Why billions of dollars of goods are stuck at sea • Hacker News Board

Re: Why billions of dollars of goods are stuck at sea

#81

Post by ars » Thu, Sep 22, 2016, 10:18 PM UTC

namdnay wrote: post #38

jfoutz wrote: post #13

Earlier 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? Thus reducing pollution

No, local food production increases pollution. The lowest pollution is obtained when food is grown in the climate most suited to it.

Transportation energy (or pollution) is absolutely minuscule compared to energy used in growing the food.

Optimizing for transportation costs in food production is a horrible idea from an environmental point of view, because the other costs so dwarf it as to make it utterly irrelevant.

Re: Why billions of dollars of goods are stuck at sea

#82

Post by ghostly_s » Thu, Sep 22, 2016, 10:22 PM UTC

gumby wrote: post #48

shambala wrote: post #21

Earlier quoted context omitted.

They will just buy insurance, and the insurance companies will figure it out.

> They will just buy insurance, and the insurance companies will figure it out. It's not that simple. Yes, premiums will adjust depending on the finances of the carrier but the cost of insuring the risk itself is quite variable and can be ruinous. The value of a delayed shipment of iPads is much higher than a delayed shipment of board games, yet Apple can tolerate the former while the latter could sink a company. The…

Doesn't Apple famously use overnight air for all their shipping needs? Or is that only for devices?

Re: Why billions of dollars of goods are stuck at sea

#83

Post by ansible » Thu, Sep 22, 2016, 10:23 PM UTC

mhurron wrote: post #47

namdnay wrote: post #38

Earlier quoted context omitted.

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?

And leading us back to a time of poor nutrition for large parts of the world that currently rely on shipping to bring fresh and varied food.

Fresh food is better than preserved food, I won't argue that. But people got by with preserved food for a long, long time. We've gotten used to eating fruits and such out of season, but maybe that's going to get expensive again.

Re: Why billions of dollars of goods are stuck at sea

#84

Post by AnimalMuppet » Thu, Sep 22, 2016, 10:26 PM UTC

mathgenius wrote: post #14

Amazing 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.

Oil went down, so Hanjin's costs went down. So did everyone else's costs.

But the problem was overcapacity. Everyone was lowering their rates, trying to get enough business to fill their ships. Lower oil meant that Hanjin could survive on lower rates. But lower oil meant that everyone else could, also, and they lowered rates to a place where Hanjin couldn't make it.

Re: Why billions of dollars of goods are stuck at sea

#85

Post by SwellJoe » Thu, Sep 22, 2016, 10:30 PM UTC

slv77 wrote: post #16

This bankruptcy means that companies shipping goods are no longer going to be able to treat shipping as a fungible commodity and instead are going to have to price in a risk component as well. That suggests that the largest and best financed players are likely to be able to command a premium which will accelerate losses at smaller players. This would increase the spreads further and create a viscous loop. Does anybod…

Hanjin doesn't really qualify as a "smaller player", do they? So, it seems to indicate any shipping company could end up in trouble, if the sixth largest in the world can fail so catastrophically in such a short time. Given the size of the expenses involved, and how thin the margins are (particularly in a market that has more capacity than cargo), it seems like it's not easy to predict who will be solvent six months or two years out; I imagine the contracts are negotiated on a relatively long time-scale, since these voyages take weeks in the best of cases.

Re: Why billions of dollars of goods are stuck at sea

#86

Post by johan_larson » Thu, Sep 22, 2016, 10:30 PM UTC

Animats wrote: post #59

This is a mess because Hanjin's top management was in denial about the possibility of bankruptcy. Just like the typical startup. They've been trying for months to get a bailout deal from somebody, anybody - a merger, loans, their parent chaebol, their stockholders (Korean Air is the largest), or the S. Korean government. Everybody turned them down. There's too much container ship capacity right now; nobody needed Han…

> This is a mess because Hanjin's top management was in denial about the possibility of bankruptcy. Just like the typical startup.

Just like pretty much anybody. Everyone keeps hoping against hope, everyone is afraid to show weakness, and nobody likes to tell the boss no. Typically the staff knows for months that the end is nigh until some minor event precipitates the final undeniable crisis.

Megan McArdle has some interesting things to say about this in her book "The Up Side of Down." Chapter 5 is about handling crises (in general) and the GM failure (in particular).

"Wagoner [the head of GM] seemed to believe that by not admitting GM might declare bankruptcy, he could somehow keep it from happening. What he thought would take place when the company ran out of cash is not clear. Nor is it clear why his executives and his board of directors nodded and said 'Yes, Rick' rather than insisting that he confront reality. Instead, they helped him sustain his delusion by formulating a mad plan to merge with Chrysler, as if strapping together two nearly bankrupt auto firms would somehow make both of them solvent."

https://www.amazon.com/Up-Side-Down-Failing-Success/dp/01431...

Re: Why billions of dollars of goods are stuck at sea

#87

Post by jdmichal » Thu, Sep 22, 2016, 10:36 PM UTC

ars wrote: post #81

namdnay wrote: post #38

Earlier quoted context omitted.

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? Thus reducing pollution No, local food production increases pollution. The lowest pollution is obtained when food is grown in the climate most suited to it. Transportation energy (or pollution) is absolutely minuscule compared to energy used in growing the food. Optimizing for transportation costs in food production is a horrible idea from an e…

Yes, absolutely. There's a reason that growing the food in another country and shipping it is still cheaper than growing it locally. All those energy costs get compounded together in the final cost of the product, and typically being cheaper means it cost less energy. (There are other factors that come into play of course, like farm subsidies.)

Re: Why billions of dollars of goods are stuck at sea

#88

Post by sqeaky » Thu, Sep 22, 2016, 10:37 PM UTC

frandroid wrote: post #31

mathgenius wrote: post #14

Amazing 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.

This has nothing to do with oil, it has to do with over-capacity in the industry.

If we take your "nothing" to mean "nothing practical" to do with oil, then you are completely correct.

If a boat could be operated for free, then overcapacity wouldn't matter, just ship boats underloaded. Of course there are costs so that notion is silly. I suspect he thought that fuel costs were among the biggest costs in shipping. I bet licensing and legal fee are the biggest costs, then I bet personnel cost come in second, then boat maintenance, then somewhere below that oil.

Re: Why billions of dollars of goods are stuck at sea

#89

Post by clock_tower » Thu, Sep 22, 2016, 10:42 PM UTC

bkor wrote: post #70

honkhonkpants wrote: post #29

Earlier 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.

It's much easier to ship it via air. If this is for some assembly line you'd have weekly shipments by container vessel. Instead of putting it into a container vessel to arrive 4+ weeks later, just air it and have it in a 1-2 days at most.

Easier, but more expensive and much more polluting.

Re: Why billions of dollars of goods are stuck at sea

#90

Post by josscrowcroft » Thu, Sep 22, 2016, 10:48 PM UTC

I'm curious - and surprised nobody seems to have mentioned or asked - what happens to all the sailors working aboard the ships, which are now stranded offshore?

Do they continue working aboard, knowing that they probably won't be paid (because the company is bankrupt)?

What's morale like? Can they leave, and how would they logistically?

What kind of laws and rights (if any) apply to them in these circumstances?

It's funny to me to be thinking about how our Christmas may be "ruined", meanwhile hundreds or thousands of workers may be out of jobs and effectively indefinitely stranded at sea.