4 ms·

So am I right thinking these ships are fully loaded? If so, I guess the implicit assumption is that the price will rise back faster than the costs of having an

by phreeza 11y ago

So am I right thinking these ships are fully loaded? If so, I guess the implicit assumption is that the price will rise back faster than the costs of having an idle ship sitting in the water? If the market was efficient, wouldn't it be irrational for the holders to assume this?

tetrep 11y ago
i don't think you fully appreciate how cheap (relatively) boats are, it's why trade between the US and China works even for the cheapest of goods.
- refurb 11y ago
  This is a great point. Operating a tanker ship might appear expensive (hundreds of thousands per day), but when you spread that cost across the cargo it holds, it's actually pretty cheap. I remember hearing that shipping something from China to the US can be under $1 per pound.
  - greeneggs 11y ago
    I think $1/pound is too high. The Shanghai Containerized Freight Index (SCFI) has it at $1102 to ship a forty-foot container (FEU) from China to the US west coast [1]. A 40' container has a 61,200 lb payload capacity [2]. That's 1.8 cents/pound. How close the cost gets to this depends on the payload density, but $1/pound seems high. [1] http://www1.chineseshipping.com.cn/en/indices/scfinew.jsp http://www1.chineseshipping.com.cn/en/indices/scfinew.jsp [2] http://www.dsv.com/sea-freight/sea-container-description/dry-container http://www.dsv.com/sea-freight/sea-container-description/dry...
    - refurb 11y ago
      I didn't know the exact number that's why I put "less than $1/pound". You are correct though. If you look at some of the products like fruit that we get from Asian, the cost per pound would have to be pennies or else they couldn't charge $2/pound for the produce in the US.
  - narrowrail 11y ago
    According to the recent earnings report from North American Tanker [0], their cost per day is $12K, while they charge $35K/day on the spot market. This is for their Suezmax, which can hold 1M barrels of crude. [0]Warning PDF:http://hugin.info/201/R/1966091/717954.pdf http://hugin.info/201/R/1966091/717954.pdf
michaelt 11y ago
If suppliers don't want to trade at current prices, the ship is going to be sitting idle somewhere - and it's more profitable to sit idle near America while full than to sit idle in the Gulf of Oman while empty.
TorKlingberg 11y ago
The alternative would be land-based storage tanks. They also cost money. This happens sometimes. Example: http://www.telegraph.co.uk/motoring/news/6601779/Oil-tankers-parked-off-British-coast-as-speculators-wait-for-prices-to-rise.html http://www.telegraph.co.uk/motoring/news/6601779/Oil-tankers...
barney54 11y ago
The market is efficient, but only on the long run. People making decisions like this make the market efficient by storing oil when it is cheap (or when it appears to be cheap).
- s73v3r 11y ago
  I fail to see how deliberately not doing something with a resource makes anything more efficient.
  - JshWright 11y ago
    "Efficient" has a very specific meaning in this case. https://en.wikipedia.org/wiki/Efficient-market_hypothesis https://en.wikipedia.org/wiki/Efficient-market_hypothesis
  - jeffcoat 11y ago
    It's obvious that moving oil in space helps, right? You move the resource from a place it's relatively plentiful to a different place where oil is relatively scarce. Say, from the Persian Gulf to Australia. The same thing is happening here: These ships are trying to move oil from a time when oil is relatively plentiful to a time when it's relatively scarce. It's riskier, but if they succeed, everybody wins: they make money, and they do it by lessening that future scarcity.
barkingcat 11y ago
Often ships sit loaded for months on end (sometimes due to customs or duties / ownership issues). There's also a proximity issue. If a loaded ship is sitting close to the states but in international waters, it's easier to get the load back into the states. If you leave the cargo in a storage facility somewhere you still have to pay for the storage, and in addition the transit + time when you actually want to use/sell/offload it.

by phreeza 11y ago

tetrep 11y ago

i don't think you fully appreciate how cheap (relatively) boats are, it's why trade between the US and China works even for the cheapest of goods.

refurb 11y ago
This is a great point. Operating a tanker ship might appear expensive (hundreds of thousands per day), but when you spread that cost across the cargo it holds, it's actually pretty cheap. I remember hearing that shipping something from China to the US can be under $1 per pound.
- greeneggs 11y ago
  I think $1/pound is too high. The Shanghai Containerized Freight Index (SCFI) has it at $1102 to ship a forty-foot container (FEU) from China to the US west coast [1]. A 40' container has a 61,200 lb payload capacity [2]. That's 1.8 cents/pound. How close the cost gets to this depends on the payload density, but $1/pound seems high. [1] http://www1.chineseshipping.com.cn/en/indices/scfinew.jsp http://www1.chineseshipping.com.cn/en/indices/scfinew.jsp [2] http://www.dsv.com/sea-freight/sea-container-description/dry-container http://www.dsv.com/sea-freight/sea-container-description/dry...
  - refurb 11y ago
    I didn't know the exact number that's why I put "less than $1/pound". You are correct though. If you look at some of the products like fruit that we get from Asian, the cost per pound would have to be pennies or else they couldn't charge $2/pound for the produce in the US.
- narrowrail 11y ago
  According to the recent earnings report from North American Tanker [0], their cost per day is $12K, while they charge $35K/day on the spot market. This is for their Suezmax, which can hold 1M barrels of crude. [0]Warning PDF:http://hugin.info/201/R/1966091/717954.pdf http://hugin.info/201/R/1966091/717954.pdf

michaelt 11y ago

If suppliers don't want to trade at current prices, the ship is going to be sitting idle somewhere - and it's more profitable to sit idle near America while full than to sit idle in the Gulf of Oman while empty.

TorKlingberg 11y ago

The alternative would be land-based storage tanks. They also cost money. This happens sometimes. Example: http://www.telegraph.co.uk/motoring/news/6601779/Oil-tankers-parked-off-British-coast-as-speculators-wait-for-prices-to-rise.html http://www.telegraph.co.uk/motoring/news/6601779/Oil-tankers...

barney54 11y ago

The market is efficient, but only on the long run. People making decisions like this make the market efficient by storing oil when it is cheap (or when it appears to be cheap).

s73v3r 11y ago
I fail to see how deliberately not doing something with a resource makes anything more efficient.
- JshWright 11y ago
  "Efficient" has a very specific meaning in this case. https://en.wikipedia.org/wiki/Efficient-market_hypothesis https://en.wikipedia.org/wiki/Efficient-market_hypothesis
- jeffcoat 11y ago
  It's obvious that moving oil in space helps, right? You move the resource from a place it's relatively plentiful to a different place where oil is relatively scarce. Say, from the Persian Gulf to Australia. The same thing is happening here: These ships are trying to move oil from a time when oil is relatively plentiful to a time when it's relatively scarce. It's riskier, but if they succeed, everybody wins: they make money, and they do it by lessening that future scarcity.

barkingcat 11y ago

Often ships sit loaded for months on end (sometimes due to customs or duties / ownership issues). There's also a proximity issue. If a loaded ship is sitting close to the states but in international waters, it's easier to get the load back into the states. If you leave the cargo in a storage facility somewhere you still have to pay for the storage, and in addition the transit + time when you actually want to use/sell/offload it.