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Home Publications Blogs Beat the Press Is There a Shortage or Glut of Freight Shipping Capacity?

Is There a Shortage or Glut of Freight Shipping Capacity?

Tuesday, 27 July 2010 04:30

That is what readers of an NYT article on higher shipping fees for faster service must be wondering. The article tells readers that shippers now have a shortage of space because:

"With little demand for shipping, ocean carriers took ships out of service: more than 11 percent of the global shipping fleet was idle in spring 2009, according to AXS-Alphaliner, an industry consultant."

Okay, so we are seeing a big run-up in prices and, "fighting for freight, retailers are outbidding each other to score scarce cargo space on ships, paying two to three times last year’s freight rates — in some cases."

ummm, what happened to the 11 percent of shipping fleet that is now idle? The article does make a brief reference to this idle capacity later, noting that firms are reluctant to bring it back on line. This sounds a bit like a case of collusion to keep prices high. It might make for a good article by an enterprising reporter.

(I'm back from the DC power failure - 32 hours in my hood.)

Comments (13)Add Comment
written by izzatzo, July 27, 2010 5:20
When asked how a shortage and glut could exist at the same time, shippers replied they had been studying the practices of oil refineries in the US, conveniently shutting down for "maintenance" to raise prices.

Shippers vehemently denied high prices had anything to do with collusion or low demand, claiming it was caused by uncertainty of regulation and taxes.

For proof, they pointed to high hours of use per shipping container which they learned from Dean Baker, pointing out that high unemployment of containers taken off line and low hours of use for employed containers would indicate collusion and uncertainty.
written by fuller schmidt, July 27, 2010 10:05
Very funny Izzatzo. I believe Fox News And Tea Party would happily quote your logic here, and satirize themselves perfectly.
written by anonymous, July 27, 2010 1:14
I'm back from the DC power failure - 32 hours in my hood.)

Heh...for me here in Montgomery Co MD, it was about 33 hours.
written by Nick B in DC, July 27, 2010 5:46
Huh, luckily my house in Montgomery MD didn't lose power at all, but boy was I glad I left the pool early!
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.