The Big Dumb Ship Problem Is Much Worse Than We Think
What Happens If a Big Dumb Ship Falls Over in the Entrance Channel to a Major Port?
|Matt Stoller||Mar 30||27||7|
Welcome to BIG, a newsletter on the politics of monopoly power. If you’d like to sign up to receive issues over email, you can do so here.
I got a bunch of fascinating responses to my last issue of BIG, What Can We Learn from a Big Boat Stuck in a Canal? I found this one particularly insightful.
You said in your note below… “...frankly, we should have seen this coming, because a lot of people have been noticing supply chain fragility, even if Thomas Friedman didn’t."
Well some of us in the industry have been aware of this for a very long time and have been writing about it. Tom Friedman is a nice guy, along with all of the other observers of how the world should be working. But logistics and supply chain management is usually considered boring and get almost no airtime… until this!
The concentration of risk in these E+ Class ships is huge. Actually though, a bigger risk to global commerce is if one of these monsters falls over in the entrance channel to a regional hub, such as Rotterdam or Long Beach. Blocking Suez is one thing as there is an alternative (sail round the horn of Africa) albeit taking more time. But blocking access to Rotterdam hits traffic in an out. Diversion are possible, but this impacts road and rail links into and out of the alternatives (e.g Hamburg, Le Havre). These cannot be replicated at scale fast enough for the present velocity of global trade. Example when China shutdown due to the pandemic, the problems were caused globally when they restarted, due to boxes and ships being in the wrong place.
The chaos can best be described as analogous to that of a hub airport having a baggage handling system failure. It’s not so much the bags in the system that are a problem, it’s the bags arriving on inbound flights and the bags arriving with passengers for outbound flights. Now scale this up to billions of dollars of containers with general cargo, bulk carriers with commodities such as grain or ore, Ro Ro vessels, etc. etc. etc.
I have done several studies including one for the US Government (related to the potential of terrorist exploitation) awhile ago about the likely impact of events such as this. Back then the biggest ships were around 10K TEU per vessel, but even they were too big for many ports to handle. In the US, Halifax on the East coast and Long Beach on the west coast, can reliably handle the 24K TEU ships. The scale of cranes needed to offload them is also a challenge, as are the bayplan systems to operate the loading/offloading process. Get that wrong and the balance goes and the ship flips. This is not uncommon in some parts of the world.
Finally, the dirty little secret of global shipping is the number of mis-declarations on the manifests. This is why when some vessels catch fire, even though the containers are identified in the firefighting systems, a full on emergency is declared as the master and ship owners cannot trust what the manifest says. Shippers are supposed to declare hazmat goods and follow IMCO regulations, but the often don’t declare the hazmat and plan the game that there will not be a problem… Until there is.
The point I wish to make in writing to you, is that you are correct to highlight the problem this has caused, but it’s only one piece of a very complex puzzle. Ask Lloyds about this and they know it’s a problem in waiting… Well it has turned up - in a fortunately brief example, according to the reports in todays List and the mainstream media.
The truth is out there… as a TV show used to claim… You just need to look a bit harder. ;-)
Economies of scale are great, until they aren’t.