20 ms·

Trans-Pacific deteriorating, brace for shipping ‘tsunami’

366 points by disgrunt 5y ago

arbitrage 5y ago
Is there anywhere else that can ease the load on existing harbour infrastructure? If the demand is this extreme, shouldn't a new eceonomic opportunity be ripe for the picking, here?
- zdragnar 5y ago
  Ports for big ships have historically been constrained by geography- ideally you need a very deep, well sheltered bay. A shore with shallow waters for hundreds of feet simply make for very costly places to unload, and get treacherous in rough weather. On top of that, coastlines tend to be the most densely populated regions. Building up infrastructure for a new harbor sounds like a nightmare to get through zoning, let alone an environmental impact review.
- toast0 5y ago
  Building a container port to handle large vessels is a big capital expenditure. And you also need a labor pool, and trucking / rail facilities. It's not something you can come up with quickly to take advantage of an event that everyone hopes is short term. Labor shortages related to covid on the US west coast leading to delays wouldn't be significantly helped by adding another port on the US west coast. From the bottom of this article, it does look like there's some room in alternate non-US ports, although that seems expensive and time consuming.
- skybrian 5y ago
  Maybe some US manufacturers will benefit?
- AnimalMuppet 5y ago
  Yes and no. There are, for example, a few ports on the Pacific coast of Mexico. They don't have the transportation infrastructure to carry large amounts of cargo to the rest of the continent, and they (probably) don't have the cranes to efficiently unload container ships. The US ports don't have the space to expand. I don't think the Canadian ones can, either. Prince Rupert might be able to, but it would take time. The problem is the sheer scale of what you are asking for. We'd need either more ports, or more berths at existing ports, with more cranes, and more transport connections from the ports to the country. If there's one thing where you could get more throughput by throwing money at it, it would be in more efficient container cranes. And even that requires someone figuring out a more efficient crane, and then probably a few years of building it out at the ports, and upgrading the dockside infrastructure to handle the increased throughput.
  - briffle 5y ago
    The Port of Coos Bay in Southern Oregon has been trying to expand their port for 15 years now. https://www.portofcoosbay.com/projects https://www.portofcoosbay.com/projects But the projects take quite a bit of time (dredging the bay deeper and wider to service 1000' ships, taking over and repairing a basically abandoned railway with 100 year old tunnels and bridges, etc). Couple that with some initial resistance from state legislators that serve Portland (which lost its largest container ship terminal contracts a few years ago), and these things take years to get into place. Could be real fast, if they got a guarantee of business from somebody, but shipping companies don't want to pay to develop in only a few years, and then have their backlog clear up before then.
    - mjevans 5y ago
      It's more complicated though. Portland OR already has I5 running right through town and very near the port. Presumably it also has a number of rail lines. Coos Bay is, relatively speaking, in the middle of nowhere along the Oregon coast, in a very mountainous region. Refurbishing the rail line is a great idea, but surely they'd also want some of these to be offloaded to trucks, which is going to require an expansion in the highway infrastructure, at least with the respect of carrying heavier loads more frequently if not adding a lane in each direction so that they can accommodate the traffic increase.
    - pomian 5y ago
      Interesting idea. But Coos Bay like Astoria has a significant bar problem. Even big ships have to pay attention to the the tides. One more hindrance to being competitive with natural harbours like San Francisco and Vancouver.
belval 5y ago
I feel like article is missing conclusions on what will be affected by this. Will consumer prices be higher? Delays in shipping?
- Spellman 5y ago
  Guessing the big issue is delay in shipping of components/goods. And for critical items bidding up the price of transport will pass those to consumer or force reorganization of the supply chain to other avenues (local or other shipping). Medium term it's a big hiccup on the global JIT economy.
d_silin 5y ago
More like another boom phase after bust one.
habitue 5y ago
Really didn't expect to be reading about literal containers on HN.
- dmoy 5y ago
  Flexport is commonly featured here
  - rrdharan 5y ago
    Their hiring posts certainly are but I can’t recall seeing much else about them beyond that - am I just mistaken?
    - deleted 5y ago
      [deleted]
    - gadders 5y ago
      They did have some interesting blog posts a few years back about how the freight industry works, IIRC.
- midasuni 5y ago
  Logistics is a massive global system, plenty of hacks
- m463 5y ago
  same as docker - dependencies are downloading slowly before you get a container.
- blamazon 5y ago
  One of my favorite comments on HN, by user techbio: "Realizing mitochondria were the "powerhouse" due to a voltage gradient created by chemically transforming ATP to ADP across a membrane gave me a eureka moment about how small such a mechanism can be, and how powerful in great numbers." [1] The international shipping container is a similar example of a small mechanism that powers our global economy at scale. [1]: https://news.ycombinator.com/item?id=24128425 https://news.ycombinator.com/item?id=24128425
zenmaster10665 5y ago
Are there good stock plays off the back of this event or is it not protracted enough to invest in without buying special instruments?
- disgrunt 5y ago
  Domestic commodities seem like a good investment near term.
- T-hawk 5y ago
  My guess would be that there must be something to do from an investing angle -- but also that industry insiders and specialists who look at such things dedicatedly and professionally would have already priced in or arbitraged anything far ahead of a layman's understanding and participation.
- bradj 5y ago
  For sure shipping equities with exposure to freight rates like Maersk, and maybe other logistics equities, like railroads.
- throwawayboise 5y ago
  By the time you ask and get an answer here, the market will already have priced in any opportunity that might be mentioned.
- davidlee1435 5y ago
  Join Flexport :)
- nostrademons 5y ago
  Most have already been priced in. Maersk, for example, is making money hand-over-fist, but their stock is up 250% since the pandemic started.
wonderwonder 5y ago
Wonder if this could spur local manufacturing again if transportation costs start to out weigh labor / material costs.
- pmlnr 5y ago
  That would be a good outcome: less transportation means less pollution, plus redundancy in production, which is seriously needed.
  - Nasrudith 5y ago
    Not neccessarily for pollution. Efficency increases with larger sizes and that leads to it fulfilling broader areas. Larger manufacturing can afford more sophisticated forms of pollution control even if it is more concentrated.
    - pmlnr 5y ago
      Could afford, not can. The sad truth is that in far asian prudoction, most don't.
  - refurb 5y ago
    Scale brings a lot of efficiencies. It can be more efficient and less polluting to sail a ship with 1000 tons of tomatoes from Mexico than have a local farm drive a few crates of tomatoes to the local farmer's market in his 1970 Ford pickup.
- jayd16 5y ago
  The cost of bootstrapping manufacturing is also probably impacted though.
  - wonderwonder 5y ago
    Very much so. Seems like a good time for the federal government to make low cost loans available to those seeking to bring manufacturing back to the US.
ummonk 5y ago
I recall reading a few years ago that the port of Oakland was in a precarious spot due to being outcompeted by excess capacity in Southern California ports as well as gulf coast ports via the Panama Canal. I would guess that is not currently an issue given the shipping backlog? Edit: yeah I’m seeing articles about a historic backup at the port of Oakland.
- hattmall 5y ago
  The bigger problem is probably they don't have the capacity anymore, so now people will take Oakland because they have to, have a bad experience, and be like fuck Oakland. This is precisely why the US and the world has farm subsidies. Because these kinds of supply / logistical shocks to the food supply can result in some real issues and political changes. If we port / shipping subsidies we would keep capacity and subsidize return trips. A big part of the problem is a lack of empty containers in Asia.
icegreentea2 5y ago
I'm curious, how does the restocking work out here? Is this restocking recovering from the initial drop in Asian exports from like a year ago? Have companies been working with that dent in their inventories for the last year-ish?
etaioinshrdlu 5y ago
With global shipping, semiconductor manufacturing, and food prices spiking, is this generalized global inflation?
- XorNot 5y ago
  Shipping prices are extremely elastic is my understanding, so no. If you own a ship you always want to be running it near full capacity, so once the demand surge subsides prices will also fall. Inflation requires their not to be a way for prices to reduce.
  - deleted 5y ago
    [deleted]
- RachelF 5y ago
  We are already seeing inflation in the US. The Fed has chosen not to measure it - in their parlance they will "look through inflation".
  - jgalt212 5y ago
    true that, they don't want to admit they overcooked it. And they don't want to take money off the table for fear of drawing the ire of the investor class. The Fed's balance sheet is double what it was a year ago, and quadruple was it was after the first round of liquidity during the GFC. https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
  - astrange 5y ago
    We are not seeing unhealthy amounts of core inflation. Relative price increases are not inflation because they’re relative. Real interest rates are still negative. The intent is to get inflation to the average target of 2%, so it’s of course good if we see some.
    - imtringued 5y ago
crazygringo 5y ago
This article feels extremely confusing... maybe someone here can clarify? Nothing appears to be "deteriorating" whatsoever. According to the article, in March we imported 1.5x as many goods as in March 2019, as retailers restock inventory. Which is amazing that such increased shipping capacity exists. And because there's so much demand for shipping, shipping prices are rising. This seems... great? We're successfully restocking tons of stuff, but higher shipping prices mean that retailers will continue to give priority to what people are buying, and so a full post-pandemic restocking will be smoothed out over the rest of the year, rather than all at once? I mean, scheduling restocking seems pretty flexible and can therefore respond intelligently to prices. This article seems like everything is going great. What's deteriorating? What's the "tsunami"...??
- adrianmonk 5y ago
  This article is written for "FreightWaves" which is "The Fastest Way to Navigate the Freight Market". The target audience is people who need to ship stuff. For them, service levels are deteriorating. What is normally easy has become a struggle.
- lazide 5y ago
  It’s a tsunami of freight - 1.5x March this year over 2 years sounds decently typical considering normal growth. The issue is that April/May/June it wouldn’t be odd considering the circumstances if it was 5x or 10x - if there was enough containers, or enough ships, and there isn’t. As TFA was pointing out, it isn’t even about rising prices to get a spot. Sometimes you can’t get a slot period. Remember all those supply chain shocks and people talking about needing to restock to get things working in chips, manufacturing, etc? Right now there is 100 containers of socks stuck on a ship and in the way. At least, that is what I got from the article.
  - CameronNemo 5y ago
    > Right now there is 100 containers of socks stuck on a ship and in the way. This seems like a real easy problem to fix. Some simple import tariffs could get a lot of the cruft out of the way in no time, and they could be eased back too.
malwarebytess 5y ago
A fear I had about winding down industry, shipping, and services for COVID-19 was that getting it all up and running harmoniously would be unmanageable. The incredible interconnectedness of all industry would cause problems. Say one node wants to start again, but it depends on 5 other input nodes that also want to start again. Those 5 cannot begin without their own connected nodes. And so like an apocalyptic version of trying to restart a global power grid you would have cascades of failures, rubber-banding demand and supply, and so on.
- colechristensen 5y ago
  Inefficiency brings up business opportunity. Some industry can’t realign quickly? Make a bet that a new business will be nimble enough to deliver faster and take their market share.
  - omegaworks 5y ago
    I guess but that upstart better be willing to bet a massive amount of capital on creating that infrastructure only to potentially see its advantage evaporate as the supply lines normalize.
  - macintux 5y ago
    An industry like shipping doesn’t seem a likely target for disruption. It would take a massive investment to make even the smallest dent in the problem, and it’s mostly an analog system.
    - acchow 5y ago
      Imagine Amazon couldn't restock items and it hit their top line significantly.
    - colechristensen 5y ago
      Then manufacture locally and sell what can’t get a place on a ship. The lack of shipping capacity creates business opportunities and not just for building ships or ports.
inetsee 5y ago
As I was reading these comments I was reminded of some articles I read quite some time ago about the impact of global warming produced sea level rise on container ports. Many existing ports weren't built with sea level rise in mind, and building new container ports is expensive and takes quite a while. A quick search on "sea level rise container ports" produced articles that said a lot of the impact depends on the amount of sea level rise. Five feet or less will probably not affect current ports very much; as the sea level rise gets higher the impact on existing ports becomes greater. Would anyone who knows more about this topic care to comment?
- ksdale 5y ago
  I am not a person who knows much, but google says that current sea level rises are between 3 and 4 millimeters a year. At that rate it will take 300 years to reach 5 feet. It seems like increasingly severe storms will (would) have an impact a century before sea level itself becomes a problem, even in places where the sea level is already basically a problem.
  - devdas 5y ago
    This is not a linear system.
  - xnyan 5y ago
    > between 3 and 4 millimeters a year. Due to the geography of the earth as well as other factors, the effects and experience of sea level rise is not the same everywhere. At this moment the sea level at the port of Miami is 8 inches about the 1950 level, significantly more than 3-4mm a year and the rate is accelerating. Also keep in mind the sea does not need to permanently cover land to make it unlivable. It's well within the realm of possibility that due to expanded floodplains, increased intensity and frequency of storms, that portions of Miami could be unlivable in as little as 30 years, and the entire city unlivable by the end of the century. There's virtually no chance that all the populated areas on the costs will remain livable in the same timeframe.
    - damnedspot 5y ago
GnarfGnarf 5y ago
It's going to make manufacturing in the U.S. cost-effective again.
- NineStarPoint 5y ago
  It would take years for large amounts of manufacturing to be built up in the US, and I don’t know of anyone who thinks these issues will last that long. Add on to that how many more years it would take to recoup the investment, and I can’t see this making any change in investor’s thoughts towards US manufacturing.
deleted 5y ago
[deleted]
bruiseralmighty 5y ago
Sounds oddly similar to a database deadlock. Wonder who the optimizer will select as the victim. But that's what happens when you put all your manufacturing in one large transaction.
lifeisstillgood 5y ago
We seem to be entering a global version of The Beer Game (https://en.m.wikipedia.org/wiki/Beer_distribution_game https://en.m.wikipedia.org/wiki/Beer_distribution_game). The game is a training session on supply chain co-ordination designed to show effects of trying to order beer and bottles months ahead of time then demand changes etc. It's mostly chaos (I was speaking to someone who has seen their shipping from China to Europe quintuple - apparently all the containers stayed in Europe as no one wanted to send them back empty.) The game is designed to show that "local" signals aren't always indicative of full system - the example being that retailers etc are stockpiling right now on-shore. But this creates more demand than usual, slowing delivery. So the naive retailer will say "OMG it now takes 3 months and 2x price to get widgets, I had better order 4 months supply ... and so it goes - an infinite bug methodology.
- myself248 5y ago
  Heh. I was just about to ask if this was another term for the bullwhip effect, and the page actually links right to it. I think the overall effect is that we all have to get used to things being scarce or spotty for a while, that's all. The era of perfect infinite next-day availability of everything has come to a pause. Be patient, adjust expectations, make do, and give the system time to recover. And wherever possible, buy local, buy on-shore.
  - nemo44x 5y ago
    Thank god for long books and summer weather.
    - tempestn 5y ago
      I remember thinking the same thing a year ago.
      - nemo44x 5y ago
        Oh I think it every year lol. :)
ping_pong 5y ago
This sounds pretty interesting. Is this article suggesting that imports will see lots of inflation because of costs to ship goods to the US? And then a backlog growing in Asia, which will eventually flood the US just in time for the end of the Pandemic? It sounds like the beginnings of an old-fashion over-inventory-driven recession. But the mechanics these days are different than what we would have seen in the US during the 1980s, since the factories are in Asia. I'm curious what the result of this will be.
- Red_Leaves_Flyy 5y ago
  If American businesses have over bought and overpaid for inventory then expect bankruptcies and fire sales. Computers and cars are unlikely, but bread machines, lounge wear, exercise equipment, and similar items are likely to eventually, and randomly, saturate their markets. IOW people probably won't want a peloton in six months. If peloton overestimated demand it'll shock their books and if severe enough threaten their viability as a company.
underseacables 5y ago
Would this be an argument in favor of more domestic manufacturing?
macmac 5y ago
Interesting to note that the US only really has one container shipping line: Matson. It is an insignificant carrier in terms of capacity (less than 0.5 % world market share) which primarily services Hawaii.
- crftr 5y ago
  To add -- due to The Jones Act (within the Merchant Marine Act of 1920), Matson has a near-permanent lock on the cargo business between the lower-48 and Hawaii.
  - ncmncm 5y ago
    ...thus explaining why food is consistently 20+% more expensive in Hawaii than in California, despite year-round growing conditions. The only goat dairy on the Big Island imports all their feed from continental US. Apparently local forage would make the milk taste "off". Nobody grows hay in Hawaii, probably because there is no dry (enough) season to dry it in, and (maybe?) nobody has thought of trucking it to the dry side. Or something. Agriculture is always harder that it seems like it ought to be. Cheap shipping forgives a lot.
- khuey 5y ago
  Maersk has a US subsidiary with a number of US flagged ships.
  - macmac 5y ago
    Yes, but they primarily service the USN.
hchz 5y ago
Another perspective - the ETF tracking shipping indices (BDRY) is outperforming every other US ETF for 2021 YTD at 177%, including leveraged index ETFs. https://etfdb.com/compare/highest-ytd-returns/ https://etfdb.com/compare/highest-ytd-returns/
- JohnWhigham 5y ago
  Tempting, but good God, that expense ratio. The highest I've ever seen on an ETF.
  - hchz 5y ago
    An even better reason might be that the operator has been fined more than the market cap of this fund. https://www.investmentnews.com/etf-managers-group-nasdaq-fine-175728 https://www.investmentnews.com/etf-managers-group-nasdaq-fin...
  - Clewza313 5y ago
    You're not joking: > Expense Ratio 3.32% https://etfdb.com/etf/BDRY/#etf-ticker-profile https://etfdb.com/etf/BDRY/#etf-ticker-profile
amerine 5y ago
It feels like ports in Portland could be used for this. Too bad they are dead, right?
ecommerceguy 5y ago
Between this, collectible prices skyrocketing and the crypto ponzi I'd say most of the Fed's/Central Banks inflation is being soaked up according to plan.
tymekpavel 5y ago
An interesting side effect here is that people are opting for domestic alternatives. We are in the process of remodeling our house and were going to get our windows from Italy and our heat pump system from Japan, but given the long lead times for container unloading (sometimes as much as 6 weeks on the west coast in addition to the 4 week voyage) we opted for American windows and a Carrier heat pump system (at higher cost).
- alert0 5y ago
  That's pretty interesting. I wonder how an increase in domestic spending balances against all the printing we did during COVID. It decreases demand for foreign currencies (for foreign purchases) which would strengthen the dollar relatively. I guess it really depends on the magnitude of the trend on how much it will offset the increase in supply.
dalbasal 5y ago
Can anyone fill in some of the macro view? Why are imports (seems to be many/most routes, worldwide) so high, in general? I get the speculation on restocking/stockpiling vs consumer demand, and how there may be a feedback loop here.^ Before that though...? What are we transporting more of? Why? I'm confused.
- alert0 5y ago
  Retailers stopped stocking when things shut down. An example is rental car companies selling off parts of their fleets. Now that things are opening back, they are anticipating demand and attempting to meet it.
  - dalbasal 5y ago
    So... that's the "restocking" part. If I understood the article, the restocking part of the story is a little more speculative, and short lived. Underlying that is a >10% increase in consumer demand... possibly more in some (non-US) markets. I don't understand why.
bawana 5y ago
ever since Nvidia saw how much people were willing to pay for GPUs, the whole world has gone crazy and is finding ways to manufacture scarcity.
- LesZedCB 5y ago
  seriously though, i legitimately believe this. prices for stuff has gotten way out of hand and i am seriously scaling back expectations of speed and searching for a lot of used/second hand stuff.
gpm 5y ago
Lot's of discussion here about how congestion might help US industry. I think that's backwards, high shipping rates seem to be a sign that more things are being imported from oversees instead of created locally than normal. This seems like a bad thing > He noted that January trans-Pacific imports were up 10% versus 2019 (comparisons to 2020 numbers are skewed by COVID) and 13.5% in February, then jumped 51% in March. “So, we’re now at 1.5 times pre-pandemic levels.”
Animats 5y ago
Ports may have to do something like what aviation did a few decades ago. At major airports, you have to book a landing slot before you can take off. This eliminated circling the airport waiting to land. Los Angeles and Long Beach may have to have a scheduling system like that.
Clewza313 5y ago
It's not just COVID either, the Suez Canal/Ever Given logjam of some ~70k containers is still being unspooled. Some 20k of those are still physically on Ever Given, which escaped the canal only to get even more firmly wedged in the quicksand of Egyptian bureaucracy for almost a month and still counting now. https://www.freightwaves.com/news/ever-givens-arrest-and-manifest-and-the-impact-on-us-importers https://www.freightwaves.com/news/ever-givens-arrest-and-man...
tomcam 5y ago
> "We had one client who needed something loaded in May that was extremely urgent and who was ready to pay $15,000 per container." Irrelevant observation that will impress none of you. I first studied business (informally, I was just a kid reading books at the library) 50 years ago when the container business was relatively new. When I first started businesses around 35 years ago shipping was still pretty expensive. So for me, the thought of spending $15K to ship 2,400 cubic feet of pretty much anything is kind of awesome. From lumber to textiles to appliances to iPhones (okay, the last one is a layup) a motivated businessperson could probably still figure out how to make that work in a lot of contexts. There are tons of possibilities in this world and they're always expanding.
- richardw 5y ago
  No doubt there are businesses that can make it work. But any constraints affect supply, pricing some business models out. When your whole business is set up to optimally create and ship plastic garden chairs, you’re probably in trouble.
  - tomcam 5y ago
    Very well put, of course. I try to avoid pure commodity plays in any businesses I get involved in.
londons_explore 5y ago
Shipping is more elastic than you would imagine. Ships can sail faster easily (but they use more fuel). They do that when prices are high like now. That increases throughput. Shipping contracts can usually be resold - so someone importing low priority goods can make a healthy profit by selling their shipment slot on to someone else. These two things mean shipping should never run out. Claims of this article that there is no space left 'regardless of price' I am dubious of...
pedro2 5y ago
OT: why does that site ask to install Google Widevine DRM?
ricksunny 5y ago
The article reads like those that real estate agents push - how there is such acute housing scarcity in a given market, with advice to home buyers to be prepared to act fast with aggressive offers & inflated prices to secure their home purchase. i.e. it serves to stoke demand and set a higher water mark on pricing. When the tight spot eases up you don’t hear about prices relaxing, terms easing up, etc.

366 points by disgrunt 5y ago

Is there anywhere else that can ease the load on existing harbour infrastructure? If the demand is this extreme, shouldn't a new eceonomic opportunity be ripe for the picking, here?

zdragnar 5y ago
Ports for big ships have historically been constrained by geography- ideally you need a very deep, well sheltered bay. A shore with shallow waters for hundreds of feet simply make for very costly places to unload, and get treacherous in rough weather. On top of that, coastlines tend to be the most densely populated regions. Building up infrastructure for a new harbor sounds like a nightmare to get through zoning, let alone an environmental impact review.
toast0 5y ago
Building a container port to handle large vessels is a big capital expenditure. And you also need a labor pool, and trucking / rail facilities. It's not something you can come up with quickly to take advantage of an event that everyone hopes is short term. Labor shortages related to covid on the US west coast leading to delays wouldn't be significantly helped by adding another port on the US west coast. From the bottom of this article, it does look like there's some room in alternate non-US ports, although that seems expensive and time consuming.
skybrian 5y ago
Maybe some US manufacturers will benefit?
AnimalMuppet 5y ago
Yes and no. There are, for example, a few ports on the Pacific coast of Mexico. They don't have the transportation infrastructure to carry large amounts of cargo to the rest of the continent, and they (probably) don't have the cranes to efficiently unload container ships. The US ports don't have the space to expand. I don't think the Canadian ones can, either. Prince Rupert might be able to, but it would take time. The problem is the sheer scale of what you are asking for. We'd need either more ports, or more berths at existing ports, with more cranes, and more transport connections from the ports to the country. If there's one thing where you could get more throughput by throwing money at it, it would be in more efficient container cranes. And even that requires someone figuring out a more efficient crane, and then probably a few years of building it out at the ports, and upgrading the dockside infrastructure to handle the increased throughput.
- briffle 5y ago
  The Port of Coos Bay in Southern Oregon has been trying to expand their port for 15 years now. https://www.portofcoosbay.com/projects https://www.portofcoosbay.com/projects But the projects take quite a bit of time (dredging the bay deeper and wider to service 1000' ships, taking over and repairing a basically abandoned railway with 100 year old tunnels and bridges, etc). Couple that with some initial resistance from state legislators that serve Portland (which lost its largest container ship terminal contracts a few years ago), and these things take years to get into place. Could be real fast, if they got a guarantee of business from somebody, but shipping companies don't want to pay to develop in only a few years, and then have their backlog clear up before then.
  - mjevans 5y ago
    It's more complicated though. Portland OR already has I5 running right through town and very near the port. Presumably it also has a number of rail lines. Coos Bay is, relatively speaking, in the middle of nowhere along the Oregon coast, in a very mountainous region. Refurbishing the rail line is a great idea, but surely they'd also want some of these to be offloaded to trucks, which is going to require an expansion in the highway infrastructure, at least with the respect of carrying heavier loads more frequently if not adding a lane in each direction so that they can accommodate the traffic increase.
  - pomian 5y ago
    Interesting idea. But Coos Bay like Astoria has a significant bar problem. Even big ships have to pay attention to the the tides. One more hindrance to being competitive with natural harbours like San Francisco and Vancouver.

belval 5y ago

I feel like article is missing conclusions on what will be affected by this. Will consumer prices be higher? Delays in shipping?

Spellman 5y ago
Guessing the big issue is delay in shipping of components/goods. And for critical items bidding up the price of transport will pass those to consumer or force reorganization of the supply chain to other avenues (local or other shipping). Medium term it's a big hiccup on the global JIT economy.

d_silin 5y ago

More like another boom phase after bust one.

habitue 5y ago

Really didn't expect to be reading about literal containers on HN.

dmoy 5y ago
Flexport is commonly featured here
- rrdharan 5y ago
  Their hiring posts certainly are but I can’t recall seeing much else about them beyond that - am I just mistaken?
  - deleted 5y ago
    [deleted]
  - gadders 5y ago
    They did have some interesting blog posts a few years back about how the freight industry works, IIRC.
midasuni 5y ago
Logistics is a massive global system, plenty of hacks
m463 5y ago
same as docker - dependencies are downloading slowly before you get a container.
blamazon 5y ago
One of my favorite comments on HN, by user techbio: "Realizing mitochondria were the "powerhouse" due to a voltage gradient created by chemically transforming ATP to ADP across a membrane gave me a eureka moment about how small such a mechanism can be, and how powerful in great numbers." [1] The international shipping container is a similar example of a small mechanism that powers our global economy at scale. [1]: https://news.ycombinator.com/item?id=24128425 https://news.ycombinator.com/item?id=24128425

zenmaster10665 5y ago

Are there good stock plays off the back of this event or is it not protracted enough to invest in without buying special instruments?

disgrunt 5y ago
Domestic commodities seem like a good investment near term.
T-hawk 5y ago
My guess would be that there must be something to do from an investing angle -- but also that industry insiders and specialists who look at such things dedicatedly and professionally would have already priced in or arbitraged anything far ahead of a layman's understanding and participation.
bradj 5y ago
For sure shipping equities with exposure to freight rates like Maersk, and maybe other logistics equities, like railroads.
throwawayboise 5y ago
By the time you ask and get an answer here, the market will already have priced in any opportunity that might be mentioned.
davidlee1435 5y ago
Join Flexport :)
nostrademons 5y ago
Most have already been priced in. Maersk, for example, is making money hand-over-fist, but their stock is up 250% since the pandemic started.

wonderwonder 5y ago

Wonder if this could spur local manufacturing again if transportation costs start to out weigh labor / material costs.

pmlnr 5y ago
That would be a good outcome: less transportation means less pollution, plus redundancy in production, which is seriously needed.
- Nasrudith 5y ago
  Not neccessarily for pollution. Efficency increases with larger sizes and that leads to it fulfilling broader areas. Larger manufacturing can afford more sophisticated forms of pollution control even if it is more concentrated.
  - pmlnr 5y ago
    Could afford, not can. The sad truth is that in far asian prudoction, most don't.
- refurb 5y ago
  Scale brings a lot of efficiencies. It can be more efficient and less polluting to sail a ship with 1000 tons of tomatoes from Mexico than have a local farm drive a few crates of tomatoes to the local farmer's market in his 1970 Ford pickup.
jayd16 5y ago
The cost of bootstrapping manufacturing is also probably impacted though.
- wonderwonder 5y ago
  Very much so. Seems like a good time for the federal government to make low cost loans available to those seeking to bring manufacturing back to the US.

ummonk 5y ago

I recall reading a few years ago that the port of Oakland was in a precarious spot due to being outcompeted by excess capacity in Southern California ports as well as gulf coast ports via the Panama Canal. I would guess that is not currently an issue given the shipping backlog? Edit: yeah I’m seeing articles about a historic backup at the port of Oakland.

hattmall 5y ago
The bigger problem is probably they don't have the capacity anymore, so now people will take Oakland because they have to, have a bad experience, and be like fuck Oakland. This is precisely why the US and the world has farm subsidies. Because these kinds of supply / logistical shocks to the food supply can result in some real issues and political changes. If we port / shipping subsidies we would keep capacity and subsidize return trips. A big part of the problem is a lack of empty containers in Asia.

icegreentea2 5y ago

I'm curious, how does the restocking work out here? Is this restocking recovering from the initial drop in Asian exports from like a year ago? Have companies been working with that dent in their inventories for the last year-ish?

etaioinshrdlu 5y ago

With global shipping, semiconductor manufacturing, and food prices spiking, is this generalized global inflation?

XorNot 5y ago
Shipping prices are extremely elastic is my understanding, so no. If you own a ship you always want to be running it near full capacity, so once the demand surge subsides prices will also fall. Inflation requires their not to be a way for prices to reduce.
- deleted 5y ago
  [deleted]
RachelF 5y ago
We are already seeing inflation in the US. The Fed has chosen not to measure it - in their parlance they will "look through inflation".
- jgalt212 5y ago
  true that, they don't want to admit they overcooked it. And they don't want to take money off the table for fear of drawing the ire of the investor class. The Fed's balance sheet is double what it was a year ago, and quadruple was it was after the first round of liquidity during the GFC. https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
- astrange 5y ago
  We are not seeing unhealthy amounts of core inflation. Relative price increases are not inflation because they’re relative. Real interest rates are still negative. The intent is to get inflation to the average target of 2%, so it’s of course good if we see some.
  - imtringued 5y ago

crazygringo 5y ago

This article feels extremely confusing... maybe someone here can clarify? Nothing appears to be "deteriorating" whatsoever. According to the article, in March we imported 1.5x as many goods as in March 2019, as retailers restock inventory. Which is amazing that such increased shipping capacity exists. And because there's so much demand for shipping, shipping prices are rising. This seems... great? We're successfully restocking tons of stuff, but higher shipping prices mean that retailers will continue to give priority to what people are buying, and so a full post-pandemic restocking will be smoothed out over the rest of the year, rather than all at once? I mean, scheduling restocking seems pretty flexible and can therefore respond intelligently to prices. This article seems like everything is going great. What's deteriorating? What's the "tsunami"...??

adrianmonk 5y ago
This article is written for "FreightWaves" which is "The Fastest Way to Navigate the Freight Market". The target audience is people who need to ship stuff. For them, service levels are deteriorating. What is normally easy has become a struggle.
lazide 5y ago
It’s a tsunami of freight - 1.5x March this year over 2 years sounds decently typical considering normal growth. The issue is that April/May/June it wouldn’t be odd considering the circumstances if it was 5x or 10x - if there was enough containers, or enough ships, and there isn’t. As TFA was pointing out, it isn’t even about rising prices to get a spot. Sometimes you can’t get a slot period. Remember all those supply chain shocks and people talking about needing to restock to get things working in chips, manufacturing, etc? Right now there is 100 containers of socks stuck on a ship and in the way. At least, that is what I got from the article.
- CameronNemo 5y ago
  > Right now there is 100 containers of socks stuck on a ship and in the way. This seems like a real easy problem to fix. Some simple import tariffs could get a lot of the cruft out of the way in no time, and they could be eased back too.

malwarebytess 5y ago

A fear I had about winding down industry, shipping, and services for COVID-19 was that getting it all up and running harmoniously would be unmanageable. The incredible interconnectedness of all industry would cause problems. Say one node wants to start again, but it depends on 5 other input nodes that also want to start again. Those 5 cannot begin without their own connected nodes. And so like an apocalyptic version of trying to restart a global power grid you would have cascades of failures, rubber-banding demand and supply, and so on.

colechristensen 5y ago
Inefficiency brings up business opportunity. Some industry can’t realign quickly? Make a bet that a new business will be nimble enough to deliver faster and take their market share.
- omegaworks 5y ago
  I guess but that upstart better be willing to bet a massive amount of capital on creating that infrastructure only to potentially see its advantage evaporate as the supply lines normalize.
- macintux 5y ago
  An industry like shipping doesn’t seem a likely target for disruption. It would take a massive investment to make even the smallest dent in the problem, and it’s mostly an analog system.
  - acchow 5y ago
    Imagine Amazon couldn't restock items and it hit their top line significantly.
  - colechristensen 5y ago
    Then manufacture locally and sell what can’t get a place on a ship. The lack of shipping capacity creates business opportunities and not just for building ships or ports.

inetsee 5y ago

As I was reading these comments I was reminded of some articles I read quite some time ago about the impact of global warming produced sea level rise on container ports. Many existing ports weren't built with sea level rise in mind, and building new container ports is expensive and takes quite a while. A quick search on "sea level rise container ports" produced articles that said a lot of the impact depends on the amount of sea level rise. Five feet or less will probably not affect current ports very much; as the sea level rise gets higher the impact on existing ports becomes greater. Would anyone who knows more about this topic care to comment?

ksdale 5y ago
I am not a person who knows much, but google says that current sea level rises are between 3 and 4 millimeters a year. At that rate it will take 300 years to reach 5 feet. It seems like increasingly severe storms will (would) have an impact a century before sea level itself becomes a problem, even in places where the sea level is already basically a problem.
- devdas 5y ago
  This is not a linear system.
- xnyan 5y ago
  > between 3 and 4 millimeters a year. Due to the geography of the earth as well as other factors, the effects and experience of sea level rise is not the same everywhere. At this moment the sea level at the port of Miami is 8 inches about the 1950 level, significantly more than 3-4mm a year and the rate is accelerating. Also keep in mind the sea does not need to permanently cover land to make it unlivable. It's well within the realm of possibility that due to expanded floodplains, increased intensity and frequency of storms, that portions of Miami could be unlivable in as little as 30 years, and the entire city unlivable by the end of the century. There's virtually no chance that all the populated areas on the costs will remain livable in the same timeframe.
  - damnedspot 5y ago

GnarfGnarf 5y ago

It's going to make manufacturing in the U.S. cost-effective again.

NineStarPoint 5y ago
It would take years for large amounts of manufacturing to be built up in the US, and I don’t know of anyone who thinks these issues will last that long. Add on to that how many more years it would take to recoup the investment, and I can’t see this making any change in investor’s thoughts towards US manufacturing.

deleted 5y ago

[deleted]

bruiseralmighty 5y ago

Sounds oddly similar to a database deadlock. Wonder who the optimizer will select as the victim. But that's what happens when you put all your manufacturing in one large transaction.

lifeisstillgood 5y ago

We seem to be entering a global version of The Beer Game (https://en.m.wikipedia.org/wiki/Beer_distribution_game https://en.m.wikipedia.org/wiki/Beer_distribution_game). The game is a training session on supply chain co-ordination designed to show effects of trying to order beer and bottles months ahead of time then demand changes etc. It's mostly chaos (I was speaking to someone who has seen their shipping from China to Europe quintuple - apparently all the containers stayed in Europe as no one wanted to send them back empty.) The game is designed to show that "local" signals aren't always indicative of full system - the example being that retailers etc are stockpiling right now on-shore. But this creates more demand than usual, slowing delivery. So the naive retailer will say "OMG it now takes 3 months and 2x price to get widgets, I had better order 4 months supply ... and so it goes - an infinite bug methodology.

myself248 5y ago
Heh. I was just about to ask if this was another term for the bullwhip effect, and the page actually links right to it. I think the overall effect is that we all have to get used to things being scarce or spotty for a while, that's all. The era of perfect infinite next-day availability of everything has come to a pause. Be patient, adjust expectations, make do, and give the system time to recover. And wherever possible, buy local, buy on-shore.
- nemo44x 5y ago
  Thank god for long books and summer weather.
  - tempestn 5y ago
    I remember thinking the same thing a year ago.
    - nemo44x 5y ago
      Oh I think it every year lol. :)

ping_pong 5y ago

This sounds pretty interesting. Is this article suggesting that imports will see lots of inflation because of costs to ship goods to the US? And then a backlog growing in Asia, which will eventually flood the US just in time for the end of the Pandemic? It sounds like the beginnings of an old-fashion over-inventory-driven recession. But the mechanics these days are different than what we would have seen in the US during the 1980s, since the factories are in Asia. I'm curious what the result of this will be.

Red_Leaves_Flyy 5y ago
If American businesses have over bought and overpaid for inventory then expect bankruptcies and fire sales. Computers and cars are unlikely, but bread machines, lounge wear, exercise equipment, and similar items are likely to eventually, and randomly, saturate their markets. IOW people probably won't want a peloton in six months. If peloton overestimated demand it'll shock their books and if severe enough threaten their viability as a company.

underseacables 5y ago

Would this be an argument in favor of more domestic manufacturing?

macmac 5y ago

Interesting to note that the US only really has one container shipping line: Matson. It is an insignificant carrier in terms of capacity (less than 0.5 % world market share) which primarily services Hawaii.

crftr 5y ago
To add -- due to The Jones Act (within the Merchant Marine Act of 1920), Matson has a near-permanent lock on the cargo business between the lower-48 and Hawaii.
- ncmncm 5y ago
  ...thus explaining why food is consistently 20+% more expensive in Hawaii than in California, despite year-round growing conditions. The only goat dairy on the Big Island imports all their feed from continental US. Apparently local forage would make the milk taste "off". Nobody grows hay in Hawaii, probably because there is no dry (enough) season to dry it in, and (maybe?) nobody has thought of trucking it to the dry side. Or something. Agriculture is always harder that it seems like it ought to be. Cheap shipping forgives a lot.
khuey 5y ago
Maersk has a US subsidiary with a number of US flagged ships.
- macmac 5y ago
  Yes, but they primarily service the USN.

hchz 5y ago

Another perspective - the ETF tracking shipping indices (BDRY) is outperforming every other US ETF for 2021 YTD at 177%, including leveraged index ETFs. https://etfdb.com/compare/highest-ytd-returns/ https://etfdb.com/compare/highest-ytd-returns/

JohnWhigham 5y ago
Tempting, but good God, that expense ratio. The highest I've ever seen on an ETF.
- hchz 5y ago
  An even better reason might be that the operator has been fined more than the market cap of this fund. https://www.investmentnews.com/etf-managers-group-nasdaq-fine-175728 https://www.investmentnews.com/etf-managers-group-nasdaq-fin...
- Clewza313 5y ago
  You're not joking: > Expense Ratio 3.32% https://etfdb.com/etf/BDRY/#etf-ticker-profile https://etfdb.com/etf/BDRY/#etf-ticker-profile

amerine 5y ago

It feels like ports in Portland could be used for this. Too bad they are dead, right?

ecommerceguy 5y ago

Between this, collectible prices skyrocketing and the crypto ponzi I'd say most of the Fed's/Central Banks inflation is being soaked up according to plan.

tymekpavel 5y ago

An interesting side effect here is that people are opting for domestic alternatives. We are in the process of remodeling our house and were going to get our windows from Italy and our heat pump system from Japan, but given the long lead times for container unloading (sometimes as much as 6 weeks on the west coast in addition to the 4 week voyage) we opted for American windows and a Carrier heat pump system (at higher cost).

alert0 5y ago
That's pretty interesting. I wonder how an increase in domestic spending balances against all the printing we did during COVID. It decreases demand for foreign currencies (for foreign purchases) which would strengthen the dollar relatively. I guess it really depends on the magnitude of the trend on how much it will offset the increase in supply.

dalbasal 5y ago

Can anyone fill in some of the macro view? Why are imports (seems to be many/most routes, worldwide) so high, in general? I get the speculation on restocking/stockpiling vs consumer demand, and how there may be a feedback loop here.^ Before that though...? What are we transporting more of? Why? I'm confused.

alert0 5y ago
Retailers stopped stocking when things shut down. An example is rental car companies selling off parts of their fleets. Now that things are opening back, they are anticipating demand and attempting to meet it.
- dalbasal 5y ago
  So... that's the "restocking" part. If I understood the article, the restocking part of the story is a little more speculative, and short lived. Underlying that is a >10% increase in consumer demand... possibly more in some (non-US) markets. I don't understand why.

bawana 5y ago

ever since Nvidia saw how much people were willing to pay for GPUs, the whole world has gone crazy and is finding ways to manufacture scarcity.

LesZedCB 5y ago
seriously though, i legitimately believe this. prices for stuff has gotten way out of hand and i am seriously scaling back expectations of speed and searching for a lot of used/second hand stuff.

gpm 5y ago

Lot's of discussion here about how congestion might help US industry. I think that's backwards, high shipping rates seem to be a sign that more things are being imported from oversees instead of created locally than normal. This seems like a bad thing > He noted that January trans-Pacific imports were up 10% versus 2019 (comparisons to 2020 numbers are skewed by COVID) and 13.5% in February, then jumped 51% in March. “So, we’re now at 1.5 times pre-pandemic levels.”

Animats 5y ago

Ports may have to do something like what aviation did a few decades ago. At major airports, you have to book a landing slot before you can take off. This eliminated circling the airport waiting to land. Los Angeles and Long Beach may have to have a scheduling system like that.

Clewza313 5y ago

It's not just COVID either, the Suez Canal/Ever Given logjam of some ~70k containers is still being unspooled. Some 20k of those are still physically on Ever Given, which escaped the canal only to get even more firmly wedged in the quicksand of Egyptian bureaucracy for almost a month and still counting now. https://www.freightwaves.com/news/ever-givens-arrest-and-manifest-and-the-impact-on-us-importers https://www.freightwaves.com/news/ever-givens-arrest-and-man...

tomcam 5y ago

> "We had one client who needed something loaded in May that was extremely urgent and who was ready to pay $15,000 per container." Irrelevant observation that will impress none of you. I first studied business (informally, I was just a kid reading books at the library) 50 years ago when the container business was relatively new. When I first started businesses around 35 years ago shipping was still pretty expensive. So for me, the thought of spending $15K to ship 2,400 cubic feet of pretty much anything is kind of awesome. From lumber to textiles to appliances to iPhones (okay, the last one is a layup) a motivated businessperson could probably still figure out how to make that work in a lot of contexts. There are tons of possibilities in this world and they're always expanding.

richardw 5y ago
No doubt there are businesses that can make it work. But any constraints affect supply, pricing some business models out. When your whole business is set up to optimally create and ship plastic garden chairs, you’re probably in trouble.
- tomcam 5y ago
  Very well put, of course. I try to avoid pure commodity plays in any businesses I get involved in.

londons_explore 5y ago

Shipping is more elastic than you would imagine. Ships can sail faster easily (but they use more fuel). They do that when prices are high like now. That increases throughput. Shipping contracts can usually be resold - so someone importing low priority goods can make a healthy profit by selling their shipment slot on to someone else. These two things mean shipping should never run out. Claims of this article that there is no space left 'regardless of price' I am dubious of...

pedro2 5y ago

OT: why does that site ask to install Google Widevine DRM?

ricksunny 5y ago

The article reads like those that real estate agents push - how there is such acute housing scarcity in a given market, with advice to home buyers to be prepared to act fast with aggressive offers & inflated prices to secure their home purchase. i.e. it serves to stoke demand and set a higher water mark on pricing. When the tight spot eases up you don’t hear about prices relaxing, terms easing up, etc.