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The unsustainable growth of the container ship industry

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Re: The unsustainable growth of the container ship industry

#51

Post by techdragon »

mediaman wrote: post #45

Price of container shipping has skyrocketed due to high demand and the supply of ships being fairly limited, even more limited when the average trip time of a boat increases. One question I've been thinking about is whether the ocean freight companies will respond by increasing supply of ships. These ocean shipping companies didn't actually make a lot of money prior to the pandemic: back when China-USWest prices were…

They will not increase the supply of ships because of the lead time involved. If they could add one tomorrow, sure.. but they can’t. Bringing a ship online takes months, to years depending on how “off the plan” the design is. It’s not going to fit into their modelling or be relevant to the current global situation which from what I can tell is mainly constrained by containers not container ships. Repurposing existing container capable ships is valuable but beyond that it’s not helpful due to the rapidly increasing volatility of the available container supply. If there aren’t enough containers there’s no point adding ships that will need to be deprecated over a decade or more. Ergo… no new ships.

Re: The unsustainable growth of the container ship industry

#52

Post by mech987 »

lom wrote: post #48

The article claims that 15 ships pollute as much as all of the worlds cars in terms of co2, but a minute of googling reveals that it’s not the case.. All cars pollute around 3 times more than all ships. That’s still a lot of pollution from ships, no doubt - but I don’t understand how two different sources can come to such different conclusions.

If I remember right the pollutants they're talking about are not CO2. The fuel oil that these big ships use is pretty sulfury and dirty and makes a lot of NOx, and that's the sort of stuff that the statistics refer to. They also don't use catalytic converters or some such similar tech.

Some environmental coverage likes to omit this level of detail and it makes them sound extra extra horrendous.

Re: The unsustainable growth of the container ship industry

#53

Post by acrooks »

mediaman wrote: post #45

Price of container shipping has skyrocketed due to high demand and the supply of ships being fairly limited, even more limited when the average trip time of a boat increases. One question I've been thinking about is whether the ocean freight companies will respond by increasing supply of ships. These ocean shipping companies didn't actually make a lot of money prior to the pandemic: back when China-USWest prices were…

I work with a number of container shipping companies. Almost all have kicked off new-build projects since the start of the pandemic, after several years of tight margins, budget cuts, bankruptcies, and asset sales. The industry is in a real peak right now - some ocean shipping companies paid a 100% bonus in 2021.

It's really difficult for the industry to target the right spot of the supply/demand curve. A new-build project takes several years they need to commit in advance to the shipyards how many vessels will be built as part of a new class. Meanwhile, many other companies are simultaneously building vessels. And it's impossible to predict events like the port congestion in LA that drastically reduced supply for a period of time. And it's difficult to predict macroeconomic changes in demand. And a vessel might cost a hundred million dollars, so the operator isn't going to let it sit around and do nothing - they're going to put it to work and make as much money as they can.

Re: The unsustainable growth of the container ship industry

#54

Post by mistrial9 »

mech987 wrote: post #52
lom wrote: post #48

The article claims that 15 ships pollute as much as all of the worlds cars in terms of co2, but a minute of googling reveals that it’s not the case.. All cars pollute around 3 times more than all ships. That’s still a lot of pollution from ships, no doubt - but I don’t understand how two different sources can come to such different conclusions.

If I remember right the pollutants they're talking about are not CO2. The fuel oil that these big ships use is pretty sulfury and dirty and makes a lot of NOx, and that's the sort of stuff that the statistics refer to. They also don't use catalytic converters or some such similar tech. Some environmental coverage likes to omit this level of detail and it makes them sound extra extra horrendous.

I was in the engine room of a Maersk line ship, many times while crossing the Pacific. It was like a simple car engine, except the cylinders are each almost 2 meters in diameter. The fuel was raw crude oil with every dirty component, and the force so large, this engine, the size of a two story house, would crush this crude oil to make the combustion. It was pure force, and cheap to run.

Re: The unsustainable growth of the container ship industry

#55

Post by mediaman »

acrooks wrote: post #53
mediaman wrote: post #45

Price of container shipping has skyrocketed due to high demand and the supply of ships being fairly limited, even more limited when the average trip time of a boat increases. One question I've been thinking about is whether the ocean freight companies will respond by increasing supply of ships. These ocean shipping companies didn't actually make a lot of money prior to the pandemic: back when China-USWest prices were…

I work with a number of container shipping companies. Almost all have kicked off new-build projects since the start of the pandemic, after several years of tight margins, budget cuts, bankruptcies, and asset sales. The industry is in a real peak right now - some ocean shipping companies paid a 100% bonus in 2021. It's really difficult for the industry to target the right spot of the supply/demand curve. A new-build p…

Interesting. If there are a lot of new vessels built, then they could be facing poor margins again in a few years after supply comes online.

It's a lot like the airline industry. Once that vessel is built, the cost of each incremental container is almost nothing.

Re: The unsustainable growth of the container ship industry

#56

Post by mistrial9 »

harpersealtako wrote: post #39
thfuran wrote: post #5

Earlier quoted context omitted.

>Of course the entire "make 5000 miles away, ship it over the pacific" was enabled by the lack of a proper carbon tax. I think this pretty much sums it up: >Shippers earned $25 billion in 2020; research consultant Drewry predicted $300 billion for 2021 and 2022.[...] A study by the National Oceanic and Atmospheric Administration found that pollution from cargo ships has led to 60,000 deaths per year and costs up to $…

How many people's lives are saved from increased access to trans-oceanic trade? I don't have an answer to that, but isn't it possible that the counterfactual world where no container ships exist involves worse health and mortality outcomes?

trans-ocean ships enabled the Age of Expansion (1500s) and were directly responsible for transporting gold from the Spanish New World back to Europe, by the ton. The question "what if there were no ships instead of lots of ships" is so far from the actual implementation of movement of goods and military power, that it is simply some kind of thought exercise.

Re: The unsustainable growth of the container ship industry

#57

Post by lmz »

mech987 wrote: post #52
lom wrote: post #48

The article claims that 15 ships pollute as much as all of the worlds cars in terms of co2, but a minute of googling reveals that it’s not the case.. All cars pollute around 3 times more than all ships. That’s still a lot of pollution from ships, no doubt - but I don’t understand how two different sources can come to such different conclusions.

If I remember right the pollutants they're talking about are not CO2. The fuel oil that these big ships use is pretty sulfury and dirty and makes a lot of NOx, and that's the sort of stuff that the statistics refer to. They also don't use catalytic converters or some such similar tech. Some environmental coverage likes to omit this level of detail and it makes them sound extra extra horrendous.

i.e. the kind of pollutant that got VW in trouble.

Re: The unsustainable growth of the container ship industry

#59

Post by ksec »

6gvONxR4sf7o wrote: post #20

> No upstart carrier could possibly compete with the alliances; they couldn’t afford the massive startup costs to build or lease their own mega-ship. This is such a common pattern with optimization. Something starts small-ish, but gets optimized and optimized to the point that newcomers aren’t viable and everything gets locked in. It happens all over the economy, and the unprecedented scale of everything only makes t…

It isn't just newcomer. The shipping industry was in a race to the bottom, until Hanjin Shipping bankrupt before they agree or the market balance out ( depending on your POV ).

>What’s the way out?

Until something that somehow compete with it from an adjacent industry. Otherwise they keep working until they are no longer needed. DRAM and NAND are industries that are like that. Or any industry that requires huge capital investment and it is somehow a commodity.

Re: The unsustainable growth of the container ship industry

#60

Post by deepnotderp »

This article is wrong on key points.

1. Larger ships are more efficient due to physics. There isn’t some conspiracy. [1]

2. Just a few years ago the shipping industry was struggling so much that there were calls to scrap ships. [2] The article implies that there’s some oligopoly with opulent profits, which is wrong.

[1] Large cargo ships actually broke some von karman efficiency records.

[2] https://www.economist.com/business/2016/09/10/profits-overbo...

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