11 ms·

There is this weird "worst of all worlds" where ships aren't maintained because owners are too cheap. If they break down before they reach the destination (or g

There is this weird "worst of all worlds" where ships aren't maintained because owners are too cheap. If they break down before they reach the destination (or get hit with unexpected port fees), the cost of the repairs can be more than the value of the ship + cargo. So the owner just stops answering the phone (or rather the untraceable faceless fake corporation in a tax haven jurisdiction does). Then the crew are stuck: they won't get paid. But the port the ship is in won't let them leave with the ship without paying the fees, which they can't. And they aren't allowed to leave without the ship (and fly home or whatever) because the authorises don't want the ship to just sit there rusting or sink. That's what happened here. It can go on for decades. The issue here was that the courts said the cargo couldn't be seized as no one knew who the owner was in order to sue. So it just had to be stored forever. For some crazy reason they also refused to allow it to be moved out of the highly populated, busy port city. Not sure why that was... It's apparently quite common for this crap to happen and no one really cares. The big losers are crews. The winners are consumers getting a few nano percent less in shipping costs...

fragmede 5y ago
that consumers get things for slightly cheaper seems like a side-effect. The winners would be the owners of the vessel who have done the X vs Y math, and enjoy the extra money from having done so.
structural 5y ago
The dirty secret is that shipping is a rarely profitable industry, so the "owners are too cheap" aspect is really the owners trying to go out of business as slowly as possible, hoping that times will improve in the future: if the shipping company goes out of business, it cares not one bit for the maintenance state of its fleet. So what do you do if you're a country that doesn't want this to happen? Well, we tried regulating how international shippers operate, and it turns out that it's expensive to do that. So we ended up with flags of convenience. It'd be easy to think that you could say "well, you need to be well-maintained, etc., etc., in order to dock at and use our country's ports" -- but that doesn't work either. There's no global inspection regime to make sure the ship is in good repair when it leaves the last port (and it can break down on the passage so that the only place it can be repaired to move again is at the same port you'd like to prevent it from using). You also can't be too heavy-handed about the whole thing, because shipping is pretty essential to the operation of industrialized countries, and if too many shippers were to be driven out of business the result might likely be worse than the current status quo.
- petra 5y ago
  Why is shipping rarely profitable ? the barriers to entry are large, and at least in theory that should give companies some stable margin ?
  - perl4ever 5y ago
    I don't know, but DryShips is an amusing example. https://www.barchart.com/stocks/quotes/DRYS https://www.barchart.com/stocks/quotes/DRYS Because of reverse splits, the stock appears to have peaked at around $1.5B per share in late 2007. If you multiply that by the shares now outstanding you get about $130 trillion. Which of course it was never worth. They kept issuing shares and getting asymptotically closer to zero, but I'm not sure they ever actually went out of business.
- nradov 5y ago
  That may be true for some of the bottom feeders but Maersk has been pretty consistently profitable.
drran 5y ago
Ship and cargo should be insured for such cases.
- LatteLazy 5y ago
  But then they'd charge more, and I'd have to pay 3p more a pointless plastic waste off amazon and that's fundamentally unacceptable to our democratic capitalist mess of a society.

fragmede 5y ago

that consumers get things for slightly cheaper seems like a side-effect. The winners would be the owners of the vessel who have done the X vs Y math, and enjoy the extra money from having done so.

structural 5y ago

The dirty secret is that shipping is a rarely profitable industry, so the "owners are too cheap" aspect is really the owners trying to go out of business as slowly as possible, hoping that times will improve in the future: if the shipping company goes out of business, it cares not one bit for the maintenance state of its fleet. So what do you do if you're a country that doesn't want this to happen? Well, we tried regulating how international shippers operate, and it turns out that it's expensive to do that. So we ended up with flags of convenience. It'd be easy to think that you could say "well, you need to be well-maintained, etc., etc., in order to dock at and use our country's ports" -- but that doesn't work either. There's no global inspection regime to make sure the ship is in good repair when it leaves the last port (and it can break down on the passage so that the only place it can be repaired to move again is at the same port you'd like to prevent it from using). You also can't be too heavy-handed about the whole thing, because shipping is pretty essential to the operation of industrialized countries, and if too many shippers were to be driven out of business the result might likely be worse than the current status quo.

petra 5y ago
Why is shipping rarely profitable ? the barriers to entry are large, and at least in theory that should give companies some stable margin ?
- perl4ever 5y ago
  I don't know, but DryShips is an amusing example. https://www.barchart.com/stocks/quotes/DRYS https://www.barchart.com/stocks/quotes/DRYS Because of reverse splits, the stock appears to have peaked at around $1.5B per share in late 2007. If you multiply that by the shares now outstanding you get about $130 trillion. Which of course it was never worth. They kept issuing shares and getting asymptotically closer to zero, but I'm not sure they ever actually went out of business.
nradov 5y ago
That may be true for some of the bottom feeders but Maersk has been pretty consistently profitable.

drran 5y ago

Ship and cargo should be insured for such cases.

LatteLazy 5y ago
But then they'd charge more, and I'd have to pay 3p more a pointless plastic waste off amazon and that's fundamentally unacceptable to our democratic capitalist mess of a society.