Originally Posted by
Lead Balloon
More comedy gold! Thanks for another belly laugh, 43.
Without the shipping industry, half the world would freeze and half the world would starve. That’s why the shipping industry makes money. It’s ‘needed’, in the economic sense. Without it, lots and lots of people die.
Without the aviation industry, there’d be no aviation industry. It’s merely ‘wanted’ in the economic sense. Much of the commercial aviation industry that isn’t government subsidised is effectively a Ponzi scheme and that’s why Warren Buffet says what he has to say about it.
The shipping industry isn't going anywhere, soon that is, as the technology to move the goods of that quantity is not available yet in other means, however, ships are expensive and not particularly efficient. They are only 'cheap' because of the sheer size of the vessels and the quantity they carry. If you were to create an aircraft that carried the same as a mega freighter the scale would make it cheaper to operate than the equivalant ship. Hence why they have tried to pursue options like ekranoplans and airships. There is also further crunch on fuel to move to less polluting higher refined fuels and biofuels as well as LNG, which is driving costs upwards. Some stats that show the increasing cost base of shipping is that over the last 20 years the accepted minimum cost effective load went from 4000 TEU to 8000 TEU, from 8000 TEU onwards the cost per container starts to be a gentle decline that still favours bigger ships but is acceptable. This is the reason the companies push for bigger ships now well in excess of 20,000 TEUs. Which means the governments have to dredge deeper channels, and provide larger port facilities as well as the ship building nations offering subsidized ship building as well as tax incentives. All part of the way countries subsidize the industry overall.
That being said there is another debt crunch coming for the container industry with China and Korea offering heavily subsidized ship building to offer replacements for what is an ageing fleet stagnated over the last 20 years due to costs. The next few years will see over capacity and losses return especially to the Asia/Pacific markets. There's already data that the Singapore-Euro market has fallen to below cost freight prices.
In the US some rail sectors are making good money, but its a distorted market as the government effectively gave away rail assets a while back and we havn't got to the stage that mass replacement of infrastructure and upgrades are required. So companies are skimming the cream off what the tax payer had paid for year. Just like Melbourne Airport is finding out how much it is just to replace aging taxiways after they had wasted millions on carparks.
The overall freight industry got a massive boost during covid, but it's about to have a big adjustment.