<i>Anticipating major industry collapse, the Carrier Alliances showed remarkable discipline in aligning supply with demand as early as February; removing trade capacity from the seas by halting vessels and shipments. By doing so, the erosion of ocean rates was kept to a minimum. Basing their reaction on potential worst case scenarios, shipping carriers artificially created under-capacity. This made available space come at a premium and therefore significantly raised the cost of container shipping, stabilizing revenues for carriers.</i><p>If I'm reading this right, container shipping is an oligopoly similar to OPEC and they all banded together to reduce supply enough to raise prices, while in a competitive environment prices would have gone down due to reduced demand?
Classic network balancing problem. Even in regular times this causes gross inefficiencies: A number of years ago I had heard that for large carriers (e.g. FedEx, UPS) ~20% of trailers you see on the road drive totally empty to balance their network. They didn't have a good solution to optimize this figure nor did they know what the minimum value of this percentage could be.
>North America currently faces a 40% imbalance; which means that for every 100 containers that arrive only 40 are exported. 60 out of every 100 containers continue to accumulate, which is a staggering figure considering the China to USA trade route sustains on average 900,000 TEUs per month.<p>>The scrapping of containers now exceeds the building of new ones, causing inventories in factories to plummet. It will take months before more vessels and containers are built, meaning capacity likely won’t normalize until Q2 2021.<p>Interesting, try to buy one and they are charging and arm and leg. About 10-15 years ago you could pick up an old 40 FT container for about $500. Today you could go to a yard that has 10000 stacked and rusting containers and they want $2k plus to buy a beat up one.<p>Here is a 20 Ft beat to shit for $3600<p><a href="https://northerncontainersales.ca/shipping-container-prices/toronto-on/" rel="nofollow">https://northerncontainersales.ca/shipping-container-prices/...</a>
Globalisation and cost cutting gave us this fragile system with no redundancies, no stockpiles and backups. When something esssential runs out, we are just stuffed.<p>Whats worse is diffusion of responsibility - someone could be on the critical path to essential suppliers for millions of people, but at the same time have no obligations to ensure their job is done, and perhaps not enough profit margin to plan for the shit time.<p>All it took was a sneeze and the whole thing falls apart.
The mechanism described in the article is that Asian economies are business as usual, but European and American activity has slowed because of the pandemic, so there's lots of demand to ship from Asia, but nothing coming back.<p>This makes sense, but at a macro level it can't have <i>too</i> large an effect on shipping rates: at worst, you need to pay for a round trip to bring back the empty container, instead of a one way journey. A 100% increase, which is a lot in most contexts, but oil prices (the other main marginal cost in shipping) fluctuate by that much three years out of ten.<p>Container shipping is so cheap these days that I don't see this effect killing the margins of many businesses.
Tangentially related, but if you're curious, here's a photo of HMM Algeciras, the largest container ship in the world: <a href="https://www.easycargo3d.com/wp-content/uploads/2020/08/hmm-algeciras-1-1536x835.png" rel="nofollow">https://www.easycargo3d.com/wp-content/uploads/2020/08/hmm-a...</a><p>It's able to carry 24,000 of those large ISO containers.
Just some anecdata from my partner’s business - before all this shipping a container of woks from China to the UK cost £1500 and last month it cost an astonishing £9000.
Now I know why I can't get towels for my hotel. None of the hotels can't get towels. My franchise changed supplier because there is a towel shortage since last December.
But... don't the ships have to get back to China somehow, if they are going to bring more cargo from China to north america? Why don't they take containers (even empty) when they do so, especially when they are so valuable.<p>If the <i>ships</i> aren't piling up in north america, how are the containers? Are ships leaving north america without picking up containers and if so why?
Also, this doesn't help things: "Suez Canal Blocked After Giant Container Ship Gets Stuck"<p><a href="https://www.nytimes.com/2021/03/24/world/middleeast/suez-canal-blocked-ship.html" rel="nofollow">https://www.nytimes.com/2021/03/24/world/middleeast/suez-can...</a><p>100 ships stuck behind it.<p>When it rains, it shit pours...
I was thinking of containers that could be split up and shipped in parts then re-assembled...<p>However that doesn't fix the problem of ships being out of balance too.<p>Cheaper energy and AI to assist with shipping (and maybe operating sealed power plants authorized by major nuclear world powers).
from january:<p><a href="https://www.freightwaves.com/news/inside-californias-colossal-container-ship-traffic-jam/" rel="nofollow">https://www.freightwaves.com/news/inside-californias-colossa...</a>
Prediction: By mid-2022 there'll be a glut of containers. All the publicity around the present shortage will induce manufacturers to ramp up capacity. But that takes time. The short-term pinch will evaporate by the time production ramps.<p>I wonder if there's a good systemwide way to handle this problem.<p>Airlines use "irrops" -- irregular operations -- teams to handle big weather events, to get their airplanes to where their passengers are waiting. I suppose ocean shipping has similar irrops protocols. But the grounding of the Ever Given in the southern Suez Canal indicates that shipping irrops teams ignore actual weather events at their peril.<p>See Peter Senge's The Fifth Discipline.
Funny how nobody mentions 15 large container ships like this generate as much emissions as all the cars in the world combined.<p>It's almost like buying products from slaves in Asia and transporting them across the ocean is bad for the planet and the citizens of the planet.
Also issues which pallets:<p>* <a href="https://theloadstar.com/where-have-all-the-pallets-gone-on-shelves-in-warehouses-every-one/" rel="nofollow">https://theloadstar.com/where-have-all-the-pallets-gone-on-s...</a>
Another great opportunity to question the global supply chain that is not sustainable anyway. I understand it disrupts critical industries, but the impact on consumer over consumption of crap is a blessing.
This global shortage is caused by lockdown. Its clear that lockdown created massive problem. Way more than the virus itself. We need to make sure that lockdowns don't happen again in the future.