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We're a small export shop based in Japan. It's becoming increasingly difficult to find containers to ship even to APAC region. 'Difficult' = not just expensive,

We're a small export shop based in Japan. It's becoming increasingly difficult to find containers to ship even to APAC region. 'Difficult' = not just expensive, I'm talking we're not able to get on the ship period, no matter how much we'll pay. So, for us service is deteriorating because we're not able to fulfill obligations and lose money. For our customers service is deteriorating, because they are not able to buy goods that will be delivered in a timely fashion. This goes on for 3-4 months now, and this is definitely a problem, even if it doesn't look so from outside.

angry_octet 5y ago
It seems like time insensitive freight is absorbing 100% of capacity, so the spot price is going vertical. Big customers are getting most of their freight booked, but no slack is hurting ad hoc shipments. Like a short squeeze.
- reillyse 5y ago
  It’s not an efficient market.
  - angry_octet 5y ago
    It beats me why companies are not reselling their future freight contracts. If I was, e.g., shipping 500 TEUs of carpet that was a restock, I'd consider selling some on the spot market. But the mechanisms to do this at scale are not in place. It highlights that liner companies (e.g. Maersk) are leaving cash on the table by selling capacity at rates which don't reflect demand, although perhaps they prefer long term stability. I also wonder if significant demurrage costs were incurred by the logjam at ports, and that disincentivized charter shipping for a period.
    - xxpor 5y ago
      >It highlights that liner companies (e.g. Maersk) are leaving cash on the table by selling capacity at rates which don't reflect demand, although perhaps they prefer long term stability. It seems like there's an opportunity here for a bidding based shipping company. I can't even begin to fathom the time or capital required to start a new container shipping company from scratch though these days.
      - acrooks 5y ago
        Pretty much the entire ocean transportation industry, with the exception of container shipping, works this way. Prices are largely based on predictions of market conditions in your load port at the time of loading, and the the same wherever you’re sending the cargo. If you’re trying to load cargo in an area with an undersupply of vessels, you’ll pay a lot for the opportunity. If you’re sending a ship to an area with an oversupply of vessels, you pay more for that because the company renting it to you doesn’t have good confidence in its ability to get a contract once your cargo is offloaded.
        angry_octet 5y ago
        Despite the significant increase in commercial intelligence products from satellite imagery, ripoffs etc, the information available is still quite limited. And the MILP problems that result are extremely challenging to solve. A lot of the shipping companies still seem to use heuristics instead of models. But shipping lines seem able to control capacity because of consolidation, and hence maintain high utilisation: https://www.freightwaves.com/news/qa-flexport-on-2021-container-crunch-liner-pricing-coup https://www.freightwaves.com/news/qa-flexport-on-2021-contai...
        acrooks 5y ago
        I helped start an organisation which builds data science models for the shipping and commodity markets, and has had great success trading on the results of those models. Within most shipping companies, there continues to be a significant hubris amongst charterers of "I know what I know" - a lot of people who have worked for decades in the industry and still trust their gut instinct over anything else. As a result, since so few decisions are significantly data-driven, it's actually not that complex to build predictive models that take advantage of arbitrage opportunities in the market.
      - gmueckl 5y ago
        The capital requirements are certainly no joke, but the ships themselves are cheaper than I expected. The Ever Given, for example, supposedly cost around 130 mio. dollars to build. For comparison, a new Boeing 747 costs around 230 to 260 mio.
    - thesumofall 5y ago
      They absolutely _also_ prefer long-term stability and target a healthy mix of Spot and long-term contracts. It is clear that this extreme high will be followed by a low and then they will be happy to have signed stable volume commitments Source: work in shipping

angry_octet 5y ago

It seems like time insensitive freight is absorbing 100% of capacity, so the spot price is going vertical. Big customers are getting most of their freight booked, but no slack is hurting ad hoc shipments. Like a short squeeze.

reillyse 5y ago
It’s not an efficient market.
- angry_octet 5y ago
  It beats me why companies are not reselling their future freight contracts. If I was, e.g., shipping 500 TEUs of carpet that was a restock, I'd consider selling some on the spot market. But the mechanisms to do this at scale are not in place. It highlights that liner companies (e.g. Maersk) are leaving cash on the table by selling capacity at rates which don't reflect demand, although perhaps they prefer long term stability. I also wonder if significant demurrage costs were incurred by the logjam at ports, and that disincentivized charter shipping for a period.
  - xxpor 5y ago
    >It highlights that liner companies (e.g. Maersk) are leaving cash on the table by selling capacity at rates which don't reflect demand, although perhaps they prefer long term stability. It seems like there's an opportunity here for a bidding based shipping company. I can't even begin to fathom the time or capital required to start a new container shipping company from scratch though these days.
    - acrooks 5y ago
      Pretty much the entire ocean transportation industry, with the exception of container shipping, works this way. Prices are largely based on predictions of market conditions in your load port at the time of loading, and the the same wherever you’re sending the cargo. If you’re trying to load cargo in an area with an undersupply of vessels, you’ll pay a lot for the opportunity. If you’re sending a ship to an area with an oversupply of vessels, you pay more for that because the company renting it to you doesn’t have good confidence in its ability to get a contract once your cargo is offloaded.
      - angry_octet 5y ago
        Despite the significant increase in commercial intelligence products from satellite imagery, ripoffs etc, the information available is still quite limited. And the MILP problems that result are extremely challenging to solve. A lot of the shipping companies still seem to use heuristics instead of models. But shipping lines seem able to control capacity because of consolidation, and hence maintain high utilisation: https://www.freightwaves.com/news/qa-flexport-on-2021-container-crunch-liner-pricing-coup https://www.freightwaves.com/news/qa-flexport-on-2021-contai...
        acrooks 5y ago
        I helped start an organisation which builds data science models for the shipping and commodity markets, and has had great success trading on the results of those models. Within most shipping companies, there continues to be a significant hubris amongst charterers of "I know what I know" - a lot of people who have worked for decades in the industry and still trust their gut instinct over anything else. As a result, since so few decisions are significantly data-driven, it's actually not that complex to build predictive models that take advantage of arbitrage opportunities in the market.
    - gmueckl 5y ago
      The capital requirements are certainly no joke, but the ships themselves are cheaper than I expected. The Ever Given, for example, supposedly cost around 130 mio. dollars to build. For comparison, a new Boeing 747 costs around 230 to 260 mio.
  - thesumofall 5y ago
    They absolutely _also_ prefer long-term stability and target a healthy mix of Spot and long-term contracts. It is clear that this extreme high will be followed by a low and then they will be happy to have signed stable volume commitments Source: work in shipping