3 ms·

Yes, it will self-correct eventually. However, one thing that is easily missed is how shipping lines have been operating at a loss/narrow margins for years, e.

Yes, it will self-correct eventually. However, one thing that is easily missed is how shipping lines have been operating at a loss/narrow margins for years, e.g., Hanjin bankruptcy: https://www.wsj.com/articles/south-koreas-hanjin-shipping-files-for-u-s-bankruptcy-protection-1473002745 https://www.wsj.com/articles/south-koreas-hanjin-shipping-fi.... Many of the major shippers are not interested in building out capacity right now (e.g., Maersk CEO has consistently messaged this: https://splash247.com/if-msc-ends-up-having-more-capacity-than-we-do-thats-not-the-end-of-the-world-skou-talks-up-profitability-over-market-share/ https://splash247.com/if-msc-ends-up-having-more-capacity-th... ). It makes sense: why would they when they know that inevitably shipping rates will fall and they will have excess capacity on their hands. Instead, they are essentially adopting a wait and see approach. In the meantime, shipping customers pay more, the shipping companies strengthen their balance sheets and reward shareholders with fat dividends, and finally demand will settle down naturally. What some fail to realize is that this will take a decent amount of time. In particular, no one expects easing of the shipping situation until 2022: https://www.joc.com/maritime-news/container-lines/hapag-lloyd/hapag-lloyd-warns-shipping-tightness-through-2022_20210625.html https://www.joc.com/maritime-news/container-lines/hapag-lloy...

FooHentai 5y ago
Reminds me of the US-based mask manufacturer who refused to scale up in the early stages of the pandemic, citing previous times he'd done so only to be left in the lurch when demand dried up. His main point (IIRC) was the strong conflict between the moral imperative and economic incentive. https://news.ycombinator.com/item?id=22339349 https://news.ycombinator.com/item?id=22339349
- lotsofpulp 5y ago
  There is no moral imperative for an individual company to risk their survival because society does not want to pay. If society wants something, society should pay for it. Surely there was a number the US government could have offered the manufacturer to make it worth their while.
- sct202 5y ago
  And it looks like that's 100% what has happened to US based suppliers of surgical masks and N95s. A lot of them are having trouble marketing their higher cost masks now that the main suppliers (3M etc) have been able to catch up for the healthcare market, and there is a flood of consumer grade surgical and KN95s from overseas.

FooHentai 5y ago

Reminds me of the US-based mask manufacturer who refused to scale up in the early stages of the pandemic, citing previous times he'd done so only to be left in the lurch when demand dried up. His main point (IIRC) was the strong conflict between the moral imperative and economic incentive. https://news.ycombinator.com/item?id=22339349 https://news.ycombinator.com/item?id=22339349

lotsofpulp 5y ago
There is no moral imperative for an individual company to risk their survival because society does not want to pay. If society wants something, society should pay for it. Surely there was a number the US government could have offered the manufacturer to make it worth their while.
sct202 5y ago
And it looks like that's 100% what has happened to US based suppliers of surgical masks and N95s. A lot of them are having trouble marketing their higher cost masks now that the main suppliers (3M etc) have been able to catch up for the healthcare market, and there is a flood of consumer grade surgical and KN95s from overseas.