5 ms·
Obviously oil price has 0 correlation with cost of shipping.
by qaq 11y ago
Obviously oil price has 0 correlation with cost of shipping.
- VLM 11y agoA rule of thumb is trucking spends 1/3 on fuel, more efficient rail spends 1/4 on fuel. Shipping is even more efficient, so its likely under 1/4 total costs. (edited to emphasize that if fuel cost magically dropped to zero, costs could not drop more than perhaps 20%. And fuel has dropped, but not to magical zero) Capex and maintenance are expensive.
- qaq 11y agoAll great points. Thing is you just provided additional support to the idea that premise in the article is flawed :) Volume would be a much more important indicator.
- TheCowboy 11y agoqaq's assertion that shipping costs have zero correlation with oil prices is not accurate. It's not difficult to demonstrate that some correlation exists, and one can also do an overlay of shipping cost indexes to oil prices. Shipping is already highly efficient in general, so it might be the opposite that fuel prices are a significant percentage of operating expenses. Low estimates I've seen state that fuel costs are around 40% of operating expenses. Source: https://people.hofstra.edu/geotrans/eng/ch7en/conc7en/bdi.html https://people.hofstra.edu/geotrans/eng/ch7en/conc7en/bdi.ht... I'm not arguing they're the only cost, but there has been a lot of hysteria about the Baltic Dry Index this month. So much that Snopes and Marine Traffic responded to it: http://www.snopes.com/cargo-ships-atlantic-map/ http://www.snopes.com/cargo-ships-atlantic-map/
- qaq 11y agoThere is a thing called sarcasm :)
- rdlecler1 11y agoActually could put upward pressure if they start to store excess capacity in tankers and have the ships run slower.
- ihsw 11y agoThey don't need to drive slower, they can park themselves outside of ports and refuse to discharge their cargo. And they are doing just that.