15 ms·

Probably the actual cost will require an army of accountants and lawyers at a dozen major logistics corporations arguing with each other for months to even try

by ufmace 6y ago

Probably the actual cost will require an army of accountants and lawyers at a dozen major logistics corporations arguing with each other for months to even try to compute. I doubt us regular uninvolved people will ever get a "real" number. How do you even try to calculate and reveal the cost associated with say a manufacturer in the middle of a supply chain deciding to source their parts from a different vendor for this run because their usual source was delayed due to the Suez blockage and they didn't want to leave their factory idle?

ape4 6y ago
Perhaps adding up all the penalties all the delayed ships have to pay could cover it.
chipsambos 6y ago
Agree it's incalculable, I don't mean that in the "it's too big of a number" sort of way but in the "we can't possibly know" kind of way: 1) The scale and depth of the disruption makes it impractical to figure in any kind of accurate way and 2) The disruption will have introduced hypotheticals that nay spiral out themselves (butterfly effect style) e.g. some retailer may have lost a customer who went elsewhere, some supplier may have lost a retailer who went elsewhere, etc
- lisper 6y ago
  You can get a rough idea by thinking of this as if it were a natural disaster, and from that perspective I think the toll is probably not too bad. No casualties, very little property damage, and a week is not really all that long. However... that is no excuse to shrug this off. We were very, very lucky that it was only a week. The ship could easily have broken in two, which would have been a catastrophe of the first order and likely shut the canal down for a year. The world dodged a major bullet here.
  - nowandlater 6y ago
    That's no joke. Salvage operations is such a fascinating topic, which I'm sure many (me included) found themselves quickly obsessed with. The sagging and hogging threshold of this ship is the critical key here. I'm curious how close/or not the hull came to being compromised.
    - Animats 6y ago
      That's why Smit has naval architects on staff, and the program Hecsalv.[1] They will have calculated the limits of how much the stern could be pushed without damaging the bow before pushing it. [1] https://www.herbert-abs.com/hecsalv https://www.herbert-abs.com/hecsalv
  - iso1210 6y ago
    The canal revenues were down about $15m/day. If it really cost $7b a day, then Egypt is massively undercharging.
    - Taek 6y ago
      Not necessarily. I pay only $1 a day for water, but if you stop giving me water for 7 days the damages are going to be a lot more than $7. That doesn't mean it's reasonable to charge me more than $1 per day for water. Obviously an extreme example, but the situation with this ship is likely similar. The damages probably far exceed the $15m/day in revenue (though I suspect they are far lower than $7b per day).
      - Sohcahtoa82 6y ago
        > That doesn't mean it's reasonable to charge me more than $1 per day for water. This is where someone steps in and says something to the tune of "Whatever price you're willing to pay is by definition reasonable" and completely ignore the ethical/moral issues with essentially holding someone's life for ransom by charging the maximum price they can get for something they need to survive.
        ksdale 6y ago
        Looks like you stepped in to say it!
      - OscarCunningham 6y ago
        The reason water is cheap is because it's plentiful; there's a lot of competition to supply it. But there's only one Suez canal and sailing around Africa is much worse. So you would expect Egypt to be extracting a significant portion of the value the Suez canal adds.
        wizzwizz4 6y ago
        So… if somebody gets a monopoly on the water supply to an area, you think a price hike is reasonable? Oh, wait, water's already a monopoly: https://en.wikipedia.org/wiki/Natural_monopoly https://en.wikipedia.org/wiki/Natural_monopoly
  - DVk6dqsfyx5i3ii 6y ago
    After Egypt intentionally blocked the Suez Canal during the Six Day War and an operation was taken to reopen it after the Yom Kippur War it took around 7 months to clear the ships that were scuttled to block it[1]. I would think a cleanup with more modern technology dealing with a ship that wasn't scuttled for the purpose of blockage would take less time. [1] https://en.wikipedia.org/wiki/1974_Suez_Canal_Clearance_Operation#Operation_Nimrod_Spar https://en.wikipedia.org/wiki/1974_Suez_Canal_Clearance_Oper...
    - lisper 6y ago
      The 1974 operation involved ten ships, the largest of which was 6700 tons. The Ever Given displaces 220,000 tons. It's an entirely different beast.
      - pixl97 6y ago
        While our ships have grown greatly, so has our ability to salvage them at the same time.
        Animats 6y ago
        Worldwide salvage capacity isn't up much. Mammoet Salvage and Titan Salvage exited the business a few years ago. Smit is one of the few salvors with worldwide reach and their own heavy equipment. The business requires huge equipment on standby, and trained people waiting for the next crisis. Smit is now part of Boskalis, which is a big marine engineering firm. They have dredgers, heavy lift ships, tugs, and barges, which are useful both for marine construction and for salvage. So the fleet can do other things between crises.
        Uehreka 6y ago
        That feels like the kind of non-obvious claim that should come with a source (even just a blog post by an analyst that lays out the relevant vocab terms and the general theory).
      - fiedzia 6y ago
        Its large, but its size is limited by sues canal. Ships could be much larger if they were designed for a different route.
  - andi999 6y ago
    There is no major bullet here. Nowadays the alternative route around Africa takes 10 days only.
    - lisper 6y ago
      10 days is not a big deal if it's just one shipment. It's a huge deal if it affects every ship that would otherwise have gone through the canal, i.e. 50 ships a day, 18,000+ ships a year. That's 180,000 extra ship-days per year. That's a pretty major bullet in an economy built on just-in-time inventory control.
      - bkor 6y ago
        Aside from the additional ships, you need additional containers, employees, etc. It also costs more in bunkers, etc. For JIT it wouldn't matter too much though. As long as it arrives on schedule it would be ok.
- 908B64B197 6y ago
  > some retailer may have lost a customer who went elsewhere, some supplier may have lost a retailer who went elsewhere, etc But then that also created profits for another supplier!
  - slg 6y ago
    And the increase in profits of that second supplier might surpass the losses of the first supplier if the customer made their original decision based on cost. You can frame this as increasing economic output. Let's break all the canals[1]. [1] - https://en.wikipedia.org/wiki/Parable_of_the_broken_window https://en.wikipedia.org/wiki/Parable_of_the_broken_window
    - 908B64B197 6y ago
      But the customer will end up paying more! It's a never-ending problem! (Increasing economic outputs by breaking all canals is the perfect example of why I'm always worried about gradient descent)
- iso1210 6y ago
  > 2) The disruption will have introduced hypotheticals that nay spiral out themselves (butterfly effect style) e.g. some retailer may have lost a customer who went elsewhere, some supplier may have lost a retailer who went elsewhere, etc And some retailers and suppliers may have gained customers
- throwawayfire 6y ago
  > The disruption will have introduced hypotheticals In general, temporary disruption has some long-term positive economic effects (which is directly why 'disruption' is valued in Silicon Valley). For example, during London Tube Strikes, commuters find different and more efficient routes and 5% ended up permanently changing their route on public transport: https://www.independent.co.uk/news/business/news/tube-strike-good-economy-study-finds-10499926.html https://www.independent.co.uk/news/business/news/tube-strike...
  - sidpatil 6y ago
    This reminds me of annealing, and why it's implemented as a technique for finding optima.
    - piyh 6y ago
      I'm not blocking the canal, I'm testing robustness! Also in the big picture with covid not being as deadly as it could have been, could serve as a nice dress rehearsal for a captain trips.
      - djhn 6y ago
        We theoretically may have avoided, for the next few decades, the risk of a truly dangerous infectious disease being underestimated, something halfway between Covid and extinction-level threat.
        sellyme 6y ago
        Given the sheer quantity of idiots underestimating it right now, I'm not too sure that things will have improved a few decades down the line.
        ehnto 6y ago
        I think it's hopeful humanity would prevail a more deadly pandemic, many countries closed borders very quickly and there are island nations with understandably quick responses. Civilization as we know it could definitely still get wiped out though.
- ozim 6y ago
  That is why most of the people are fine with $XXX million per day as it is not practical to narrow it down to thousands of dollars. We lost $100 millions, so it does not matter if it was $10k or $20k more or less because that is less than 1% of the total. There is no meaningful decision you can make based on that 1% difference.
mschuster91 6y ago
Probably the actual "damage" that was caused will be given by the insurance companies as a sum of claims covered, but there will be a lot of companies that simply have to eat the loss incurred by idling factories and the likes because their supply contracts allow for delivery delays or because pursuing coverage isn't worth the effort (e.g. for those who still had sufficient stock to cover a week of delay and no "real" damage occurred). A many weeks long shutdown (in case they had to unload the Ever Given) would be many orders of magnitude more expensive.
- bkor 6y ago
  > but there will be a lot of companies that simply have to eat the loss incurred by idling factories and the likes Factories will know enough in advance of this problem. They can fly over some supplies to keep the factory running. It's entirely normal to do this. They usually do _not_ idle or shutdown the factory. Who pays is for lawyers and so on. A shipping company will know about these clients and prioritize that cargo.
riverageraldo 6y ago
This makes me question that shouldn't we have another canal built? Like if so much of the world's economy depends on this route shouldn't we build an extra canal to speed up the transportation and also act as a redundancy
- flatiron 6y ago
  Where do you propose building this extra canal?
  - adrianmonk 6y ago
    Cue Elon Musk promising to build a tunnel version of it for $5 million total cost, opening fall 2022.
    - creaturemachine 6y ago
      Of course everything has to be repacked into little tubes and back into containers on the other end, but let's not let these things get in the way of a solid plan. Elon Musk!
- onei 6y ago
  It's a lot further to dig, but the next best thing would be to dig from the Persian gulf through Iraq, Syria and probably Lebanon. Not forgetting half the Persian Gulf is Iran. It's not exactly the most stable geopolitical area.
  - dvirsky 6y ago
    I'm not sure there's a path that's flat enough to make it practical even if everything else falls into place somehow.
  - InitialLastName 6y ago
    A quick look suggests that the Tigris is mostly navigable up to Baghdad, which would get you halfway there. As an alternative (and ignoring the obviously substantial geopolitical concerns), is there a geographic reason not to dig a canal on the other side of the Sinai from, say, Aqaba to Rafah? If you had to dig that far, it would seem to be the next best option.
interestica 6y ago
So by attempting to calculate it, the cost goes up higher.
dfsegoat 6y ago
For spoilage etc., most of it would be insured, I assume, so insurance claims would likely be a solid proxy for estimating one aspect of impact.
social_quotient 6y ago
I'm gonna assume the insurance companies will know by the time this is all over.
tw04 6y ago
I'm not sure the collective "we" will ever truly know. I'd imagine a LOT of that livestock died and they aren't going to be jumping up and down to volunteer how many/much given the negative PR. If they did divulge that would probably be the easiest jumping off point for hard losses.
deleted 6y ago
[deleted]

by ufmace 6y ago

ape4 6y ago

Perhaps adding up all the penalties all the delayed ships have to pay could cover it.

chipsambos 6y ago

Agree it's incalculable, I don't mean that in the "it's too big of a number" sort of way but in the "we can't possibly know" kind of way: 1) The scale and depth of the disruption makes it impractical to figure in any kind of accurate way and 2) The disruption will have introduced hypotheticals that nay spiral out themselves (butterfly effect style) e.g. some retailer may have lost a customer who went elsewhere, some supplier may have lost a retailer who went elsewhere, etc

lisper 6y ago
You can get a rough idea by thinking of this as if it were a natural disaster, and from that perspective I think the toll is probably not too bad. No casualties, very little property damage, and a week is not really all that long. However... that is no excuse to shrug this off. We were very, very lucky that it was only a week. The ship could easily have broken in two, which would have been a catastrophe of the first order and likely shut the canal down for a year. The world dodged a major bullet here.
- nowandlater 6y ago
  That's no joke. Salvage operations is such a fascinating topic, which I'm sure many (me included) found themselves quickly obsessed with. The sagging and hogging threshold of this ship is the critical key here. I'm curious how close/or not the hull came to being compromised.
  - Animats 6y ago
    That's why Smit has naval architects on staff, and the program Hecsalv.[1] They will have calculated the limits of how much the stern could be pushed without damaging the bow before pushing it. [1] https://www.herbert-abs.com/hecsalv https://www.herbert-abs.com/hecsalv
- iso1210 6y ago
  The canal revenues were down about $15m/day. If it really cost $7b a day, then Egypt is massively undercharging.
  - Taek 6y ago
    Not necessarily. I pay only $1 a day for water, but if you stop giving me water for 7 days the damages are going to be a lot more than $7. That doesn't mean it's reasonable to charge me more than $1 per day for water. Obviously an extreme example, but the situation with this ship is likely similar. The damages probably far exceed the $15m/day in revenue (though I suspect they are far lower than $7b per day).
    - Sohcahtoa82 6y ago
      > That doesn't mean it's reasonable to charge me more than $1 per day for water. This is where someone steps in and says something to the tune of "Whatever price you're willing to pay is by definition reasonable" and completely ignore the ethical/moral issues with essentially holding someone's life for ransom by charging the maximum price they can get for something they need to survive.
      - ksdale 6y ago
        Looks like you stepped in to say it!
    - OscarCunningham 6y ago
      The reason water is cheap is because it's plentiful; there's a lot of competition to supply it. But there's only one Suez canal and sailing around Africa is much worse. So you would expect Egypt to be extracting a significant portion of the value the Suez canal adds.
      - wizzwizz4 6y ago
        So… if somebody gets a monopoly on the water supply to an area, you think a price hike is reasonable? Oh, wait, water's already a monopoly: https://en.wikipedia.org/wiki/Natural_monopoly https://en.wikipedia.org/wiki/Natural_monopoly
- DVk6dqsfyx5i3ii 6y ago
  After Egypt intentionally blocked the Suez Canal during the Six Day War and an operation was taken to reopen it after the Yom Kippur War it took around 7 months to clear the ships that were scuttled to block it[1]. I would think a cleanup with more modern technology dealing with a ship that wasn't scuttled for the purpose of blockage would take less time. [1] https://en.wikipedia.org/wiki/1974_Suez_Canal_Clearance_Operation#Operation_Nimrod_Spar https://en.wikipedia.org/wiki/1974_Suez_Canal_Clearance_Oper...
  - lisper 6y ago
    The 1974 operation involved ten ships, the largest of which was 6700 tons. The Ever Given displaces 220,000 tons. It's an entirely different beast.
    - pixl97 6y ago
      While our ships have grown greatly, so has our ability to salvage them at the same time.
      - Animats 6y ago
        Worldwide salvage capacity isn't up much. Mammoet Salvage and Titan Salvage exited the business a few years ago. Smit is one of the few salvors with worldwide reach and their own heavy equipment. The business requires huge equipment on standby, and trained people waiting for the next crisis. Smit is now part of Boskalis, which is a big marine engineering firm. They have dredgers, heavy lift ships, tugs, and barges, which are useful both for marine construction and for salvage. So the fleet can do other things between crises.
      - Uehreka 6y ago
        That feels like the kind of non-obvious claim that should come with a source (even just a blog post by an analyst that lays out the relevant vocab terms and the general theory).
    - fiedzia 6y ago
      Its large, but its size is limited by sues canal. Ships could be much larger if they were designed for a different route.
- andi999 6y ago
  There is no major bullet here. Nowadays the alternative route around Africa takes 10 days only.
  - lisper 6y ago
    10 days is not a big deal if it's just one shipment. It's a huge deal if it affects every ship that would otherwise have gone through the canal, i.e. 50 ships a day, 18,000+ ships a year. That's 180,000 extra ship-days per year. That's a pretty major bullet in an economy built on just-in-time inventory control.
    - bkor 6y ago
      Aside from the additional ships, you need additional containers, employees, etc. It also costs more in bunkers, etc. For JIT it wouldn't matter too much though. As long as it arrives on schedule it would be ok.
908B64B197 6y ago
> some retailer may have lost a customer who went elsewhere, some supplier may have lost a retailer who went elsewhere, etc But then that also created profits for another supplier!
- slg 6y ago
  And the increase in profits of that second supplier might surpass the losses of the first supplier if the customer made their original decision based on cost. You can frame this as increasing economic output. Let's break all the canals[1]. [1] - https://en.wikipedia.org/wiki/Parable_of_the_broken_window https://en.wikipedia.org/wiki/Parable_of_the_broken_window
  - 908B64B197 6y ago
    But the customer will end up paying more! It's a never-ending problem! (Increasing economic outputs by breaking all canals is the perfect example of why I'm always worried about gradient descent)
iso1210 6y ago
> 2) The disruption will have introduced hypotheticals that nay spiral out themselves (butterfly effect style) e.g. some retailer may have lost a customer who went elsewhere, some supplier may have lost a retailer who went elsewhere, etc And some retailers and suppliers may have gained customers
throwawayfire 6y ago
> The disruption will have introduced hypotheticals In general, temporary disruption has some long-term positive economic effects (which is directly why 'disruption' is valued in Silicon Valley). For example, during London Tube Strikes, commuters find different and more efficient routes and 5% ended up permanently changing their route on public transport: https://www.independent.co.uk/news/business/news/tube-strike-good-economy-study-finds-10499926.html https://www.independent.co.uk/news/business/news/tube-strike...
- sidpatil 6y ago
  This reminds me of annealing, and why it's implemented as a technique for finding optima.
  - piyh 6y ago
    I'm not blocking the canal, I'm testing robustness! Also in the big picture with covid not being as deadly as it could have been, could serve as a nice dress rehearsal for a captain trips.
    - djhn 6y ago
      We theoretically may have avoided, for the next few decades, the risk of a truly dangerous infectious disease being underestimated, something halfway between Covid and extinction-level threat.
      - sellyme 6y ago
        Given the sheer quantity of idiots underestimating it right now, I'm not too sure that things will have improved a few decades down the line.
        ehnto 6y ago
        I think it's hopeful humanity would prevail a more deadly pandemic, many countries closed borders very quickly and there are island nations with understandably quick responses. Civilization as we know it could definitely still get wiped out though.
ozim 6y ago
That is why most of the people are fine with $XXX million per day as it is not practical to narrow it down to thousands of dollars. We lost $100 millions, so it does not matter if it was $10k or $20k more or less because that is less than 1% of the total. There is no meaningful decision you can make based on that 1% difference.

mschuster91 6y ago

Probably the actual "damage" that was caused will be given by the insurance companies as a sum of claims covered, but there will be a lot of companies that simply have to eat the loss incurred by idling factories and the likes because their supply contracts allow for delivery delays or because pursuing coverage isn't worth the effort (e.g. for those who still had sufficient stock to cover a week of delay and no "real" damage occurred). A many weeks long shutdown (in case they had to unload the Ever Given) would be many orders of magnitude more expensive.

bkor 6y ago
> but there will be a lot of companies that simply have to eat the loss incurred by idling factories and the likes Factories will know enough in advance of this problem. They can fly over some supplies to keep the factory running. It's entirely normal to do this. They usually do _not_ idle or shutdown the factory. Who pays is for lawyers and so on. A shipping company will know about these clients and prioritize that cargo.

riverageraldo 6y ago

This makes me question that shouldn't we have another canal built? Like if so much of the world's economy depends on this route shouldn't we build an extra canal to speed up the transportation and also act as a redundancy

flatiron 6y ago
Where do you propose building this extra canal?
- adrianmonk 6y ago
  Cue Elon Musk promising to build a tunnel version of it for $5 million total cost, opening fall 2022.
  - creaturemachine 6y ago
    Of course everything has to be repacked into little tubes and back into containers on the other end, but let's not let these things get in the way of a solid plan. Elon Musk!
onei 6y ago
It's a lot further to dig, but the next best thing would be to dig from the Persian gulf through Iraq, Syria and probably Lebanon. Not forgetting half the Persian Gulf is Iran. It's not exactly the most stable geopolitical area.
- dvirsky 6y ago
  I'm not sure there's a path that's flat enough to make it practical even if everything else falls into place somehow.
- InitialLastName 6y ago
  A quick look suggests that the Tigris is mostly navigable up to Baghdad, which would get you halfway there. As an alternative (and ignoring the obviously substantial geopolitical concerns), is there a geographic reason not to dig a canal on the other side of the Sinai from, say, Aqaba to Rafah? If you had to dig that far, it would seem to be the next best option.

interestica 6y ago

So by attempting to calculate it, the cost goes up higher.

dfsegoat 6y ago

For spoilage etc., most of it would be insured, I assume, so insurance claims would likely be a solid proxy for estimating one aspect of impact.

social_quotient 6y ago

I'm gonna assume the insurance companies will know by the time this is all over.

tw04 6y ago

I'm not sure the collective "we" will ever truly know. I'd imagine a LOT of that livestock died and they aren't going to be jumping up and down to volunteer how many/much given the negative PR. If they did divulge that would probably be the easiest jumping off point for hard losses.

deleted 6y ago

[deleted]