Why Ships Got So Insanely Big

Summary

This script delves into the evolution and economics of global shipping, highlighting how technological advances and post-WWII policies led to a massive increase in ship sizes and efficiency. It discusses the impact on supply chains, the potential drawbacks of globalization, and the recent trend towards 'nearshoring' and 'friendshoring' as responses to vulnerabilities exposed by the pandemic and geopolitical tensions. The video also touches on the historical context and the future challenges faced by the shipping industry.

Takeaways

• 🚢 Record numbers of serviceable vessels were scrapped 3 years ago due to high costs, favoring tax write-downs and scrap metal value.
• 🔄 The global shipping industry has seen significant changes, with larger ships now taking the place of scrapped vessels.
• 💡 The fundamental economics of the shipping industry are best understood through supply chains like that of a USB flash drive, which involves complex global logistics.
• 📉 Shipping has become incredibly efficient and cheap, enabling complex global supply chains for even basic products.
• 📈 Technological advancements have drastically reduced shipping costs, making global trade more feasible and widespread.
• 🌍 Global shipping faces major challenges, including weaknesses in supply chains and geopolitical issues affecting trade.
• 🏗️ Historical shipping relied on high-cost, small, slow, and dangerous voyages, limited to goods that couldn't be produced locally.
• ⚓ Modern shipping's efficiency is due to larger ships that carry more cargo with fewer crew members, significantly reducing costs.
• 🔍 Post-World War II saw a shipping revolution, driven by technological advances and high demand from rebuilding efforts in Europe and Japan.
• 🏭 The concentration of global shipbuilding in countries like Japan, South Korea, and China has led to ultra-competitive, low-cost ship production.
• ⚠️ Over-reliance on complex global supply chains was highlighted during the pandemic, prompting considerations for nearshoring and friendshoring.
• 🌐 Global shipping and trade have winners and losers, with current trends suggesting even larger disparities in the future.

Q & A

Why were serviceable vessels intentionally scrapped three years ago?

Vessels were scrapped because the cost of maintaining them outweighed their operational value. For modern shipping companies with thin profit margins, these vessels were more valuable as tax write-offs and scrap metal, especially during a period when global trade was severely impacted.

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