The operating cost per TEU is inversely proportional to ship size. New container ships are 17, 18, 19 thousand TEU behemoths. Even the New Panamax ships are 13,000 TEU.
Thanks for adding that detail - the size of the New Panamax ships was one piece of information missing from the article that would have helped with perspective.
In the article, it said that the market price for shipping capacity has dropped by 60+% in the last 2 yrs, dropping below the operating cost for the ships.
Also, not all the ships are being scrapped, but there will be lower demand for Panamax sized ships once New Panamax capacity comes online.
I don't think the issue is availability of shipping lanes. I think the issue is that they will be no longer economical to operate those ships when the new panama canal will allow ships that have twice the useful load to go through.
I agree in general but this is occurring to generate resources for bigger ships, so not knowing the numbers, there is a possibility the net capacity may be balanced or even grow.
Panamax is an "artificially constrained" size class
Going to have to say this is likely more do to consolidation in the industry. the top 10 shipping companies control two thirds of the capacity so when others join forces allowing them to share capacity they no longer need their own ships or simply need less.
Removing these ships saves money on crews, taxes, maintenance, and more. Throw in sharing capacity with other similar minded players and removing this excess capacity could raise rates.
Of course the downside is less independent players mean shipping prices could rise for non competitive ports
> For example, rates for a 4,400 teu gearless panamax ship of $5,400 per day, are a staggering 63% below the market rates of a year ago, and in many cases are below the daily operating cost.
TIL you can rent a Panamax cargo ship for $5,400 a day! That's definitely cheaper than I would have expected. Someone should park one of those in the San Francisco bay and convert it into apartments.
You act as if land scarcity was the issue in San Francisco, rather than legal permission to establish an abode. If people started doing this, the city would find a way to ban them from doing this.
Regardless - there is some land scarcity in SF, objectively speaking. It's bound to have some non-zero contribution to housing shortages. This is a city surrounded by water on 3 sides. It's not like some iconic-looking locality in Texas, home of the Marlboro Man, where "the land stretches out forever".
then no country's navy would protect you. except for the US Navy. which acts as the planet's navy. therefore all US taxpayers will be paying for it, in effect. wait a minute... doh. maybe that is an efficient hack!
Wave heights off the coast of SF are 6-9ft in the winter, with your occasional 20-footer thrown in for good measure. Unless you have serious sea legs, not a place you want to call home.
I know plenty of former military contractors that are disgruntled holding down 9 to 5 jobs at Home Depot. It wouldn't take much to stand up a private army to take over a private country.
19 out of 20 of them were probably KBR workers who served food in the DFAC at Bagram, not "pointy end of the spear" Blackwater/Triple Canopy PSD teams.
BlueSeed is such a hilariously bad idea, it should be in some kind of hall of fame. (Of course, you're just pointing it out, not advocating it!)
1. A landlord who doesn't have to obey any laws regarding rent and terms?
2. The Farallon Islands are offshore from SF, so the 11 mile limit is actually much further than BlueSeed acknowledges.
3. The "Potato Patch" shoal offshore from the Golden Gate makes for nasty waves for many miles in every direction. Guaranteed sea-sickness on every Ferry.
4. If you think SF is cold in Summer, try offshore. The heating costs alone will be astronomical. Fog and fog-colored water is all you will see for most of the year.
5. It's going to stay offshore when we get Tropical Storm-level winds in Winter?
6. One Ferry doesn't cut it -- you need a Plan B for when the Ferry needs maintenance. Ferries are incredibly expensive to operate, which is why there are so few on the Bay.
7. Surely that's a commercial use, and subject to the 200-mile economic exclusion zone?
8. High speed internet? Not when the Fog is drizzling.
9. Presumably it will have to have generators. If you had to rent generators for your businesses and run them 24/7, how much would that cost you in fuel alone?
10. Your generator will also be powering a desalination plant.
11. Nuclear waste? Yep, you'll be parked where the nuclear waste was dumped.
Being within 200 miles probably affects the ship, not the people. It would likely mean being US flagged and/or owned. You can forget about the ship being Panama flagged and Cayman Island owned.
This of course gets you US law and the US navy, for better and worse. (taxes, environmental regulations, etc.) It doesn't actually put you in the US though, since you're 11 miles out, so the people shouldn't be affected by immigration law.
I think a bigger problem is just the poor value. The ship presumes that people can't work from the other side of the world, but somehow they can work if they are only an annoying ferry ride or an expensive helicopter ride away. Who are the users who need to be close, but not really close?
> The ship presumes that people can't work from the other side of the world, but somehow they can work if they are only an annoying ferry ride or an expensive helicopter ride away. Who are the users who need to be close, but not really close?
You need everyone in a room, and that room needs to be somewhere your venture capitalists are willing to visit every few months?
If only there were a way to get to a location more than 15 miles from the Bay area every few months. Darn. Someone needs to disrupt the stagecoach industry. :-)
"Blueseed is now on hold pending additional funding." - blueseed.com
Other issues:
The location proposed was offshore of Half Moon Bay. This presents a few problems:
1. Half Moon Bay has Pillar Point Harbor, but no facilities for cargo vessels, lighters, or ferries. It's a small boat harbor, run by the County of San Mateo, which probably isn't going to let you build a big dock for large workboats and ferries.
2. West of Pillar Point Harbor is Mavericks, where surfers fight 100 foot waves. Not a good area for boating when there's a small craft advisory.
3. The whole point of Blueseed is that it's not in the US. Half Moon Bay isn't a port of entry to the US. You'd have to go up to SF and pass through customs and border protection to go ashore. Every time.
4. If your startup is losing money, you're not paying taxes anyway. If your startup is successful, you probably need more space than Blueseed could provide.
Yeah, international waters are not the best idea, or the whole thing.
But for the first couple it's worth nothing that if you park somewhere between 3 and 12 nautical miles out you are in US territory but you avoid being in California territory. I think.
That offshore regulatory thing is interesting for a commercial zone. You can be sure nobody interested in gambling, drugs, money laundering, slavery, tax shelters, IP piracy, bribery, or prostitution would be interested in such a place. Nope, nobody.
Half seriously, you can get all that stuff in Chicago or LA without the water part.
No, not towers. It's very difficult to get land zoned for building. Anyway SF is pretty short so you can get comfortably higher without getting into "towers".
To protect the environment, commercial activities on the Bay are limited to things that cannot be done on land -- that's something the "Google Barge" learned the hard way.
The shipbreaking process is pretty strange. It's really labor-intensive. It looks dangerous. It looks like large chunks could even get lost in the beach. Does the company even legitimately own the beach?
Of course, due to labor cost and environmental law and so many other things, we can't replicate that method in a first-world nation. I wonder if we could automate it. I think the ships are mostly just going to be melted down. That should be easy: put a dry dock next to a really big furnace that can consume the whole ship in one go. NOM NOM NOM!
I recently got sucked up watching videos of this on YouTube. From what I can tell they just run them at top speed directly onto the beach: https://www.youtube.com/watch?v=5kDbwE7mFck
It initially seems like it would be difficult to so comprehensively beach a ship but that impression may be in part due to the fact that normally the ship's crew would be trying to avoid being beached. In other situations when a ship is beached we are seeing a ship that did everything it could to avoid or at least minimize the situation.
Not that surprising really that the outcome is very different if the crew point the ship directly at the beach, try to arrive with as much momentum as possible and keep the engines at full power throughout while ignoring the various bumps and thumps.
In addition, I assume, the ships being beached are empty- no cargo, very little fuel, probably stripped of a lot of normal equipment. They'll have a much shallower draft than a laden ship.
That would make sense. Removing any cargo is a no brainer. It also seems to make sense to have as little fuel as possible and to have already removed any high value equipment that doesn't absolutely need to still be on the ship for its final journey.
All together that means the ship could potentially be significantly lighter than its usual unloaded weight let alone its weight when loaded.
Have you been to India? Everything is labor intensive and dangerous. The employers have no liability for workplace deaths because everyone just wants a job.
It's amazing what sorts of things can happen when strong, dedicated, and intelligent people will work for 250 rupees per day and be happy about it.
To me the amazing thing about this article is that owners can afford to scrap their ships after only a couple of decades in service. I guess nothing's built to last.
It is not so much that they can afford to scrap them as it is that they cannot afford to keep them (though I assume they knew this was coming when they built them.)
Are the newer ships more environmentally friendly? I'd assume only slightly because they're still burning bunker oil, only slightly more efficiently. Which I find perverse given the attention focused on car pollution.
Much more, yes - modern ships have been built slower, with lover rev-engines, to save fuel. And a larger ship is inherently more environmentally friendly. And even the oldest ships do far, far less environmental damage per kilogram per kilometer than cars or other road transport. Not to mention that the issues with nitrogen oxide emissions in particular (the focus of the recent scandal) are less about environmental damage and more about the danger to humans from breathing them in, which is obviously a lot more important when emissions are happening in the middle of a city rather than out on the open sea.
To understand this article (swiped from Wikipedia):
TEU: Twenty Foot Equivalent Unit is the unit of the capacity of a container ship, a container terminal and the statistics of the container transit in a port. The two most common international standardised containers are those of twenty and forty foot.
LDT: Light displacement ton, the weight of a ship without anything on board, used to determine the value of a ship which is to be scrapped
Can someone explain the correlation between the new Panama Canal coming online and the need to scrap ships?
For an eye opener into the horrid industry of ship scapping google "Chitagong Ship Breaking." Basically they hall them into a ship yard in Bangladesh and pay people peanuts to risk their lives dismantling this tonnage by hand. People die all the time. Its a disaster in many different ways. It's everything that's bad about globalization.
The Panama Canal re-opening will allow larger ships to pass through. The larger ships are much more cost effective, and now that they will be able to traverse the canal, the small-ish ships are being decommissioned.
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[ 4.6 ms ] story [ 108 ms ] threadAlso, not all the ships are being scrapped, but there will be lower demand for Panamax sized ships once New Panamax capacity comes online.
Scrapping your capacity could be taken as an indicator as well.
Panamax is an "artificially constrained" size class
Removing these ships saves money on crews, taxes, maintenance, and more. Throw in sharing capacity with other similar minded players and removing this excess capacity could raise rates.
Of course the downside is less independent players mean shipping prices could rise for non competitive ports
TIL you can rent a Panamax cargo ship for $5,400 a day! That's definitely cheaper than I would have expected. Someone should park one of those in the San Francisco bay and convert it into apartments.
https://blueseed.com
http://www.ndbc.noaa.gov/view_climplot.php?station=46026&mea...
1. A landlord who doesn't have to obey any laws regarding rent and terms?
2. The Farallon Islands are offshore from SF, so the 11 mile limit is actually much further than BlueSeed acknowledges.
3. The "Potato Patch" shoal offshore from the Golden Gate makes for nasty waves for many miles in every direction. Guaranteed sea-sickness on every Ferry.
4. If you think SF is cold in Summer, try offshore. The heating costs alone will be astronomical. Fog and fog-colored water is all you will see for most of the year.
5. It's going to stay offshore when we get Tropical Storm-level winds in Winter?
6. One Ferry doesn't cut it -- you need a Plan B for when the Ferry needs maintenance. Ferries are incredibly expensive to operate, which is why there are so few on the Bay.
7. Surely that's a commercial use, and subject to the 200-mile economic exclusion zone?
8. High speed internet? Not when the Fog is drizzling.
9. Presumably it will have to have generators. If you had to rent generators for your businesses and run them 24/7, how much would that cost you in fuel alone?
10. Your generator will also be powering a desalination plant.
11. Nuclear waste? Yep, you'll be parked where the nuclear waste was dumped.
This of course gets you US law and the US navy, for better and worse. (taxes, environmental regulations, etc.) It doesn't actually put you in the US though, since you're 11 miles out, so the people shouldn't be affected by immigration law.
I think a bigger problem is just the poor value. The ship presumes that people can't work from the other side of the world, but somehow they can work if they are only an annoying ferry ride or an expensive helicopter ride away. Who are the users who need to be close, but not really close?
You need everyone in a room, and that room needs to be somewhere your venture capitalists are willing to visit every few months?
Other issues:
The location proposed was offshore of Half Moon Bay. This presents a few problems:
1. Half Moon Bay has Pillar Point Harbor, but no facilities for cargo vessels, lighters, or ferries. It's a small boat harbor, run by the County of San Mateo, which probably isn't going to let you build a big dock for large workboats and ferries.
2. West of Pillar Point Harbor is Mavericks, where surfers fight 100 foot waves. Not a good area for boating when there's a small craft advisory.
3. The whole point of Blueseed is that it's not in the US. Half Moon Bay isn't a port of entry to the US. You'd have to go up to SF and pass through customs and border protection to go ashore. Every time.
4. If your startup is losing money, you're not paying taxes anyway. If your startup is successful, you probably need more space than Blueseed could provide.
I really appreciate that you recognized that. Great list, too.
But for the first couple it's worth nothing that if you park somewhere between 3 and 12 nautical miles out you are in US territory but you avoid being in California territory. I think.
Half seriously, you can get all that stuff in Chicago or LA without the water part.
See also: http://www.sealandgov.org/
Of course, due to labor cost and environmental law and so many other things, we can't replicate that method in a first-world nation. I wonder if we could automate it. I think the ships are mostly just going to be melted down. That should be easy: put a dry dock next to a really big furnace that can consume the whole ship in one go. NOM NOM NOM!
Not that surprising really that the outcome is very different if the crew point the ship directly at the beach, try to arrive with as much momentum as possible and keep the engines at full power throughout while ignoring the various bumps and thumps.
All together that means the ship could potentially be significantly lighter than its usual unloaded weight let alone its weight when loaded.
https://vimeo.com/88162472 from 1:21:00. The entire film is quite beautifully photographed. Too bad it has not been released in an HD format yet.
Workingman's Death is probably my favorite Michael Glawogger film. It feels less staged and fake than "Megacities".
It's amazing what sorts of things can happen when strong, dedicated, and intelligent people will work for 250 rupees per day and be happy about it.
To me the amazing thing about this article is that owners can afford to scrap their ships after only a couple of decades in service. I guess nothing's built to last.
TEU: Twenty Foot Equivalent Unit is the unit of the capacity of a container ship, a container terminal and the statistics of the container transit in a port. The two most common international standardised containers are those of twenty and forty foot.
LDT: Light displacement ton, the weight of a ship without anything on board, used to determine the value of a ship which is to be scrapped
For an eye opener into the horrid industry of ship scapping google "Chitagong Ship Breaking." Basically they hall them into a ship yard in Bangladesh and pay people peanuts to risk their lives dismantling this tonnage by hand. People die all the time. Its a disaster in many different ways. It's everything that's bad about globalization.