Fortunately TWTR's market cap is worth more than a solution to problems like this because...
Suez Canal says traffic in channel resumes after stranded ship refloated
491–500 of 593 posts
Re: Suez Canal says traffic in channel resumes after stranded ship refloated
#492Earlier quoted context omitted.
Agree it's incalculable, I don't mean that in the "it's too big of a number" sort of way but in the "we can't possibly know" kind of way: 1) The scale and depth of the disruption makes it impractical to figure in any kind of accurate way and 2) The disruption will have introduced hypotheticals that nay spiral out themselves (butterfly effect style) e.g. some retailer may have lost a customer who went elsewhere, some…
> The disruption will have introduced hypotheticals In general, temporary disruption has some long-term positive economic effects (which is directly why 'disruption' is valued in Silicon Valley). For example, during London Tube Strikes, commuters find different and more efficient routes and 5% ended up permanently changing their route on public transport: https://www.independent.co.uk/news/business/news/tube-strike..…
Yup, just think of covid. It has accelerated digitization of the world in an unprecedented way, amongst the many other world changes it has caused.
Re: Suez Canal says traffic in channel resumes after stranded ship refloated
#493Earlier quoted context omitted.
Not necessarily. I pay only $1 a day for water, but if you stop giving me water for 7 days the damages are going to be a lot more than $7. That doesn't mean it's reasonable to charge me more than $1 per day for water. Obviously an extreme example, but the situation with this ship is likely similar. The damages probably far exceed the $15m/day in revenue (though I suspect they are far lower than $7b per day).
The reason water is cheap is because it's plentiful; there's a lot of competition to supply it. But there's only one Suez canal and sailing around Africa is much worse. So you would expect Egypt to be extracting a significant portion of the value the Suez canal adds.
There is no major city with two independant water supplies, with their own sets of pips, purification systems and suers. Thays what water supply means. So no, there is no competition, and a supermarket water bottle is not competition.
Re: Suez Canal says traffic in channel resumes after stranded ship refloated
#494Earlier quoted context omitted.
Not necessarily. I pay only $1 a day for water, but if you stop giving me water for 7 days the damages are going to be a lot more than $7. That doesn't mean it's reasonable to charge me more than $1 per day for water. Obviously an extreme example, but the situation with this ship is likely similar. The damages probably far exceed the $15m/day in revenue (though I suspect they are far lower than $7b per day).
The reason water is cheap is because it's plentiful; there's a lot of competition to supply it. But there's only one Suez canal and sailing around Africa is much worse. So you would expect Egypt to be extracting a significant portion of the value the Suez canal adds.
You're forgetting about the stick, namely, the literally armies backing these massive shipping companies.
If you're going to run an extortion racket, you need the power to secure yourself against the inevitable challenges to your station. Egypt is in no position to handle and armed threat from the US, China, or even most European nations. Their government would be toppled and a sympathetic one would be installed who would lower shipping prices to something on the cheap side of fair.
Re: Suez Canal says traffic in channel resumes after stranded ship refloated
#495Earlier quoted context omitted.
I'd start by computing the number of ships that went around the Southern tip of Africa as a result of the stuck ship. I wonder how much the cost of extra fuel and food/pay for all of those ships doing additional miles will be? And the resulting increase in wholesale/retail costs? Regarding penalties re late delivery, I'm less worried about that. Cargo ships always have language about loss and force majeure. I think a…
I believe that we can simply look at the channel fees lost due to the downtime - as far as I understand, the fee for using the channel is intentionally close to "the cost of extra fuel and food/pay for all of those ships doing additional miles", a bit lower but not much lower than the alternative of going around Africa.
As posted elsewhere in this thread, this guy debunks that theory:
Re: Suez Canal says traffic in channel resumes after stranded ship refloated
#496Earlier quoted context omitted.
LOL. The fruits in American grocery stores are not airlifted in from Brazil.
There are probably better ways to say this. If you're familiar with the industry, perhaps you could better inform the conversation. Personally, I've always been surprised by the amount of fruit, flowers, and other perishables that do economically come in via air.
Flowers, yes. Fruits, short of the exotic, name them.
Re: Suez Canal says traffic in channel resumes after stranded ship refloated
#497Earlier quoted context omitted.
Container ships burn horrible, cheap bunker fuel, and the shipping industry is infamous for hiring crew from low-income countries like the Philippines, paying them a pittance, and treating them like modern-day slaves. I'd strongly suspect that the costs for spoilage and knock-on effects from late delivery etc would outstrip crew and fuel costs by a large margin.
Filipino Masters and Chief Engineers are being paid north of $8500/month. Evidently you are not well informed.
I don't doubt a select few senior people are well paid - but there are many, many more junior crew members that do not fit that description.
Also - rude.
Re: Suez Canal says traffic in channel resumes after stranded ship refloated
#498Now, understand all those ships will take a long time to pass the canal and then even longer time processing at their ports of destination which will also have their schedules completely disrupted. Does anybody know at what percentage of capacity the canal usually operates?
Apparently they are going to double throughput for the next few days compared to normal traffic, so they had some spare capacity.
Re: Suez Canal says traffic in channel resumes after stranded ship refloated
#499Earlier quoted context omitted.
So… if somebody gets a monopoly on the water supply to an area, you think a price hike is reasonable? Oh, wait, water's already a monopoly: https://en.wikipedia.org/wiki/Natural_monopoly
The houses just 100 yards away from me have wells for water. There is a large upfront cost of making the well but after that you have "free" water other than the electricity for the pump.
In some countries (Latvia being the example I'm familiar with), water from artesian wells is considered a limited resource and it's taxed.
Re: Suez Canal says traffic in channel resumes after stranded ship refloated
#500Earlier quoted context omitted.
The canal revenues were down about $15m/day. If it really cost $7b a day, then Egypt is massively undercharging.
The suez is the site of massive imperial intervention. The Suez crisis was precipitated when Egypt nationalized the canal. Western militaries and economic leverage are deployed to keep the prices low for the benefit of those governments. It's a huge mistake to regard any international trade in the middle east as regulated by simple supply and demand curves. This is a site of world geostrategic focus, usually at the e…
It's not 100% negative - clever Egyptian governments have managed to charge an extra "price" in diplomatic and geopolitical advantage. e.g. using selective closures as a weapon, selective opening to military traffic as an incentive. You just have to be careful not to take actions that affects everyone, like a massive and "unreasonable" price hike; these invite the kind of great-power consensus against you that is very dangerous.
(Interestingly, both have been practiced towards Israel at different times, as the countries have gone from bitter enemies to cautiously aligned against both Iran and Sunni Islamism of the Brotherhood/Hamas flavor.)