Could they just have an "accident" and get insurance money?
I'm sure the insurance companies would be fine with that......
Why billions of dollars of goods are stuck at sea
71–80 of 224 posts
Re: Why billions of dollars of goods are stuck at sea
#72Amazing that this happens on top of such low prices for crude oil. What's going on? EDIT: Yes I read the article. Seriously, oil is so cheap and this still happened? It's just mind boggling to me.
The bunker price is charged separately to customers. So low or high bunkers doesn't affect it that much. However, if a competitor is much more efficient with its bunkers you'd have a problem. At the moment, oil is cheap and there's no advantage of having efficient vessels. Hanjin doesn't even have efficient vessels. Their vessels aren't that big anymore, so they have a cost disadvantage vs the bigger companies.
Re: Why billions of dollars of goods are stuck at sea
#73Earlier quoted context omitted.
yes but that is the major fear the docks have. No debt holder is going to repossess a ship at sea they are going to wait for them to dock then file a court order to prevent them from undocking until the repossession proceedings finish. This means they are stuck at the dock taking up space the dock owners want to use to unload other ships so they just ban these ships from their docks letting another dock deal with it…
I don't understand how they can legally do that. When you repossess a truck you don't get to leave it at someone else's loading dock for free. Wouldn't it be the creditor's obligation to pay the fees or move it somewhere else to be moored?
> When you repossess a truck you don't get to leave it at someone else's loading dock for free.
"Repossess" is an inaccurate term here. Arrest of a vessel is a different (though conceptually related) process [0]. Notably, the creditor does not take ownership or possession of the vessel, and so can't be responsible for fees; the ship is taken over by the government and its operation restricted unless it is either "bailed out" by the owner providing alternative security, the underlying litigation resolved, or the ship ordered sold by the government while the litigation proceeds.
If its sold, the costs incurred will be paid out of the sale proceeds, but they may take some time.
[0] http://www.maritimelawcenter.com/html/arrest_of_vessel.html
Re: Why billions of dollars of goods are stuck at sea
#74Earlier quoted context omitted.
If someone needed those parts to keep their assembly lines running, why wouldn't they just put up the money to have the ships unloaded? We're only talking about a few million to move these goods.
Ports are reluctant to let the vessels unload as creditors would impound the vessels tying up valuable mooring space.
It seems like the receiving ports and their respective authorities should consider creating a process by which the ship can unload and cannot be seized while unloading or prior to leaving the port.
Re: Why billions of dollars of goods are stuck at sea
#75Earlier quoted context omitted.
That's one way of looking at it. Of course, the more expensive shipping is, the less likely it is to ship inexpensive items, like food.
Wouldn't it do more to encourage local food production and consumption? Thus reducing pollution while at the same time boosting farm economies in poorer countries which were previously flooded by lower-cost imports from richer highly efficient food-producing countries?
> Wouldn't it do more to encourage local food production and consumption?
It would, only by making food more expensive -- specifically, by driving up the transportation costs so that the more-expensive-to-produce local food was competitive with less-expensive-to-produce imported food. This might be pleasing to those with an ideological preference that other people should eat locally, but the other effect is increased cost of living for everyone.
Re: Why billions of dollars of goods are stuck at sea
#76Flexport did a great blog post on the situation: https://www.flexport.com/blog/on-hanjin/ Also of interest, they also did a game theory analysis of ocean liners: https://www.flexport.com/blog/game-theory-ocean-carrier-comp...
Their analysis of the impact of recent increases in shipping capacity and the impact on price today is also an interesting read: https://www.flexport.com/blog/why-are-ocean-freight-rates-so...
Re: Why billions of dollars of goods are stuck at sea
#77We have overcapacity that could lead to the formation of cartels if profit margins remain small.
We need more companies in this game, not less, but with overcapacity, who would like to join?
Re: Why billions of dollars of goods are stuck at sea
#78It's not just retail goods on those ships. There is also a great deal of parts that are needed by US manufacturing lines. That creates a ripple effect down the line as missed parts causes snags in the lines. Businesses have gotten pretty good with Just In Time building, so the loss of a few containers will put a snag into it. Some places may have predicted this and gotten alternative parts flows, but that puts a stra…
If someone needed those parts to keep their assembly lines running, why wouldn't they just put up the money to have the ships unloaded? We're only talking about a few million to move these goods.
A company that desperately needs parts stuck on one of these ships is only going to have at most, a handful of containers onboard. Those containers might be worth several million but then that one company would be shouldering 100% of the unloading costs for a negligible portion of the ship's cargo. Nobody wants to be the party that blinks first as the longer they wait, the greater the likelihood of another party paying those fees becomes.
It's in every party's best interest to get these ships docked and unloaded but no single party will own more than a fraction of the total cargo. Cooperation is possible but it will take months for hundreds of primary owners to come to an agreement. Before that happens, each one of those primary owners will need to come to agreements on cost-sharing with all the party's downstream from them in the supply chain first.
It's the very definition of "tragedy of the commons" played out in private enterprise.
Re: Why billions of dollars of goods are stuck at sea
#79Earlier quoted context omitted.
Ports are reluctant to let the vessels unload as creditors would impound the vessels tying up valuable mooring space.
It seems like the receiving ports and their respective authorities should consider creating a process by which the ship can unload and cannot be seized while unloading or prior to leaving the port.
> It seems like the receiving ports and their respective authorities should consider creating a process by which the ship can unload and cannot be seized while unloading or prior to leaving the port.
That's already happening in the U.S. (well, not "creating a process" so much as "using an existing process, to wit, Chapter 15 bankruptcy protection".) [0]
[0] http://www.bloomberg.com/news/articles/2016-09-09/hanjin-win...
Re: Why billions of dollars of goods are stuck at sea
#80It's not just retail goods on those ships. There is also a great deal of parts that are needed by US manufacturing lines. That creates a ripple effect down the line as missed parts causes snags in the lines. Businesses have gotten pretty good with Just In Time building, so the loss of a few containers will put a snag into it. Some places may have predicted this and gotten alternative parts flows, but that puts a stra…
If someone needed those parts to keep their assembly lines running, why wouldn't they just put up the money to have the ships unloaded? We're only talking about a few million to move these goods.
Business X has ten containers on a ship. The ship has 4000 containers on it. Should Business X pay to unload the whole ship? That seems rather burdensome.
Should Business X pay to just unload their own containers? But containers are in large stacks on the ship; it is improbable that the containers they want are all on top. They'd have to unload at least some others to get the ones they want.
Should Business X join with all the other businesses that have containers on board? That might be the most equitable, but it's a huge coordination problem (their could be a thousand businesses), and it's still unjust - Business X (and all the others) had to pay for unloading on top of what they already paid Hanjin.
It might be better than the alternative (having your assembly line idled), but it's not an easy or cheap solution...