Edit: in fact, clicking through the data on that page.. it looks like 2015 was a record year (by tonnage) for the Suez.. along with record toll collections. They did handle more, but smaller, ships in 2008.. but that could just be caused by the trend in the industry toward larger ships. More cargo passed through the Suez than any year previous.
> 100 ships have taken a route around south africa during the last quarter of 2015...17483 ships used the Suez Canal last year
Thanks for the context. Any way we could compare the TEUs going each way? Unlikely the 400 ships that went around the Cape are 44 times larger than the 17 483 that went through the Canal (17483 / (4 * 100)), but I'm curious by how much the gap narrows.
In other words, the canal pricing is just about right. As a canal owner you will want some of the ships to take a detour because if all ships used your canal you wouldn't necessarily know if you're actually charging too little. In that case you would start raising prices until some ships, presumably with less urgent cargo, begin to drop out.
Yes; but make no mistake, it's pure rent extraction. The canal has a substantial public value (to the degree that improving the international economy creates public value) but by setting a price that is only just below the cost of avoid the canal, almost all of the potential public value is captured by the people who control the canal.
There's some resdiual value accruing to the public from getting goods faster, but urgent goods aren't generally sent by sea.
Really sad that economics makes a bunch of massive ships travel thousands of miles out of their way, burning tons of extra fuel, just because a bunch of guys charge way too much to drive through a canal that was built a long time ago.
The only reason that things like canals get built is because people can charge money to recoup their costs. Many infrastructure projects get built and don't earn their capital investment back. (One might argue most) The reason people still build them is a few are enormously profitable.
Once "going the long way" gets significantly cheaper, the folks in charge of the canal will lower their price so that equilibrium still means going through them.
It's their land and there are a lot of costs associated with maintianing the canal.
The failure of economics, that you should look at is in the price of oil. The are polluting the atmosphere and damaging the climate and not reimbursing anyone for the damage they are causing.
Doesn't it also have to do with safety as well? I remember reading that going the long way around also avoids some pirate areas as well (which could also be considered economics, e.g. insurance, etc).
Really great that economics, innovation and competition have driven down the cost of shipping (larger containerized ships, better fuel efficiency, smaller crews / labor component) and oil extraction down so low that there's now a cheaper option than that imposed by the canal folks. It's not merely an expensive toll that has brought this situation about, it's also cheap shipping.
Markets provide price discovery and efficient[0] prices are very valuable. In that sense it's not a waste.
Is this even a significant phenomenon? The article mentions 100 ships going the long way but wikipedia says the Suez averages 46 ships per day, or more than 16,500 per year.
[0] The definition of efficient in economics is roughly "It's not possible to make anyone better off without making someone else worse off".
- Ships are going the long way on "back haul", from Europe to Asia, not the other way around.
- Overcapacity is a significant problem for the shipping industry (see, http://www.bloomberg.com/quote/BDIY:IND over the last year to get a sense). This is a critical factor in making round-about trips economically desirable.
- Techniques such as "slow steaming" or "super slow-steaming" keep fuel costs in check.
Because the world economy is currently overproducing (more supply than demand) to prevent prices from falling, these ships (esp. oil tankers) are being "transformed" into storage. Either by taking a longer path, or by outright idling them in front of harbours.
Since nobody wants to pare back production (because the last one to reduce production will retain marketshare and revenue and jobs and ...) this is providing a short intermission where prices don't have to drop.
This extra capacity that slower shipping provides is filling up fast, it will be full in less than 2-4 months (measured starting in december), and the next leg down for the global economy will begin.
That can't be good for the environment. I recall reading that those big ships pollute like crazy. After all when you're on international waters (1) who cares and (2) who's going to do anything about it?
Given how offended you are by shipping emissions, I really hope you don't use any products that require shipping - if you're not in China or South East Asia, I hope you avoid the cheap clothing and electronics that are made there, for example.
The Suez Canal cuts just one part of those shipping trips if you're in Europe, and if you're in the Americas, there is nothing to shorten the trip between the world's manufacturing hub and the west coast - indeed, you have to travel over an ocean that literally takes up half the globe.
So, to use your own argument from above, I hope that you only use locally-sourced equipment, clothing, and food, because I have to live in this world and I doubt you consulted anyone or anything about the shipping requirements for your stuff. I hope you're paying for more expensive locally-produced goods, because if you're getting the cheap imports, you're only caring about your own bottom line.
Oh, for fuck's sake. Way to straw-man my position. I'm calling out the waste in taking the long way around Africa just to save a few bucks, not saying "DOWN WITH THE GLOBAL SHIPPING SYSTEM, MAN!"
[+] [-] rgbrenner|10 years ago|reply
For comparison, 17483 ships used the Suez Canal last year (about 1450/month). And the number of ships increased by 335 in 2015 (compared to 2014). http://www.suezcanal.gov.eg/TRstatHistory.aspx?reportId=2
Edit: in fact, clicking through the data on that page.. it looks like 2015 was a record year (by tonnage) for the Suez.. along with record toll collections. They did handle more, but smaller, ships in 2008.. but that could just be caused by the trend in the industry toward larger ships. More cargo passed through the Suez than any year previous.
[+] [-] twelvechairs|10 years ago|reply
According to the link below between 2008-2013 the world capesize fleet increased from 817 ships to 1505 ships.
https://shippingresearch.wordpress.com/tag/capesize/
[+] [-] JumpCrisscross|10 years ago|reply
Thanks for the context. Any way we could compare the TEUs going each way? Unlikely the 400 ships that went around the Cape are 44 times larger than the 17 483 that went through the Canal (17483 / (4 * 100)), but I'm curious by how much the gap narrows.
[+] [-] yason|10 years ago|reply
[+] [-] barrkel|10 years ago|reply
There's some resdiual value accruing to the public from getting goods faster, but urgent goods aren't generally sent by sea.
[+] [-] gleenn|10 years ago|reply
[+] [-] slyall|10 years ago|reply
https://en.wikipedia.org/wiki/New_Suez_Canal
[+] [-] mathattack|10 years ago|reply
The only reason that things like canals get built is because people can charge money to recoup their costs. Many infrastructure projects get built and don't earn their capital investment back. (One might argue most) The reason people still build them is a few are enormously profitable.
Once "going the long way" gets significantly cheaper, the folks in charge of the canal will lower their price so that equilibrium still means going through them.
[+] [-] lumberjack|10 years ago|reply
The failure of economics, that you should look at is in the price of oil. The are polluting the atmosphere and damaging the climate and not reimbursing anyone for the damage they are causing.
[+] [-] ryuuchin|10 years ago|reply
[+] [-] tacostakohashi|10 years ago|reply
Really great that economics, innovation and competition have driven down the cost of shipping (larger containerized ships, better fuel efficiency, smaller crews / labor component) and oil extraction down so low that there's now a cheaper option than that imposed by the canal folks. It's not merely an expensive toll that has brought this situation about, it's also cheap shipping.
[+] [-] dmm|10 years ago|reply
Is this even a significant phenomenon? The article mentions 100 ships going the long way but wikipedia says the Suez averages 46 ships per day, or more than 16,500 per year.
[0] The definition of efficient in economics is roughly "It's not possible to make anyone better off without making someone else worse off".
[+] [-] ArkyBeagle|10 years ago|reply
[+] [-] jssmith|10 years ago|reply
- Ships are going the long way on "back haul", from Europe to Asia, not the other way around.
- Overcapacity is a significant problem for the shipping industry (see, http://www.bloomberg.com/quote/BDIY:IND over the last year to get a sense). This is a critical factor in making round-about trips economically desirable.
- Techniques such as "slow steaming" or "super slow-steaming" keep fuel costs in check.
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] iofj|10 years ago|reply
Since nobody wants to pare back production (because the last one to reduce production will retain marketshare and revenue and jobs and ...) this is providing a short intermission where prices don't have to drop.
This extra capacity that slower shipping provides is filling up fast, it will be full in less than 2-4 months (measured starting in december), and the next leg down for the global economy will begin.
[+] [-] xenadu02|10 years ago|reply
[+] [-] GreaterFool|10 years ago|reply
[+] [-] vacri|10 years ago|reply
The Suez Canal cuts just one part of those shipping trips if you're in Europe, and if you're in the Americas, there is nothing to shorten the trip between the world's manufacturing hub and the west coast - indeed, you have to travel over an ocean that literally takes up half the globe.
So, to use your own argument from above, I hope that you only use locally-sourced equipment, clothing, and food, because I have to live in this world and I doubt you consulted anyone or anything about the shipping requirements for your stuff. I hope you're paying for more expensive locally-produced goods, because if you're getting the cheap imports, you're only caring about your own bottom line.
[+] [-] dang|10 years ago|reply
[+] [-] rosser|10 years ago|reply
[+] [-] jamilaliahmed|10 years ago|reply
[+] [-] tosseraccount|10 years ago|reply
houses cheap = bad
That's the narrative.
[+] [-] eternalban|10 years ago|reply