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There were supposedly trucks that couldn’t be loaded because they had no place to get rid of the empty container they currently had. So truck loading rate was

by parsimo2010 5y ago

There were supposedly trucks that couldn’t be loaded because they had no place to get rid of the empty container they currently had. So truck loading rate was low, not because of the speed of the workers and cranes, but because of the availability of the trucks. So this is supposed to allow the truck loading rate to go up by making it easier for trucks to become available. I don’t know if that will happen, but this is an increased buffer size that is directly addressing a limiting factor. It might help.

aeternum 5y ago
Increasing a buffer size can also make it look like the problem is solved temporarily when you really have a rate issue. It seems that filled containers are coming in at a faster rate than empty containers are going out. We've increased the buffer for empty containers at the dock but did we address the outgoing rate problem? Why wouldn't the buffer just fill again? I wonder if we've reached a point where manufacturing a new container is more economical than hauling an empty back across the ocean especially if you include opportunity cost to ship actual goods.
- jkelleyrtp 5y ago
  The increased buffer size gives more time to solve the rate issue before a catastrophic meltdown with inflationary pricing, civil unrest, etc.
- joshgachnang 5y ago
  On a long enough timeframe and nothing else changing, yes it would just fill up. Realistically, it gives them breathing room to get the rest of the rate up. I am curious what the costs of making a new container and recycling the old instead of shipping them back is. Trade isn't symmetrical. I assume shipping them back is cheap because otherwise the ships are going back nearly empty, so it's almost free to ship them back.
  - smileysteve 5y ago
    I've read anecdotes that China is making new containers instead of accepting old containers. This could be because buffers aren't getting them back in time or because China needed a new market for steel
    - bluGill 5y ago
      Containers have a lifespan, so China has always been making containers. When containers don't come back you can buy a new one. Shipping them back empty is a lot cheaper than buying a new one, but only if you can get them shipped back. The price to ship a container back empty is low enough that some ships decide it isn't worth it.
- smileysteve 5y ago
  Your last point is being reported. It's cheaper for the Chinese to export containers (with subsidized steel) than it is for shipping them back, so they're just making new ones. Conjecture, but policy wise, this could relate to steel tariffs, decrease Chinese steel imports to the US and finding the container market to allow you to keep pumping money into the industry
  - xyzzyz 5y ago
    No way making a new container is cheaper than shipping back the old one.
    - diordiderot 5y ago
      Why?
    - anonuser123456 5y ago
      Cheaper for who? If the state is subsidizing steel, it can absolutely be cheaper for the buyer.
    - shepherdjerred 5y ago
      Look at this graph of freight prices: https://cdn.jpmorganfunds.com/content/dam/jpm-am-aem/global/en/images/graphs---charts/eotm/2021-dude-wheres-my-stuff/chart-8.png https://cdn.jpmorganfunds.com/content/dam/jpm-am-aem/global/... It's not that it's cheaper to make new containers. It's that the opportunity cost of waiting for the ship to be loaded with empty containers is more expensive than immediately heading back to Shanghai with an empty ship so that you can make another very lucrative journey to LA. That's my limited understanding of the situation. I could be wrong. Source: https://am.jpmorgan.com/us/en/asset-management/institutional/insights/market-insights/eye-on-the-market/dude-where-is-my-stuff/ https://am.jpmorgan.com/us/en/asset-management/institutional... (which was posted here a few weeks ago)
      - xyzzyz 5y ago
        The goods waiting in Shanghai are not in freshly minted containers. If they were, shipping from LA to Shanghai would be much more expensive than your graph suggests, because otherwise it would have been cheaper to ship one from LA than buy new one in Shanghai, and so people would do that instead of buying new containers.
- groby_b 5y ago
  The buffer would (maybe) not fill again, because the overflow containers were stored on chassis. The problem was that we needed buffer space and converted transport to buffer space - and then we didn't have enough transport, so we needed more buffer space. Cue ominous feedback loop music. This should free up transportation space, so we can unload more ships, so we can load containers on them and ship them back. Is it the only problem in the supply chain? Probably not. Will it make things better? Definitely in the short term, and probably in the long term. At the very least it buys a respite to think about further fixes.
- anonAndOn 5y ago
  From the tweets, "containers are not fungible". Cosco containers need to be returned to X, Maersk containers go back to Y, etc. If you can't sort and aggregate your empties efficiently, you further slow down the rate of return.
  - aeternum 5y ago
    It's like we forgot the most fundamental goal of containers: to be fungible.. containers?
ajmurmann 5y ago
This is what I understood as well. However, I still don't understand how we got there in the first place. Last time I asked this I just got down voted.
- CoastalCoder 5y ago
  FWIW I just looked at that previous comment of yours, and it's not obvious to me why it would get downvoted. You might want to chalk that one up to HN voting noise.
more_corn 5y ago
I'm not sure this is a "supposedly". There were tens of thousands of trucks that couldn't unload their empties because empties could only be stacked 2 high for aesthetic reasons. Longbeach has since amended that to 4 high doubling the capacity for empties, freeing up trucks to clear unloaded containers from the port. This may be enough to shift the bottleneck.

aeternum 5y ago

Increasing a buffer size can also make it look like the problem is solved temporarily when you really have a rate issue. It seems that filled containers are coming in at a faster rate than empty containers are going out. We've increased the buffer for empty containers at the dock but did we address the outgoing rate problem? Why wouldn't the buffer just fill again? I wonder if we've reached a point where manufacturing a new container is more economical than hauling an empty back across the ocean especially if you include opportunity cost to ship actual goods.

jkelleyrtp 5y ago
The increased buffer size gives more time to solve the rate issue before a catastrophic meltdown with inflationary pricing, civil unrest, etc.
joshgachnang 5y ago
On a long enough timeframe and nothing else changing, yes it would just fill up. Realistically, it gives them breathing room to get the rest of the rate up. I am curious what the costs of making a new container and recycling the old instead of shipping them back is. Trade isn't symmetrical. I assume shipping them back is cheap because otherwise the ships are going back nearly empty, so it's almost free to ship them back.
- smileysteve 5y ago
  I've read anecdotes that China is making new containers instead of accepting old containers. This could be because buffers aren't getting them back in time or because China needed a new market for steel
  - bluGill 5y ago
    Containers have a lifespan, so China has always been making containers. When containers don't come back you can buy a new one. Shipping them back empty is a lot cheaper than buying a new one, but only if you can get them shipped back. The price to ship a container back empty is low enough that some ships decide it isn't worth it.
smileysteve 5y ago
Your last point is being reported. It's cheaper for the Chinese to export containers (with subsidized steel) than it is for shipping them back, so they're just making new ones. Conjecture, but policy wise, this could relate to steel tariffs, decrease Chinese steel imports to the US and finding the container market to allow you to keep pumping money into the industry
- xyzzyz 5y ago
  No way making a new container is cheaper than shipping back the old one.
  - diordiderot 5y ago
    Why?
  - anonuser123456 5y ago
    Cheaper for who? If the state is subsidizing steel, it can absolutely be cheaper for the buyer.
  - shepherdjerred 5y ago
    Look at this graph of freight prices: https://cdn.jpmorganfunds.com/content/dam/jpm-am-aem/global/en/images/graphs---charts/eotm/2021-dude-wheres-my-stuff/chart-8.png https://cdn.jpmorganfunds.com/content/dam/jpm-am-aem/global/... It's not that it's cheaper to make new containers. It's that the opportunity cost of waiting for the ship to be loaded with empty containers is more expensive than immediately heading back to Shanghai with an empty ship so that you can make another very lucrative journey to LA. That's my limited understanding of the situation. I could be wrong. Source: https://am.jpmorgan.com/us/en/asset-management/institutional/insights/market-insights/eye-on-the-market/dude-where-is-my-stuff/ https://am.jpmorgan.com/us/en/asset-management/institutional... (which was posted here a few weeks ago)
    - xyzzyz 5y ago
      The goods waiting in Shanghai are not in freshly minted containers. If they were, shipping from LA to Shanghai would be much more expensive than your graph suggests, because otherwise it would have been cheaper to ship one from LA than buy new one in Shanghai, and so people would do that instead of buying new containers.
groby_b 5y ago
The buffer would (maybe) not fill again, because the overflow containers were stored on chassis. The problem was that we needed buffer space and converted transport to buffer space - and then we didn't have enough transport, so we needed more buffer space. Cue ominous feedback loop music. This should free up transportation space, so we can unload more ships, so we can load containers on them and ship them back. Is it the only problem in the supply chain? Probably not. Will it make things better? Definitely in the short term, and probably in the long term. At the very least it buys a respite to think about further fixes.
anonAndOn 5y ago
From the tweets, "containers are not fungible". Cosco containers need to be returned to X, Maersk containers go back to Y, etc. If you can't sort and aggregate your empties efficiently, you further slow down the rate of return.
- aeternum 5y ago
  It's like we forgot the most fundamental goal of containers: to be fungible.. containers?

ajmurmann 5y ago

This is what I understood as well. However, I still don't understand how we got there in the first place. Last time I asked this I just got down voted.

CoastalCoder 5y ago
FWIW I just looked at that previous comment of yours, and it's not obvious to me why it would get downvoted. You might want to chalk that one up to HN voting noise.

more_corn 5y ago

I'm not sure this is a "supposedly". There were tens of thousands of trucks that couldn't unload their empties because empties could only be stacked 2 high for aesthetic reasons. Longbeach has since amended that to 4 high doubling the capacity for empties, freeing up trucks to clear unloaded containers from the port. This may be enough to shift the bottleneck.