Sunday, August 08, 2010

Ships At Sea

Mike at Mish’s Global Economic Trend Analysis has an interesting article about the speed of ships at sea in today’s economy. Seems they have not only slowed down, but crossing the sea is now taking longer than it did in the age of sailing ships. Wow. Turns out that slowing down not only saves fuel costs, it reduces greenhouse gas emissions, so everybody wins.

He doesn’t discuss the demand side of that calculation; that the tonnage being shipped has dropped sufficiently to permit those lower speeds. Given the lower demand, they might as well travel more slowly, otherwise the ships would be sitting idle in port much of the time with no cargo. If the amount being shipped were as high as in the past, then the shipping companies would have to calculate a balance between fuel savings and lost revenue, since the increased transit time results in fewer trips per year and therefor less tonnage shipped overall.

He does points out that the Obama Administration is trying to get consumers to resume spending money and buying more, which would increase traffic and force them to speed those ships up again.

Although, and to digress slightly, I have seen it pointed out (albeit rarely) that consumer spending as 70% of GDP is really something of an illusion. If a consumer buys a flat screen television which is produced in China, how does that add to America’s “gross domestic product” precisely?

1 comment:

Bartender Cabbie said...

good point on last paragraph. I too read Mish's column late last night/early am today and was not aware that shipping companies were reducing speed. Doubtful it is due to environmental issues though. I did not know and, and you pointed out, that tonnage has dropped. I did find the article odd. I do recall that when I was driving chemical tankers years back that if trucks held up loading a ship there was hell to pay. Hell. Everything then was "just in time" delivery which included all major modes of transport -truck, rail and inland and overseas water transport.

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