cranes can touch the ship to load/unload. "Obviously" an enormous pile of containers will take longer in port, even if you add more cranes there's a fundamental limit to turnaround and bigger ships are going to turnaround in port much slower than small ships. And, once it takes more than a day or two or four or ... to turnaround in port, that kills the operating costs if your competition can turn and burn in a day, maybe your competition is smaller and has a worse ratio of crew and labor and capex to revenue but they simply make more trips per year to more ports making more TOTAL revenue than a big ship.
(Score: 3, Informative) by Osamabobama on Tuesday June 21 2016, @05:03PM
As far as loading and unloading go, the value is accrued by getting the container closer to its destination, i.e. moving it on or off the ship. The larger ships spend less time per container getting into position at the pier so the cranes can start moving containers. Larger batches will therefore help the cranes stay productive.
That being said, there is a desire to reduce batch sizes (across all industries) to tie up less inventory in the production and delivery process. Smaller ships will necessitate less waiting for the average container, because of the reduced time to load and unload each ship, even if there is more time (per container) spent maneuvering next to the pier when nothing can be done with the cranes.
On top of that, it must be noted that larger ships are generally faster; the longer waterline helps maintain efficiency at higher speeds. Overall, there are several opposing effects on container ship size. Large ships solve a certain set of problems, but as the world economy changes a different set of problems emerges.
Appended to the end of comments you post. Max: 120 chars.
(Score: 3, Insightful) by DeathMonkey on Tuesday June 21 2016, @05:37PM
The Economy Is Better — Why Don’t Voters Believe It? [fivethirtyeight.com]
(Score: 2) by VLM on Tuesday June 21 2016, @06:12PM
That article has the structural mistake of trusting unemployment stats. Look at workforce participation rates and factor in the SSDI state unemployment to federal disability pipeline. All UE really measures anymore is how effective states are at getting perma-unemployed into federal SSDI. Also if you're not in the 3% of the population in SSDI, long term just get kicked out as "no longer in labor force" even if they're looking for work.
Other than that false statistic, the only positives they had were pointless anecdotes. "The economy must be great, after all VLM bought $20 of bell pepper plants at the nursery last month" "VLM's neighbor spends a shitload of money on beer, the economy must be great because eight DUIs aren't going to fund themselves you know" which is completely information free.