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Totally fascinating read. What's amazing to me is what the insurance costs and payouts happening must be. I imagine the losses are staggering.
by dk1138 8y ago
Totally fascinating read. What's amazing to me is what the insurance costs and payouts happening must be. I imagine the losses are staggering.
- rm_-rf_slash 8y agoEqually amazing is that catastrophic failures like these are almost invisible to the consumer. The economy just keeps humming along and we don’t even register a major cargo ship sinking because the shelves are always full.
- protomyth 8y agoNo doubt. I was really surprised when I started following sites like https://gcaptain.com/ https://gcaptain.com/ how many cargo accidents take place per year that practically no one hears about.
- holmet 8y agoThe losses are most prevalent on ULBCs, resulting in the biggest ships of all capsizing. Insurers work with ship regulators and ship owners to prevent this, as not only does it mean they've lost the ship and cargo, but picking up a new ULBC is not a quick process.
- seem_2211 8y agoWhat's a ULBC?
- jsjohnst 8y agohttps://en.m.wikipedia.org/wiki/Bulk_carrier https://en.m.wikipedia.org/wiki/Bulk_carrier (Which uses this as it’s source: https://web.archive.org/web/20070408154846/http://www.nautinst.org/info/acrnm_abbrev.htm https://web.archive.org/web/20070408154846/http://www.nautin...)
- wyldfire 8y agoULBC: Ultra Large Bulk Carrier
- holmet 8y agoUltra large bulk carrier
- ghrifter 8y agoShouldnt use such a precise jargon acronym like ULBC
- ChrisLomont 8y agoThe article says there are around 10 solid cargo ships lost per year. There are around 10,000 such ships in use. Such a ship costs ~$20M new. Cargo shipments take around 7 weeks door to door, so assuming that also roughly covers dock time, and ships run to near capacity timewise, on avg a ship makes ~7 trips per year. So, out of around 70K trips, 10 result in ship loss. It's entirely possible that the cost to reduce that loss rate against all reasons for loss and across all 10K ships and 70K journeys is far greater than simply allowing 10 failures. Those losses are also likely insured against with the cost spread across the 70K trips. The insurance against them is likely therefore cheap.
- Guvante 8y agoThe insurance cost assuming a 10% overhead is something like $3,200 per trip and that is just the portion of insurance for this one kind of event. Thus eliminating 90% of these events would save around $20k per ship of insurance cost per ship per year. While that isn't a huge amount compared to say their capital costs it is a non-trivial amount of money. Note that your $20M ignores the cost of the cargo as well as the cost of the lives lost. The later can tend to get much higher if fixes aren't found for problems that are known since letting ships sink to save some money is negligence assuming a fix can be reasonably found.
- ChrisLomont 8y ago>since letting ships sink to save some money is negligence assuming a fix can be reasonably found I'd assume there are smart people in the shipping industry that have spent a lifetime on such issues. I suspect there is not some "reasonably found" solution that will help. It may be as simple as surprise severe weather events sink many of those lost - and the cost to protect such a large fleet from rare events is extremely costly. Paying $3200/trip for insurance against ship loss of this kind is peanuts for protecting a $20M item that generates millions annually in revenue. And the insurance on the goods (and this $3200) is simply passed on to those paying to ship goods.