>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 $330 billion in annual health costs from lung and heart diseases.
Even after the preposterous profit-taking from the recent supply chain clusterfuck, their profits would still be zeroed out by accounting for just some of the externalities.
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?
Probably not, national economies would just have to function more independently. The only way I can see how trans-oceanic trade results in better health and mortality outcomes is that it makes the various world superpowers more dependent on each other for trade, reducing the likelihood of large-scale armed conflict.
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.
Ocean shipping is extremely carbon/energy efficient and would likely be advantaged with a carbon tax. It’s emissions are concentrated in sulfur from the low grade oil it burns, which is harmful to humans and the environment in other ways.
You could potentially argue that a carbon tax's impact on transportation generally would increase local manufacturing, but I kind of doubt it- it would advantage those manufacturers best concentration of raw materials and suppliers as those get transported multiple times in the production cycle, whereas the finished production only moves once.
You might be correct, but what we have now is an effectively subsidized system.
If it is properly regulated / priced to account for externalities (I would like some conservative regulation to make up for the unaccountable/unknown externalities, perhaps protectionism could function in that manner), then it would likely properly account for environmental concerns.
My top comment of course didn't even deal with the "environmental arbitrage" that international shipping represents. You make stuff where there isn't as much regulation/price accounting for externalities, THEN you ship it 5000 miles.
It used to be this amounted to simply getting to offload localized pollution on the third world, and the first world gets the benefits. You know like this:
> ship it over the pacific" was enabled by the lack of a proper carbon tax.
This is just demonstrably false. For a typical household product, more carbon is emitted trucking it from the port to the store than is emitted shipping it across the ocean. Cargo ships are extremely energy efficient. And of course for a great many products the raw materials are not actually produced locally, so if you shift manufacturing back home you now have to ship the raw materials instead.
A "proper carbon tax" would increase oversea production since economies of scale are real and huge.
It depends where the port is, and where the store is. While it is true that a cargo ship produces 20% of the carbon per km per ton that a truck does, the distance is very large. This also does not account for freight rail which produces half the carbon per km per ton that container ships do. So yes, if a cargo ship goes the 11,000 km from China to LA, then a semi-truck takes this from LA to NY the overland route would produce more carbon.
Also, the part about the raw materials not being produced locally, this is true abroad too.
Containerization has a specific meaning in the context of computers so maybe the title should be changed to "The Hidden Costs of [Shipping Containers]" to reduce confusion for people clicking the link thinking it is going to be an article about the drawbacks of docker
Unfortunately, "shipping containers" (where "shipping" is a verb, not an adjective) also has a computing meaning, so your proposed title would be just as misleading.
I went down this entire train of thought after opening the article and decided on "The Hidden Costs of [Shipment] Containerization." This I think clarified overload on "shipping", "ship", "containers" and "containization." At least until next week when Docker decides to offer a new deployment option/format/interface it calls a "Shipment" or some nonsense.
I'm sure the people knowledgable of physical shipping containers and infrastructure really weren't that concerned or perhaps even aware how overloaded the term is in tech, nor did they know they'd land on the front page of a highly trafficked tech site. I don't know the policy on editorialized headlines here but I know people seem to get up in arms about it, which I understand, but here's a case where a nice insert makes sense.
I guess I have not understood why the port in Long Beach is the one all these ships pile into? Aren't there large ports in San Francisco/Oakland? and the entire Puget Sound? Or are they, but the media doesn't talk about them as much? Portland's old container terminals are empty last I drove by them (although its been a while). I know the Portland terminal is limited on how large of a ship by how deep the water is dredged, but wouldn't it make more sense to utilize the smaller ships to get your highly important cargo delivered faster?
It's a good question without a simple clear answer. The shortest answer, which elides a lot of nuance, is that the shipping conglomerates (like so much in the current global supply chain) have been overly-optimizing for profit, at the expense of resiliency. That means consolidating business operations in fewer ports in order to drive up efficiency.
Long term I definitely would not be surprised if some of the bigger shipping players recognize the need to diversify and invest in operations facilities across more ports. But that takes time and money.
I will pay someone in pageviews if they write that article!
But it's kind of funny, you can see a few comments at the bottom from people who didn't actually click the article, and therefore thought similarly to us.
One can still dream about the Bering Straight bridge (or tunnel) [1] coming to life someday, plus the connecting (and now missing) railway parts over the two continents.
Yeah, building the connection is one thing, but it's arguably more work to construct the railway to get to that remote region of Russia.
There's a documentary (Long Way Round) about Ewen McGregor riding a motorcycle from London to NYC by going around the world across Eurasia. They were essentially ferried by a giant off-road truck through rural Russia and even then they had to practically dig a new path for truck to pass in some spots.
That was in 2004, but I doubt the road of bones has gotten any better since then...
If only it wasn't Russia on the other end of that bridge. Nobody is going to risk the investment of building the bridge, when it would be subject to the general instability of Russian internal/external politics.
Russia has had one ruler for a very long time, and that ruler has had somewhat stable (even if bad) policies. This makes Russia a more predictable place than say… the USA where every 4 years you risk having one extreme political view vs another in control of the country. One year you have peace with Iran and Cuba, and the very next year that’s off the table and it’s sanctions time. That’s a massive swing in political fortune.
Then there’s that thing of: should we? Absolutely, yes. Russia and the USA would destroy the Earth if tensions move to war. The US corporate press loves to say that Russians are massing troops on their border, but that’s within their own territory. Meanwhile, the USA has massed troops all over the globe with bases in nearly every country. The antagonisms need to stop. Peace needs to reign. The alternative is the death of the Earth.
A train connecting Asia and North America might be exactly the kind of thing to bring this peace to the table. Politicians respond to lobbying. Cargo freight is big business. If enough money lined their pockets…
> 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 the effect stronger. What’s the way out?
Seems like that's more of the same problem. Now one Corp is getting so big they can block out smaller corps and they are basically impossible to compete with
People can't get mortgages; I am skeptical that college dropouts could literally take out billions to create a shipping startup which is already a crowded space, without offering a significant value add, with no collateral or experience.
I just can't believe any financial institution would underwrite a large business plan with no collateral but would not underwrite a mortgage for the same person when they could repo the house/property if the mortgage failed.
I have no problem personally getting a mortgage, but even with a fantastic business plan I wouldn't give myself $10M for a shipping startup.
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.
We can solve the challenges with modern development of containerized applications in Kubernetes at https://codezero.io, greatly eliminating the hidden cost. Alas, physical containers - that's a hardware problem....
I wonder if this will create some opportunities for solutions to shipping to inland ports along the Columbia and Mississippi. There is a company developing boats to handle more containers on rivers.
Copy writer was genius for using Containerization in the title; gonna get a lot of views from people like me who assume it's about computer software container and not a physical shipping container.
This is definitely not the case. This publication has multiple posts about the supply chain and port affairs. Software/tech people sometimes forget that we live in a very specific world with very limited scope, and sometimes forget to take our blinders off when interacting with the “real” world.
When I first opened the site, I wondered if it was a more technical/wonkish dive, or whether it was a political take. Looking at the root site prospect.org made it clear it's the latter. Don't get me wrong, their thesis can still be right, but this is like reading about "is free trade good" in the Economist.
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 under $3k a container, their margins were actually kind of thin.
So if we've had all this consolidation, and there are now three alliances that handle most of the freight, what is the incentive to increase supply? Just a 30% increase in ship capacity would likely crater profits.
Is the industry going to respond with building more ships, or, like OPEC, will they be able to coordinate to constrain supply so that long-term rates settle down in the $6-8k range versus the <$3k that existed previously?
If they are able to operate as a cartel, that will have major, long-term consequences for the dynamics of geographic manufacturing and supply chains. If they can't, then the pandemic will be a multi-year blip and we'll go back to hallowing out manufacturing and sending it to Asia.
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.
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.
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.
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.
60 comments
[ 0.25 ms ] story [ 130 ms ] threadFaaaantastic.
Of course the entire "make 5000 miles away, ship it over the pacific" was enabled by the lack of a proper carbon tax.
If monopolies perform the same "service" then more power to them.
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 $330 billion in annual health costs from lung and heart diseases.
Even after the preposterous profit-taking from the recent supply chain clusterfuck, their profits would still be zeroed out by accounting for just some of the externalities.
You could potentially argue that a carbon tax's impact on transportation generally would increase local manufacturing, but I kind of doubt it- it would advantage those manufacturers best concentration of raw materials and suppliers as those get transported multiple times in the production cycle, whereas the finished production only moves once.
If it is properly regulated / priced to account for externalities (I would like some conservative regulation to make up for the unaccountable/unknown externalities, perhaps protectionism could function in that manner), then it would likely properly account for environmental concerns.
My top comment of course didn't even deal with the "environmental arbitrage" that international shipping represents. You make stuff where there isn't as much regulation/price accounting for externalities, THEN you ship it 5000 miles.
It used to be this amounted to simply getting to offload localized pollution on the third world, and the first world gets the benefits. You know like this:
https://www.bbc.com/future/article/20150402-the-worst-place-...
But carbon emitted in China impacts us here. And that is the existential threat.
If you want a good, modern "Web3" example of this, hm, why is Mongolia a new bitcoin mining hub?
This is just demonstrably false. For a typical household product, more carbon is emitted trucking it from the port to the store than is emitted shipping it across the ocean. Cargo ships are extremely energy efficient. And of course for a great many products the raw materials are not actually produced locally, so if you shift manufacturing back home you now have to ship the raw materials instead.
A "proper carbon tax" would increase oversea production since economies of scale are real and huge.
Also, the part about the raw materials not being produced locally, this is true abroad too.
I'm sure the people knowledgable of physical shipping containers and infrastructure really weren't that concerned or perhaps even aware how overloaded the term is in tech, nor did they know they'd land on the front page of a highly trafficked tech site. I don't know the policy on editorialized headlines here but I know people seem to get up in arms about it, which I understand, but here's a case where a nice insert makes sense.
Long term I definitely would not be surprised if some of the bigger shipping players recognize the need to diversify and invest in operations facilities across more ports. But that takes time and money.
profit, and continuity of control authority
But it's kind of funny, you can see a few comments at the bottom from people who didn't actually click the article, and therefore thought similarly to us.
[1] https://en.wikipedia.org/wiki/Bering_Strait_crossing
There's a documentary (Long Way Round) about Ewen McGregor riding a motorcycle from London to NYC by going around the world across Eurasia. They were essentially ferried by a giant off-road truck through rural Russia and even then they had to practically dig a new path for truck to pass in some spots.
That was in 2004, but I doubt the road of bones has gotten any better since then...
Then there’s that thing of: should we? Absolutely, yes. Russia and the USA would destroy the Earth if tensions move to war. The US corporate press loves to say that Russians are massing troops on their border, but that’s within their own territory. Meanwhile, the USA has massed troops all over the globe with bases in nearly every country. The antagonisms need to stop. Peace needs to reign. The alternative is the death of the Earth.
A train connecting Asia and North America might be exactly the kind of thing to bring this peace to the table. Politicians respond to lobbying. Cargo freight is big business. If enough money lined their pockets…
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 the effect stronger. What’s the way out?
Just because someone can’t qualify for a mortgage doesn’t mean they can’t raise funds for a business.
I have no problem personally getting a mortgage, but even with a fantastic business plan I wouldn't give myself $10M for a shipping startup.
Am I totally out of touch?
>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.
https://www.americanpatriotholdings.com/affiliates1.html
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 under $3k a container, their margins were actually kind of thin.
So if we've had all this consolidation, and there are now three alliances that handle most of the freight, what is the incentive to increase supply? Just a 30% increase in ship capacity would likely crater profits.
Is the industry going to respond with building more ships, or, like OPEC, will they be able to coordinate to constrain supply so that long-term rates settle down in the $6-8k range versus the <$3k that existed previously?
If they are able to operate as a cartel, that will have major, long-term consequences for the dynamics of geographic manufacturing and supply chains. If they can't, then the pandemic will be a multi-year blip and we'll go back to hallowing out manufacturing and sending it to Asia.
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.
It's a lot like the airline industry. Once that vessel is built, the cost of each incremental container is almost nothing.
Some environmental coverage likes to omit this level of detail and it makes them sound extra extra horrendous.
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...