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> No upstart carrier could possibly compete with the alliances; they couldn’t afford the massive startup costs to build or lease their own mega-ship. This is

> No upstart carrier could possibly compete with the alliances; they couldn’t afford the massive startup costs to build or lease their own mega-ship. This is such a common pattern with optimization. Something starts small-ish, but gets optimized and optimized to the point that newcomers aren’t viable and everything gets locked in. It happens all over the economy, and the unprecedented scale of everything only makes the effect stronger. What’s the way out?

nikanj 5y ago
Money is practically free these days, so a bunch of college dropouts can secure a few billion in pre-launch funding to build their own mega-whatever.
- lolsal 5y ago
  People can't get mortgages; I am skeptical that college dropouts could literally take out billions to create a shipping startup which is already a crowded space, without offering a significant value add, with no collateral or experience.
  - stcont 5y ago
    Mortgages and equity funding aren’t really comparable since the terms of the instruments and risk tolerance of the investors is very different. Just because someone can’t qualify for a mortgage doesn’t mean they can’t raise funds for a business.
    - lolsal 5y ago
      I just can't believe any financial institution would underwrite a large business plan with no collateral but would not underwrite a mortgage for the same person when they could repo the house/property if the mortgage failed. I have no problem personally getting a mortgage, but even with a fantastic business plan I wouldn't give myself $10M for a shipping startup. Am I totally out of touch?
xnx 5y ago
Giant corps in adjacent industries. Look at how a bookstore (Amazon) now runs a logistics operation that competes with USPS, UPS, and Fedex.
- tsol 5y ago
  Seems like that's more of the same problem. Now one Corp is getting so big they can block out smaller corps and they are basically impossible to compete with
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PaulDavisThe1st 5y ago
End government regulation. End government oversight. It's only government that can screw up the operation of a free market. /s
ksec 5y ago
It isn't just newcomer. The shipping industry was in a race to the bottom, until Hanjin Shipping bankrupt before they agree or the market balance out ( depending on your POV ). >What’s the way out? Until something that somehow compete with it from an adjacent industry. Otherwise they keep working until they are no longer needed. DRAM and NAND are industries that are like that. Or any industry that requires huge capital investment and it is somehow a commodity.

nikanj 5y ago

Money is practically free these days, so a bunch of college dropouts can secure a few billion in pre-launch funding to build their own mega-whatever.

lolsal 5y ago
People can't get mortgages; I am skeptical that college dropouts could literally take out billions to create a shipping startup which is already a crowded space, without offering a significant value add, with no collateral or experience.
- stcont 5y ago
  Mortgages and equity funding aren’t really comparable since the terms of the instruments and risk tolerance of the investors is very different. Just because someone can’t qualify for a mortgage doesn’t mean they can’t raise funds for a business.
  - lolsal 5y ago
    I just can't believe any financial institution would underwrite a large business plan with no collateral but would not underwrite a mortgage for the same person when they could repo the house/property if the mortgage failed. I have no problem personally getting a mortgage, but even with a fantastic business plan I wouldn't give myself $10M for a shipping startup. Am I totally out of touch?

xnx 5y ago

Giant corps in adjacent industries. Look at how a bookstore (Amazon) now runs a logistics operation that competes with USPS, UPS, and Fedex.

tsol 5y ago
Seems like that's more of the same problem. Now one Corp is getting so big they can block out smaller corps and they are basically impossible to compete with

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PaulDavisThe1st 5y ago

End government regulation. End government oversight. It's only government that can screw up the operation of a free market. /s

ksec 5y ago

It isn't just newcomer. The shipping industry was in a race to the bottom, until Hanjin Shipping bankrupt before they agree or the market balance out ( depending on your POV ). >What’s the way out? Until something that somehow compete with it from an adjacent industry. Otherwise they keep working until they are no longer needed. DRAM and NAND are industries that are like that. Or any industry that requires huge capital investment and it is somehow a commodity.