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The Shipping News Suggests Economic Weakness

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Re: The Shipping News Suggests Economic Weakness

#101

Post by qaq »

TheCowboy wrote: post #53
VLM wrote: post #16

Earlier quoted context omitted.

A rule of thumb is trucking spends 1/3 on fuel, more efficient rail spends 1/4 on fuel. Shipping is even more efficient, so its likely under 1/4 total costs. (edited to emphasize that if fuel cost magically dropped to zero, costs could not drop more than perhaps 20%. And fuel has dropped, but not to magical zero) Capex and maintenance are expensive.

qaq's assertion that shipping costs have zero correlation with oil prices is not accurate. It's not difficult to demonstrate that some correlation exists, and one can also do an overlay of shipping cost indexes to oil prices. Shipping is already highly efficient in general, so it might be the opposite that fuel prices are a significant percentage of operating expenses. Low estimates I've seen state that fuel costs ar…

There is a thing called sarcasm :)

Re: The Shipping News Suggests Economic Weakness

#102

Post by Animats »

Here are more useful numbers: containers moved in and out of the Port of Los Angeles.[1] That's where most stuff from China enters the US. Monthly and annual numbers are available. Here's this decade:

    2010 	7.8 million TEUs 	
    2011 	7.9 million TEUs 	
    2012 	8.1 million TEUs 	
    2013 	7.9 million TEUs 	
    2014 	8.3 million TEUs 	
    2015 	8.1 million TEUs
So 2015 was down 2.5% from the peak.

The discouraging number in this is that half the containers going out of LA are empty. Only 3% coming in are empty. That's the US export/import imbalance. And a lot of the ones leaving the US are full of paper and metal scrap.

(One TEU is a "Twenty foot equivalent unit", or a 20' long container. A forty foot container, the most common size now, is 2 TEU.)

[1] https://www.portoflosangeles.org/maritime/stats.asp

Re: The Shipping News Suggests Economic Weakness

#103

Post by floppydisk »

codingdave wrote: post #99
floppydisk wrote: post #83

Earlier quoted context omitted.

The best indicator for anything transportation is utilization and how much stuff is actually being moved. Not just the price of moving something from A --> B. Yes, the presence of more movers, as the article points out, suppresses the price because people are competing to offer the lowest possible price to get the business. And, shippers did start investing in new builds extensively when it looked like the economy wa…

You can also infer how much is being moved (on a very broad scale) in the US by the on-time record of Amtrak. They do not own the rails, and yield to any freight trains. When less freight is being moved, their on-time records improve.

Interesting. Hadn't thought of that angle before. Be interesting to see the correlations between rail freight company revenues and Amtrak timeliness.

Re: The Shipping News Suggests Economic Weakness

#104

Post by semi-extrinsic »

snarfy wrote: post #38
bottled_poe wrote: post #33

Earlier quoted context omitted.

That's a stupid highbrow attitude. I suppose the same concept applies to any form of information? If we don't understand the whole story, it's not worth knowing any part of it?

It's disinformation. It's like when the meteorologist shows a map of temperatures across the region, not mentioning it is the 'feels like' temperature, an arguably useless and misleading number made up of the actual temperature and the wind speed. Just tell me the temperature and wind speed - let me be the judge of what it 'feels like'. Maybe I wear a windbreaker.

For sub-freezing temperatures with strong wind there is most definitely a point in mentioning wind chill factor. It keeps inexperienced people (i.e. tourists) from flooding the ER with frostbites. Otherwise I agree "the temperature it feels like" is silly.

Re: The Shipping News Suggests Economic Weakness

#105

Post by maxerickson »

myth_drannon wrote: post #59

Sensationalist headline, nowhere is mentioned the oil glut. No point of moving oil if countries don't need it(why no need is another story, shale & warm weather).

Oil is transported on purpose built ships that don't compete with the ships reflected in the indexes discussed in the article.

Re: The Shipping News Suggests Economic Weakness

#106

Post by danharaj »

vezzy-fnord wrote: post #65
danharaj wrote: post #62

Earlier quoted context omitted.

> It's not as if there is some objective essence called "value" that people seek. use-value? you know, people actually using the goods and services they acquire?

But use value cannot be quantified, since utility is not a mathematical scale, but a subjective feeling that varies from person to person and with time as preferences shift or swing. I'm also unaware of how you can explain diverse business cycles throughout history as emanating from it. Practically every economic theory that has tried to objectively quantify "value", i.e. those of Ricardo, Marx and Sraffa, relies on…

I don't think our inability to quantify it means it's not objective. It means our mathematics is not advanced enough yet to capture use-value. Use-value is definitely objective as it is determined by nature. A screwdriver is useful because it screws screws.

Use-value is definitely context dependent and agent dependent. This is fine. But we have to acknowledge that the reason why people assign exchange-value to goods is because they have actual use-value: economics describes physical, real world activities.

I can agree that no one has presented a good dynamical theory of use-value. That's sensible: it would require at least a full description of reality, and a deep understanding of nonlinear mathematics. One quibble i have is i don't think Marx tried to establish such a theory: his observations about use-value and exchange-value can be made without a full theory of use-value or a full theory of exchange-value. The relationship between the two can be examined in the abstract and that is Marx's program.

I can still perform calculations with use-value to derive exchange value: why is water worth so little in exchange-value even though it is so vital to life? The marginalist point of view says that the price of water is determined by equilibrium between marginal cost and utility. Why is the marginal utility of water so low?

Well, if we're talking about people drinking water, then it is obvious, isn't it? You only have to drink so much water. When you're not thirsty, water has none of that use-value anymore.

Ignoring the relationship between use-value and exchange-value is... weird. It's replacing the true and difficult reality with a nice fiction amenable to manipulation with our primitive mathematics. Do markets define exchange-value or do they compute exchange-value from the aggregate use-values of everyone participating?

Edit: as for business cycles, i think they are caused by structural flaws in property rights and financial institutions, but if you asked 5 people why the business cycle occurs, you'll get 6 conjectures and 3.5 theories.

Re: The Shipping News Suggests Economic Weakness

#107

Post by vezzy-fnord »

danharaj wrote: post #106
vezzy-fnord wrote: post #65

Earlier quoted context omitted.

But use value cannot be quantified, since utility is not a mathematical scale, but a subjective feeling that varies from person to person and with time as preferences shift or swing. I'm also unaware of how you can explain diverse business cycles throughout history as emanating from it. Practically every economic theory that has tried to objectively quantify "value", i.e. those of Ricardo, Marx and Sraffa, relies on…

I don't think our inability to quantify it means it's not objective. It means our mathematics is not advanced enough yet to capture use-value. Use-value is definitely objective as it is determined by nature. A screwdriver is useful because it screws screws. Use-value is definitely context dependent and agent dependent. This is fine. But we have to acknowledge that the reason why people assign exchange-value to goods…

The marginalist conception of value is indeed underwhelming, but it's also a compromise. Determining value through mathematical exercises using hypothetical n-commodity worlds with homogeneous factors and units is at best useful as an exposition for a theory of income distribution (as Sraffa tried to do) in that by assuming a labor or commodity theory of value you can attempt to argue for a rate of exploitation.

Marxian economics has a whole lot of categories that are awkward, like "constant capital" being homogeneous and "variable capital" referencing wages of labor in producing commodities. There's barely any room for disequilibrium effects, complementarity, reserves and so forth. In turn, the organic composition of capital is held to be c/s+v, but empirical evidence on relation between OCC and crisis is scant and the concept of OCC is again completely foreign to uncertainty, disequilibrium and capital structure. It's just a ratio between two questionable taxonomies. Marxian economics has many similar failings as neoclassical economics, but because of its origins as a heterodox critique of Smith, Ricardo and Mill from a particular period, its evolution has been even more confusing.

Marginalism is situated in a means-ends framework, which is the most one can really say about value without introspecting into personal intentions and valuations. It should be underlined that neoclassical production theory (MC=MR) is separate from the subjective theory of value proper, however. Menger, Jevons and Walras all had different takes on it.

It's also worth noting that Marxian conceptions of use and exchange value have little to say about contemporary monetary and financial economies. Marxians still focus too much on issues like falling rate of profit, accumulation and OCC and often miss elephants in the room like financial fragility, or downplay them. It strikes me as archaic.

Whether or not markets compute or define exchange value seems to me like a problem of overaggregation where the contemporary social institution of a "market economy" is conflated with a market in the abstract as a system of mutual exchange, as in Proudhon and others.

Re: The Shipping News Suggests Economic Weakness

#108

Post by slv77 »

ChuckMcM wrote: post #73

There are a number of people who are perplexed. And that leads to a lot of speculation. There is also seems to be a strong survivor bias in economic reporting so everyone wants to be on record as both foretelling doom and not-doom, then depending on what happens they hope you'll remember they were "right". Either way, there are interesting questions here which are unanswered. Like why do companies have so much money…

A lot of those oversized cash accounts can be explained by corporate tax structures that hold cash overseas in subsidiaries. Repatriation of that cash would incur significant penalties.

Pundits also suggest that shareholders who should be the beneficiaries of the cash through dividends are content to let CEO's and boards invest the cash for them due to a lack of other compelling investment opportunities.

Cynics might say with the prevalence of index and other funds who hold shares by proxy and who tend to vote with corporate management there is little pressure for CEOs or Boards to return funds to shareholders and instead hold them as a personal insurance policy and to extend their power base.

Re: The Shipping News Suggests Economic Weakness

#109

Post by tootie »

calibraxis wrote: post #31
tootie wrote: post #21

Earlier quoted context omitted.

No economists believe that ridiculous straw man nor is it relevant to this article.

Many do. Not the sectarian economists hired to develop capitalist theology, but the ones you take seriously when you need to run a real capitalist economy. Here's a lucid explanation: "If you take an economics course, they’ll teach you, correctly, that if the government spends n dollars to stimulate the economy, it doesn’t really matter what it’s spent on: they can build jet planes, they can bury it in the sand and g…

The effect of burying cash in the sand and hiring teachers are pretty much the same? I get what he's saying but it's glib to the point of being meaningless. Government spending doesn't buy just anything. Outlays are specifies by Congress to be done in the most efficient manner they can agree to (I know they suck at it, but that doesn't mean the theory is wrong). Nor is interfering with profitable business a concern when production and employment are shrinking as they do during a recession.

Re: The Shipping News Suggests Economic Weakness

#110

Post by ChuckMcM »

slv77 wrote: post #108
ChuckMcM wrote: post #73

There are a number of people who are perplexed. And that leads to a lot of speculation. There is also seems to be a strong survivor bias in economic reporting so everyone wants to be on record as both foretelling doom and not-doom, then depending on what happens they hope you'll remember they were "right". Either way, there are interesting questions here which are unanswered. Like why do companies have so much money…

A lot of those oversized cash accounts can be explained by corporate tax structures that hold cash overseas in subsidiaries. Repatriation of that cash would incur significant penalties. Pundits also suggest that shareholders who should be the beneficiaries of the cash through dividends are content to let CEO's and boards invest the cash for them due to a lack of other compelling investment opportunities. Cynics might…

That is certainly a big part of it. But fundamentally it is idle capital. Why doesn't Apple build a German development center? I'm sure they could fill it with solid engineers and they could make it close to the auto centers and put their self driving electric car project there. Or pretty much anywhere in the EU. No need to repatriate funds if you can invest them in the area where they are already sitting and repatriate them as engineering expertise work items.
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