Why are Billions of Dollars Worth of Ships Being Intentionally Destroyed? | Economics Explained
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This is the Carnival Imagination, a luxury cruise liner worth hundreds of millions of dollars, which just 10 short months ago was touring passengers in extreme comfort to exotic destinations all over the world.
This ship is sailing dead ahead to its final port of call, where it has been sold for scrap alongside dozens of other ships that have become the latest victims of the global pandemic.
The Chittagong ship breaking yard in Bangladesh is the largest of its kind in the world, and in the past few months even its abundant shores have become inundated with pleasure cruises and industrial cargo ships alike that all could have otherwise sailed the oceans for many more decades.
These are all very troubling signs for the unsung heroes of our modern global economy, the merchant marine fleet. Every year trillions of dollars worth of cargo is transported on ships like these and losing this fleet could turn into a huge barrier to global trade.
But what is really going on here?
Why would profit-motivated companies destroy billions of dollars worth of productive assets? Sure times are tough, tourism and trade have declined massively but this hardly looks like a reasonable response right?
I don’t burn down my house if a video gets less than 10,000 likes, so why would companies in such a competitive industry do something equally as self-destructive?
Well as always it has to do with economics (go figure) and to understand this bizarre behavior we need to understand a few key areas.
What are the economics behind the merchant marine fleet?
How do these factors make it financially viable to destroy ships?
what does this mean for the future of international trade?
And what does this all have to do with Chinese bridge building?
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#MerchantMarine #Shipping #EconomicsExplained
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![ทททททททท #27 [หลุยส์ เค โตมายังไง ณ สระบุรี]](http://i.ytimg.com/vi/CaKoYw_Xmtg/mqdefault.jpg)
Imagine being one of those poor guys who have to drive their ship to the scrapyard and make their way back home on foot...
hahah I legittimately wondered what happens to these guys. Those breaking yards are less than ideal places to be walking through. If someone knows how the crew gets off these ships afterwards please let us know.
XD
@@EconomicsExplained Obviously they swim back. What a foolish question. :)
@@EconomicsExplained probably get flew back by the company
@@saasda6255 by the owner’s private jet
SUMMARY: Ships are not making much money during the pandemic while the price of iron skyrocketed due to China's infrastructure building during the pandemic. You're welcome!
It
.
thanks bro, you saved me 13 minutes.
Thank you!! It was so much blah blah blah.
Nailed it!
"China is building so much infrastructure that the price of iron has rose over 300%"
flashback from Victoria II
God forbid China westernises. In-game economy be going kaboom.
China is buying all iron scrap in the word to prepare for worldwar nr 3
@@johannmuller3711 nope, China is smart they know they cannot come even close to Us in military power so they are using economy and technology to defeat them and it's working good for them.
China's main goal is to secure only South China Sea that's why they are increasing there naval power.
They'll use 'one belt one road initiative' to assert dominance. That's why they are investing trillions on this project.
@@deshraj669 Africa is under heavy Chinese influence already aswell
That is why you always bully china into explosion
The next innovation in cargo shipping: Sails.
I was legit thinking of this halfway through th video😂😂😂❤️, would be great if we figured out how to propel the behemoths across water without fuel.
@@kullen1041 It makes some sense. If people could come up with efficient sail setups using only old-timey technology, I image we could come up with something using modern materials and technology that could at least increase the fuel efficiency of current engines using sails.
@@ZeusTheIrritable for sure
@@ZeusTheIrritable this is currently in the process. Not yet at ships of this size and magnitude tho.
It's called wind power
I was the Chief Fire Patrol on the Imagination for years. When I discovered this video and saw my old ship going to the breaker yard I almost cried. I have a lot of memories from my time there.
I'm sorry. That must be hard. What're some of your favorite memories of your time on it? (if you're okay sharing, ofc)
@@kristir1262 I started working for Carnival in 1995 and when I left Carnival's MS Tropicale and was sent to the Imagination it seemed so cutting edge to a 20 something year-old that the technology seemed at that time like an opportunity similar to what it must be like to work on the shuttle or something. In 1997 that ship was an amazing opportunity for someone from a small rural volunteer fire department like me. Carnival had figured out what they had done wrong with the MS Tropicale and the Celebration and when they re-designed the Imagination they did things right. It had state of the art CO2 total flooding systems in the engine room and control room, all the fire equipment was top of the line U.S. standard not European like previous ships, and it had an impressive fire detection system. The new infrared system was not like the old system where you had to run to investigate 25 alarms per day from about 4,800 smoke and heat detectors. The panel was on the bridge and the person watching the panel could sit in a leather chair 10 stories above the ocean with amazing views. The company paid over half a billion dollars for the ship and it was still an amazing luxury liner the day it was scrapped. Just working on it was a matter of privilege. After 9 years working onboard for Carnival I wanted to go back and sail on it again someday as a guest. Going back would be like going back to an old house where you used to live. I have fond memories and it is so hard to believe that the company would scrap such a nice functioning ship. The ship was doing cruises this year and was supposedly still in really good condition after dry dock and re-fitment only 4 years ago.
@@matthewkelleyhotmail Imagine if the American government and Congress had any sense and was willing to pay to preserve these amazing ships for the next year or two until a vaccine is delivered. Instead, we are scrapping perfectly good ships just to set the global economy up for a massive shortage in a few years. When I saw the high quality of the cruise ships being sent to the scrapyard, I almost cried myself. Millions of Americans would be willing to pitch in money to form a co-op to run these ships so more people can go on cruises. It's just totally insane how many marvels and wonders of mankind have been allowed to be destroyed in the past century. From historic schools and train stations in Detroit to New York to LA, just to name a small portion.
@@Nphen those ships could be used as temporary housing for poor people or as sleeping quarters for people that could not find a rent for a decent amount of money in areas where rents are too high.
@@Nphen I get where you are coming from and on an emotional level I agree with you. The problem is that the industry is going to take much more than a year or two to recover. The aviation industry expects at least a 5 year span before they get to 2019 levels of demand and they have business travelers as well, the cruise industry is just pleasure so it might be closer to a 10 year period till they recover. It's a sad situation whichever way you look at it, really.
As a former seafarer there is a tail risk from this pandemic that I think few consider. During the Covid-19 pandemic almost no countries were willing to take in disembarking crewmembers and thus many ships hade problems carrying out crew changes. I’ve heard stories of crewmembers ready to go home when the lockdown started. They stayed onboard for months. Some missed their weddings, births of their children, family members dead and buried without them being able to be there. Many will never return to the sea, some will have PTSD from this period. A global lack of seafarer can really halt the global economy. They are truly unsung heroes.
AI Seafaring Automation.
@@thelastaustralian7583
People I know now have PTSD and it sucks
TheLast Australian: Let me suggest the option were you are jobless.
@@thelastaustralian7583 Automation can only go so far. Sure it might replace or heavily augment the deck side, but the engine room will still need skilled engineers to maintain it. An AI can't fix a jammed valve that is cutting off your coolant water to your main engines. And if the ship blacks out, the AI goes with it.
Seafarers include chefs, photographers, cleaners, entertainers, engineers, mechanics, salespeople, beauty therapists...... AI can maybe steer
But yeah I’ve got a few friends who’ve had to make some major career detours
@@benlarson9775 The thing here is tho, the technician won't be the one choosing if the ship needs him or not.
It's a guy in a suit on the NYSE who can't pick that boat out of a lineup let alone tell you how one works. AI can replace nearly everything and the part's it can't will become the only area where companies can "cut overhead". AI will take more jobs than just the ones it can actually replace.
Wow, in the subtitles it actually said "twice as long and twice as Thicc" Amazing attention to detail!
It'd be great to see a breakdown of the types of goods that have dropped in demand and those that have spiked over the past year. Obviously more people than ever are shopping online and tons of things are still being shipped from China and elsewhere, but I assume the demand for heavy industrial goods, vehicles, raw materials, etc. has dropped and hasn't nearly been offset but the increase in online consumer sales.
Han solo: chewy, where's the millennium falcon?
Chewbacca: GGGRRRRRRRRRRRR (in Turkey being scrapped)
“But Chewy She Did The Kessel Run In 12 Parsecs!!!”
@@408Magenta time to scrap star wars. woke trash.
The name of this channel should be "economics confused and wrong" He has obviously never heard of the concept of malinvestment and the term "market distortion"
The fact that China is malinvesting so much resources that it has distorted the steel market to the point that ships are worth more in scrap value than to keep them, even with a downturn is not "good policy" or "big brained"
*Bangladesh actually.*
@@theotherside931 ain't no Bangladesh in my story.
I'm not even a sailor and watching these ships get scrapped still hurts.
more painful for me watching people who scap it in bangladesh
I saw my first real cargo ship cross that final bar, it hurts. I even performed the shutdown of a ship older than that, sister ship to the Al Faro
It reminds me a bit of how aircraft part manufacturers had to buy titanium golf club heads just to get enough of it, back in the 1990s.
@@mal2ksc golf club heads are made out of titanium?
Your all too soft and squishy think about how many Chinese lives are saved, and the ocean life being killed by the cutting down on Crude These thing pump.....................
In Germany, retailers are warning that there are not enough goods and to start buying Christmas presents early. I think that has something to do with your video topic. I am impressed that you have virtually predicted this.
And now - can’t find enough ships for the cargo - which of course does make the remaining companies more profitable
Exactly what I was thinking rewatching this
This must of been the first EE Video that didn’t mention Norway
ahh I will have to do better next time
@@EconomicsExplained I live in norway
Don't worry, when an EE video does not mention Norway, there's always a comment that does. Thank you for your service by the way.
Well I’m not watching it now, thanks for the warning
@@robbiehorninlow1520 😱
A timely reminder that everything you change in the economy changes atleast two other things.
Unless it’s communism, then you can just “pacify” the other problems
Why does it say 20h ago when it just got uploaded a few minutes ago
Get rid of the 22nd amendment. I will stop the destruction of such ships! The ocean is beautiful, but our economy might as well be at sea level
Sounds like a cucked version of Newton's 3rd.
You make very good videos
The other important part about the economy of using ships is their operation also benefits from globalization. They have flags of convenience, pay minimal taxes, have cheap labour, and can be scrapped where there are few labour or environmental regulations.
This Chanel has the best economic discussions Iever heard in my life. All topics are developed so elocuently and taking into account the most important factors. Something that seems easy to do, but that very few acomplish. I really liked it
“Out of fear of sounding like a Wendover Productions video” 😂😂
Lol loved that one.
Literally almost forgot this was an economics explained video XD
Wendover do be better doe
Caught this one also.
Best reference
Let’s not forget for the last decade they made WAY too many ships. Scrap ships to raise the low prices!
And the stupidity of making far too many ships was exacerbated by the Federal Reserve Board when it kept interest rates near zero thereby tempting the greedy to open their orderbooks for more ships.
@@kathieharine5982
And why would you think the monetary policy of the United States we drive shipbuilding by other countries? The United States doesn’t have a large merchant marine.
@@neilkurzman4907 Where do you think the zero interest money ends up? It has nothing to do with the small size of US flagged ships. Just examine where ships are financed. Follow the money.
@@kathieharine5982
So you believe the United States finances the entire shipping fleet of every country in the world? I am certainly not going to say that low US interest rates doesn’t create some perverse incentives.
You did not describe how you know that this is one of them.
Follow the money? Certainly why don’t you lead me.
China made too many ships, they dumped them on the market to gain market share and close western shipyards.
I love how we've gotten to the point where the sensible basics of sound economic policy, such as government investment in infrastructure in times of crisis, are "big brain" moves now.
I can’t even remember the last time an American politician mentioned infrastructure.
@@jakemocci3953 Actually, I remember Trump talking about infrastructure quite often when he was running for presidency. Not that he's done a lot to actually improve it tho.
I liked the presentation, I want him to take this further and explain the risks of infrastructure, housing, tariffs, etc. however investing in infrastructure itself is a risk or else China, Japan, Europe would do it in earnest... you see China is paying premium now for something they could have done on the cheap 5-10 years ago, with a huge reduction in global demand and investment the consequences of maintenance and lack of economic growth can make this move a disaster in the next 2-10 years if they miss the mark, the same could be said of housing, tax adjustments, farm subsidies, even wars, etc. etc.
So he perhaps overly summed it up as big brain, and chuckled at Australias housing plans, (or the USAs cash in pocket plan,) but we will see.
China has a big advantage in this stuff though, which is that they have a relatively cooperative form of government that doesn't include an adversarial planning process. In the US, the regulators are always trying to kill you. They also have much more rational decison-makers than America does, and would understand subtle nuances like the advantages of freeways over high-speed rail when connecting Cleveland with Columbus (in their case, Qinzhou with Chongzuo, as those two cities in far Southeast China you've never heard of are about the same size and would have a similar economic relationship) or what a cost-benefit analysis is.
democrats have funny ideas about what the word "infrastructure" means...
I am blown away by how smart I feel after watching this. Subscribed.
I've been a merchant mariner for 27 years. Sailed every where I wanted to go. Industry isn't dead yet. Depends on where you work and the type of vessels. Oil field is slow and towing isn't much better. Survey is still going pretty well. Pay has been drastically reduced but I'm comfortable making 80k for 6 months of work. Being a licensed Chief engineer for the last 20 years has been fun, but unless you are ready to be gone and miss just about every holiday do your research. It's not for everyone.
Wish I'd done that career. 😒
Holidays?
80k for 6 months....
6 months of holiday surely?
wait untill the United Nations agenda 20 - 30 catches up to you ...research
80K as a Chief Engineer is kind of low. At least twice as much.
Actually now glad I didn't do that career if everyone in it is that coin obsessed
"10 short months ago..."
Imma stop you right there...these are 2020 months.
How many years has it been 2020 now?
@@leandersearle5094 I know not, I merely survived the age of September knowing winter was coming.
Imagine thinking that the pandemic's unfolding disaster wasnt caused by the Politicians.
@@TheBelrick No can do.
@@jwadaow you de man. Keep repeating the truth for the Enemies who have hidden themselves among our politicians, will try and lie that the economic disaster isnt caused by their lockdowns.
Great show. First time seeing you. Found your work inspiring and informative. Thank you 🙏
🇺🇦
Really interesting video. Keep up the content. Great channel!
04:19 Trolling Wendover Production lol
Haha no troll, just don't want to encroch on my man sams territory, he has transport, RLL has corolla's, I have Norway
@@EconomicsExplained xD bruh 😂
@@EconomicsExplained XD
@@EconomicsExplained Gib me Norway too
Dividing up the world i see, i well and truly expect nothing less than in 30 years you guys being on the board of shadowy figures running the planet
Kinda not surprised to see this. In a way, its overdue, just due to the costs of running these fleets. The timing is opportune; scrap the old , inefficient ships for cash, cut down on labor costs, plan and build more efficient ships. This puts money into the hands of shipbuilders, stimulating local economies, the fleet operators can be more profitable in future as well as seeing efficiency gains, plus China gets its iron fix. Or something like that....
You sir are totally right.
cyclonicleo kind of like when we everyday people upgrade our 20 year old cars that have done over 250K KLM, it becomes too expensive to maintain, when you can get a new or newer car for the same amount of money that it costs to Maintain the old one.. Even if you buy a 5 year old car with 80-100K km, the original owner can afford to go to a car dealer and purchase a new one again.
"simulating local economies" = simulating china, japan and korea
@@timwaagh It takes years to design and build a new series of ships. They are betting that the market will be going again by then.
I agree with your comment and never needed to watch the video
Always impressed by people who are naughtier than me. (and better informed) Brilliant - thank you so much for posting :) now I have the beginnings of an understanding :)
Before finding out, I say besides taking out a few key parts is that when you have layers of steel welded together, it becomes way too costly to tear it apart as opposed to mining iron ore and making new steel.
Not with paid like a slave labour!
Yup. Chittagong, Bangladesh. You can thank us for taking up so much of our beach to recycle the whole world's ships instead of building expensive beach resorts
And look who has the jobs now and which industries have failed. Tourism has no future; recycling and sustainability, however...
And the everyone clapped
Correction that there is a “New Panamax” class that takes advantage of the new, larger locks at the canal. Goes up to 366m
I didn't hear new panamax mentioned in the video. It basically makes old panamax obscelete. Did I just miss it?
@@christopherwaugh690 Video did not mention "New Panamax"....hence my comment :)
@D R no. there was some random suggestion by a chinese billionaire to build a canal through nicaragua which was in no way supported by the chinese state, but all western media is like "china wants to build a canal through nicaragua"
Very nicely explained,loved it
Thanks
I knew about global economy but never to the extent that you presented it. Good work.
Switzerland is actually a quite bad example of a landlocked nation in this scenario. Basel is directly connected to the major port of Rotterdam by the Rhine river, and the Swiss merchant marine is the largest of any landlocked country.
These massive boats that are more efficient at shipping, are not going to go down the Rhine. So, the cargo from them will have to be transfered to smaller ships... that's another overhead that's a disadvantage.
@@sunnyjim1355 Oh absolutely, I agree. But the Rhine river happens to be a extremely busy waterway, connecting Basel, Cologne, Dusseldorf, the Ruhr and Arnhem to the sea. In fact, interfacing between river and sea is the basis for most of the world's busiest seaports (eg Alexandria, Antwerp, Rotterdam, Hamburg, Shanghai, South Louisiana, Tokyo).
@@Pasteurpipette -Columbia River system USA case in point. Idaho french fries... to China ;
9:00 You lost me at "Responsible governments will..."
Lost you? Why’s that? There’s like two or three responsible governments. (maybe)
@@alitlweird Because there is no such thing. The entire purpose of government is to benefit the politically connected at the expense of everyone else. There is no rational incentive for them to act "responsibly".
@@alainduncan3756 You are 100% right
Was he being sarcastic when he said the incentives for the Australian government to continue funding the housing market won't end badly?
@@SamuraiUjio absolutely
excellent video on an interesting and timely topic
Good upload, thanks!
Here's a question, is china scrapping its own ships as well, or are they aiming to control the shipping market by blinding their competitors with short term profits?
Very very good question! And the answer is probably YES!!!! They are building ports all over the world!
Let’s play Bingo.
Bingo, you win!
Also they are building a massive Navy
That’s a smart move ngl
probably takes a month to make a ship. if the shipping market came back with that much demand it wouldnt be hard to get back in.
Clever question
When your Living In a house of cards, you begin burning your furniture to stay warm.
That happened in the 1917 socialist Russia.
*you're
Are you saying the trading system are cards and the ships are furniture?
Is scraping those ships really a bad thing though?
@@lifeisgood5619 This is an expression an engineer I worked with used to describe deporting our industrial manufacturing base to Asia.
@@dennissalisbury496 oh okey thanks (:
"Earlier this year oil price went into negatives"
That hurts my soul. We have gas prices way over 8$ per gallon.
What hurts my soul is that it is 100% unecessary for us to still be an oil based economy :o( Greed, selfishness, & ignorance will be the end of us :o(
Your ignorance is simply staggering.
@@JustMe-nf1mf your ignorance is absolute
should be $200 per gallon. limited resources should be the most expensive things and continue to get more expensive.
but it's the same all around the world, comfort creatures not willing to accept responsibility are ruining the world for generations to come.
Very good explanation, thank you.
scrapping ships (oldest) has probably also reduced a lot of expenditures on upgrading engines on them related to IMO2020 requirements on fuels/scrubbers. Where some of the oldest may have been bunkering in the newer low sulfur MFOs, they can now skip that premium and build new ships with state of the art engine systems - not having to take an active asset out of service for a year or more to refit in the process - they can sit on the cash and be planning instead...
I clicked on this video semi-reluctantly, as I didn’t think it sounded that interesting. But this was fantastic! Love all the connections you pointed out, how one decision on one side of the world leads to consequences on the other side. Great channel!
Thanks for the video.
Very entertaining and informative. This isn't something I would normally watch, but you managed to make a boring subject like economics fun and interesting to watch. I actually enjoyed watching.
"What's going on here" 😂😂. The best of Australian accent
** WoTs gOin oN EErE
BEKFAST!
@@EconomicsExplained Will we see EE merch bearing the "Wot's goin' on 'ere" slogan?
Communism. Don't be fooled, stimulus packages are simply Communism. The Federal Reserve is rapidly seizing the means of production via monetary inflation into the share market. The next depression will be far greater than the first.
It's more profitable to destroy then to maintain
yep pretty much, sad stuff none the less
@@EconomicsExplained well considering alot of older ships runs on heavy fuel oil (or diesel, depending on route), and have inefficient engines, i have to say that from the perspective of ONLY clean air, not including the pollution from ship breaking, scraping old ships are a good idea.
@@relife6764 Sad thing is though, after the pandemic passed (and we are beginning to see it at least in the developed countries), demand for crusie ships will eventually raise again, and manufacturing of new cruise ships will spike, producing a sudden surge of carbon emissions from power generations and transportation of resources.
Edit: not just cruise ships, ocean liners and such, just, all kinds of ships.
It's a bit more complicated, of course.
It's safer to scrap now then build new in case the demand comes back than take a risk maintaining currently useless ships that would keep losing value even without work.
Look at a bright side: shipyards now have a chance to get more money from shipping companies in the future - some spike in demand for their services will probably occur. Not to mention the current demand for scrappers who get a lot of work right now.
@@lcmiracle Pollution for construction is tiny compared to operation. Same wrong already debunked logic is often applied to electric cars.
Watching this a few days after the Suez Canal cargo problem is a trip :p
Watching this as failing global supply chains are causing inflation to skyrocket even moreso…
I am from Chittagong. Ship breaking is a huge business in Bangladesh.
10:55 because shipping companies will receive more money for the steel from scrapping their ships and not continue to pay millions in crew costs, insurance, maintenance etc
Saved you 11mins. You're welcome.
China needs steel, probably to build up their military.
@@CanadianArchaeologist or their own merchant fleet
Can we please vote this comment up to the top!
Ships are built to make profit not to make costs.
Last time I was this early, was the last video, again. Great video, gonna go sell my dad's car for scrap metal now.
haha I feelk like the patreon gang might have a bit of an unfair advantage here.
@@EconomicsExplained just maybe :) but I don't pay to be first I just _invest_
@@EconomicsExplained Definitely becoming a patreon supporter once I graduate college and get a great job. Love this content
very cool explainer. Cheers!
I think i found my favorite channel.. economics 👍👍👍!!!
It's gonna suck while half-way through scrapping a ship, the price of steel suddenly plummets
That doesn't concern the shipowner. He gets paid once he delivers the vessel to the breaker yard. There are even specialized traders that buy ships for scrapping and pick them up anywhere in the world, pay the owner and sail it to Turkey or Bangla Desh or somewhere in Africa where labour for scrapping is cheap and safety or environmental regulations are non-existent. Now, however, the EU has put a stop to that practice and each EU shipowner must show that his (former) vessel is being scrapped in a responsible way or else he risks huge fines.
@@BaronSamedi1959 "Bye bye EU!" Shipowners selling to some non-EU holding company - that then scraps it the 'normal' way.
-and vaccines jumpstart global economies back into *buy buy buy*
It won't plummet if you control the supply
3:56 "twice as long, twice as thick, and twice as h-"
brain: "hard?"
video: "high"
oh
thiccc
b r u h
"Now c'mon man don't make it sound like a fat plumpy delicious c@ck"
Proof, if any was needed, that IQ is falling fast.
@@sunnyjim1355 My iq is probably higher than yours
very interesting. Thanks
Great video!
I left merchant marine as Third Assist engineer after 4 years ,used my savings(saved over 70% of income) put myself thru flight school and 5 years later got hired by major air cargo company. Retired this year, age 59 as 747 captain.
Well done pal,but what point you trying to make ?
Nice man, what was life like as a merchant marine
What was your motivation for leaving merchant marine?
@@thedarkdestroyer5063 That the average person is their own demise by not being smart economically I suppose, because few do what he did. And what he told is also just speaking of, the subject of the video
That would not work right now during Covid, you would do better as a third assist engineer.
I retired at 76 , rather I was made redundant along with everybody else . I was a Coach driver for Greyhound Australia.
I retired from full time work at 61 but very quickly got bored. I had been driving coaches on weekends and just kept doing that. I didn't need the money but I enjoy driving, traveling and the people I met from all over the world.
As for someone heading into the merchant marine field, this is VERY alarming.
Get ready to get sunk and raided by the massive Chinese fleet. With few other ships around , who will notice when yours disappeared
Well the video mentioned that this is the best type of transportation.. Just sucky times..
Ships are really bad at navigating fields.
I've been a merchant mariner for 27 years. Sailed every where I wanted to go. Industry isn't dead yet. Depends on where you work and the type of vessels. Oil field is low and towing isn't much better. Survey is still going pretty well. Pay has been drastically reduced but I'm comfortable making 80k for 6 months of work. Being a licensed Chief engineer for the last 20 years has been fun, but unless you are ready to be gone and miss just about every holiday do your research. It's not for everyone.
I wouldn't worry about it...we will always need ships to move people and goods. It's just going through a transformation, which happens in every industry.
Thank you for this video
Great job!
Note that Switzerland has access to maritime trade through the Rhine, with container ship routes going from Basel to Rotterdam.
Smaller ones tho
@HeedArmy83 yes but the point still stands that it has a harder time trading than countries with access to the sea
Yeah, the Mississippi river is great for shipping, but a bit of a difference in flat bottom barges and super container ships.
@@mrspeigle1 you're correct. Without navigational rivers the u s would have sunk quickly. Not having it almost lost the country politically.
Yeah that's actually true. Switzerland's handicap in manufacturing is an excessively strong currency that makes it more expensive to buy their goods outside of Switzerland than within it, and also makes everyone elses goods cheaper in Switzerland, not a lack of maritime access.
Why are we up right now its like 1 am in sydney go to bed.
oh mate my bedtime is normally around 5am, but thanks for looking out for me :)
@@EconomicsExplained it's 9 am in Canada 😂. I like to think you make these videos for us Canadians 😂
@@EconomicsExplained But it is a perfect time to watch this kind of videos in western Russia - 5pm here. At least for a quarantined student like myself
@@digitalpetor Good job comrade, your English is impeccable.
its 17pm here mate
Hey I’m not sure if it was affected by the time of making this video but I saw you mentioned a cargo ship container would cost around €2200 to ship from UK to Australia. My dad works for a company that does business with China and he told me that they increased the shipping rate of the containers from around three to $4000 a container all the way up to $12-$13,000 per container today. The cost of shipping is actually rapidly increasing because of Covid and the reduced merchant fleets to deliver the product.
Bravo! Great content.
Cruise ships arent really considered the merchant marine in the US
Yes, my thoughts exactly. Covid 19 has decimated the cruise ship market, but merchandise still has to get moved around the world.
Find a cruise ship ported in the USA... They're all foreign-based ships.
@@neilfrasersmith need money buy goods, stores need money to order stock... globalists are trying to break the system by attacking the logistics while crushing incomes.
NCL Pride of America in Hawaii is the only US flagged cruise.
@NotAfraidOfLeftist somehow your name really goes to show, you have some serious issues 😂😂
Me, a Mongolian subscriber: "I know man, I know.."
I feel ya man
What do you know ?
That Grand Tour special they filmed there was EPIC. Beautiful country!
@@ganbat About landlocked countries
@@matt-hew69 what grand tour special?, filmed by who?
Interesting - thanks.
Thank you for explaining
Good thing I did not listen to the guys saying that those ships would just be sold to another company
Whoever said that was right. Just the company will cut them up and melt them down instead of putting them back out to sea.
This channel has been steadily raising the quality bar over the last year.
definitely coming close to the level of lame joke as Wendover, I like it.
Or your standards have been dropping
Except that almost everything he said in the video is either wrong of irrelevant
@@IANinALTONA what is wrong? I am curious.
@@joostsmals640 Too many things to mention, but fundamentally he does not understand how long ships last, the 7 to 12 years taken to depreciate a ship on a shipping companies books, and the relationship between ship scrapping and ship building. Ships last between 10 and 20 years depending on the type of ship and physical and economic obsolescence. They do not last 40 years. Every year something like 5% of the world's feet is scrapped and 5% is replaced. If more ships are scrapped than are built obviously the fleet will shrink. Ship owners bet on future growth of trade and on the ability of ship builders to add vessels to the fleet. What the "economist" finds so alarming is part of a recurring cycle.
"Australia used its fiscal spending to keep on propping up a housing market that definitely wont end badly" HAHAHAHAHAAHAHAHAA
I live near that area, *Chittagong shipping graveyard* . The pollution here is off the chart. These third world countries have literally become the dumping ground ,global trash can of the first world countries luxurious lifestyles. Our area is getting the first hand experience of global warming. It's not sustainable. Sooner or later this lavish life style will backfire greatly in the near future.
Yes, and ship breaking is dirty business and is probably unregulated.
A lot of the pollution is probably the result of limited local regulation of the these areas (which unfortunately is probably why such areas are chosen l) and isn't necesarily inherent to the excessive waste of first world lifestyles.
I'm sorry to hear that, God will be taking note of 'those destroying that part of the earth' the Bible promises to 'destroy those destroying the earth' in the very near future, he will also restore earth & it's inhabitants to perfection. 🙏🌎👌
My line of thinking is dystopian, which means I should not proffer that suggestion.
@@thetruthisoutthere6870 the Bible says a lot of things.
"Prop up a housing market"
Triggers in NZ
20% increase over the last year. Jacinda said they cant go up for ever and then printed up another 28 billion for more low interest loans. She may be pretty buy she is dumb AF.
Kind of like what China is doing.
i love crysis
@@tarstarkusz atleast china is building roads , you know as a capitalist i must say they made socialism work.
@@bubblegumgun3292 Building roads and bridges that aren't needed isn't capitalism (or socialism). If you are building something for the purpose of employment and stimulus, you are by definition not building something because it is needed.
Liked and subscribed. Good job!
C.o.n.t.a.c.t. M.e. O.n
W.h.a.t.s.a.p *+1..2..1..3..2..9...7..4...3...9...0*
Sorry for late response I was very busy
Do well to respond 🙏
Thank you!
A big cost for merchant fleets is they must go green and cut emissions down starting 2021 in addition to become for efficient and cut other costs.This was pre-covid. Only the big guys can survive.
And that's the whole point... Centralization.
-One World Governance, 'Brave New World', or... "Some Pigs are More Equal than Others" ;
you got the point.
regarding the emission rules will be valid in 2021, the old-tech vessels will be prohibited while new vessels with less CO2 emission have been built for replacing those old ones therefore there have been excess container vessels in the market causing fleet price to decrease.
with more cost - less profit , i still be in doubt how they withstand.
I for one see most of this Global Warming as a pack of pure 💩. I grew up with the cries of the same sorts whining about the Millennial Ice Age coming our way. Then low and behold decades later (August 2020) the scientist leading the charge publishes his apologetic reaction saying he was 😑 wrong. Awww Gee. Probably seeking some last glimmer of notoriety.
Anyways one of the few things I agree with in all this is the amount pollution you find in bunker oil. It’s really nasty,on a grand scale. I think I read someplace it was on the order of 2500 x as dirty as gasoline. Here in the North Country many institutions military bases and such all ran on that stuff via a big steam central heat plant. Most if not all have been modernized to diesel / HHO or done away with in favor of natural gas.
I saw a couple documentaries showing quasi modernized ships running bunker and diesel the diesel being required for near shore operations. I can see where that ramps up the costs and they made a big show of that in the documentary. Sign of the times I guess. It’s probably just good financial sense to start over with new compliant gear. The world moves on.....
@@drizler also I think diesel is better for the engine then bunker oil. It sounds to be that bunker oil really clog up the engine components faster then diesel does and soon we will go over to biodiesel that is even better then regular diesel
Nicely done. This is excellent explanaition. Explainning the logistics of the profit motive is terrific.
Glad you enjoyed it!
Or minimizing losses motive.
Good video and analysis. How big is the EE team that puts this together?
Very good channel very buisness informative 👍👍👍👍👍 keep up channel more power!!
An additional factor in determining the timing of scrapping is the periodic major survey that all vessels must pass in order to be insured (IIRC every seven years). If an owner knows that a ship approaching its due date for survey will not pass that survey without major repairs, the owner may not be prepared to invest that money in an older vessel. Under these circumstances, scrapping or sale/re-registration under a less stringent survey may be more attractive options.
Sustainable ship recycling is a must nowadays. Shipbreakers in developing countries should be able to implement ship recycling plans without incurring significant costs. A good idea might be that the entire shipbreaking process is carried out on a specially constructed bed rather than a muddy surface. By the way, great video Economics Explained! Very interesting, looking forward to the next one.
Thanks!
Excellent content
I don't know why, but the phrase "so valuable that shipping costs are an irrelevant rounding error" was simply hilarious
I like how he measured the width of the ship as "2X Thiccc
Outstanding!!!
Very interesting
0:00 - "This is the Carnival Imagination" while the stern reads Carnival Fantasy :D
I thought the same thing, but wasn't too sure if he was referring to the boat he was on. After doing a short research this is what I found out "Carnival Cruise Lines announced July 23 that the 1995-built Carnival Imagination would be placed in long-term layup, with no immediate plans for it to re-enter the fleet. On August 26, the ship officially embarked on its last journey, sailing from Willemstad, Curacao, to Aliaga, Turkey, where it will be broken up." According to Marine traffic Aliaga Turkey was the last port he was reported to be at. Too sad, it was actually the first cruise I got on.
I think he means the ship that the camera recording the fanatasy is on.
i would have thought the first one they scrapped was the diamond princess. Last time i was on it, it was looking pretty rough around the edges
@@gregh7457 That's not a Carnival ship. "They" (meaning Carnival's executives) can't scrap a competitor's ship (unless they buy it).
@@mal2ksc which one isn't carnival? princess is owned by carnival btw
Brilliantly presented. This reminds me of the series “Connections” by James Burke.
Wow! I recently 'connected' with this series a couple of months ago. It seems incredibly prescient. For your delectation.....episode 1 ;) th-cam.com/video/XetplHcM7aQ/w-d-xo.html
This entire video is cringe. Almost zero economic knowledge to be had here.
This is actually great news. I've said for the last few years that there are simply too many ships and too much tonnage by companies to service the industry. Rates have been so low several companies have gone under, before covid. Other shipping companies would keep increasing their fleets and the problem continued, too much capacity and not enough tonnage to be shipped worldwide even with rediculously low shipping rates of the last few years. Taking older ships out of the business will ease the problem for a bit, but only if they aren't replaced immediately will it solve the problem for the long run.
Well, this aged like lettuce…
Hopefully a lot of the ships being scrapped are the rusty old single hull ships registered in dodgy ports that cause so much damage.
Yep hopefully we will have a newer better Fleet as a result
Old crappy ships are likely the most economic to scrap
Keep up the great work EE. I love this channel so much, I learn something new every day
Thanks mate, that is so nice to hear :)
“Australia used fiscal stimulus to keep propping up its housing market”
*laughs in Canadian*
Yea this guy thinks that making housing less affordable while robbing people of their savings is somehow "responsible" economics? He obviously doesn't understand the first thing about economics. His channel should be renamed "Lies that government wants you to believe".
I did 2 contracts on carnival imagination and carnival breeze before getting off and settling in USA around 2013
I cannot imagine the level of damage humanity will sustain from a few hundred wealthy families who have immeasurable greed. It is truly terrifying.
U won't need to imagine it... your going to see it. And FYI it's not being done out of greed. We are being culled my friend. Lock down was designed to wipe out independent business so corporations can boom in wealth so they can then weather the storm of the great reset. Then after body count will really start to boom. All planned decades ago
@@alabar9795 sure thing mate, but you got any sources for that claim?
Most humans are greedy , if you had the money and the power you would probably do the same thing too.
Sad of all this we people let that happen under our noses that extremely greedy families destroy humanity and earth itself.
Record profits for the big corporations while millions of small businesses go bust IS evidence.
Before watching the video, I would assume that with these ships being unable to sail, they still have to be put in port somewhere and there just isn't enough space for them all considering ports weren't built to hold all of them as they were intended to only spend a bit of time there then depart. Also, it would cost money constantly for them to just stick around in port and I would assume with the sudden demand for port access with so many ships needing it, the prices have probably gone up. So ultimately, it would've cost more money in the long term to keep the ships than not to, especially considering that cruises got IMMENSE bad press over how fast diseases spread through them and they've had a lot of news coverage before that for other issues. They probably thought it would take too long for the cruise industry to recover and it just wouldn't be worth it for a long time and is better to just scrap them to get that stimulus of money to do something else with. So now i'll watch the video and see if any of that syncs up. :P
At 9:56 . . .
China: ". . . that stimulus is coming in the form of infrastructure spending."
United States: "What's infrastructure?"
China builds poor quality infrastructure it breaks down after 2 decades. And you do realize since China is an authoritarian state it has the ability to control its market. In reality
It’s not as good as you think.
-Willing to sacrifice Freedom? "Those who sacrifice Freedom, in exchange for Security, Deserve Neither" ;
@@blogengeezer4507 In other words like talking about some people who are crazy enough to speed with the absolute delusion of conviction that they believe they have a fool proof breaking systems fitted in their vehicles for keeping them safe & secure no matter how fast or far they take their freedom! Right? .. EXCEPT NOT EVERYONE'S GROWN UP AND MATURE ENOUGH TO HANDLE SUCH A DELICATE COMPLEXITY AS ABSOLUTE FREEDOM WITHOUT SECURITY / CONTROL! You really don't want to put that kind of hope & faith in all of crazy humanity.. 🍷
@@cloutmastermemes2007 l don't have notice of any other authoritarian regime worst than United States of England . There isn't a single Latin American country that hasn't suffered with dictatorships implemented by the CIA . The same in Africa , Asia and Middle East .
If it's not authoritarianism , my grandpa is a bycicle .
Salute from Brazil .
California is leading the infrastructure way with its high speed rail to nowhere and converting EVERYTHING to non-fossil fuel energy sources. They can always supplement their energy needs with wood from the forests which are burning anyway with great regularity. However they probably would not be smart enough to harvest the wood that grows close to where people live and work. Will Rogers said, "When the Okies left Oklahoma and moved to California, it raised the I.Q. of both states." (I absolutely love that quote.)
7:38 I would bet that this is Gibraltar. I have been kite boarding amongst those moored ships. When the wind conditions weren't ideal in Tarifa. Great times!
10:51 lolol " commodity prices go brrrr". Wall Street Bets hits the EE channel. Lol love it.
Wow, not only commercial vessels but even military battleships were limited by the Panama canal.
This leads to question, where and how can you scrap some large inventions like battleships and space rockets?
Space rockets? Traditonally you'd scrap them to a bottom of an ocean.. Besides, relative to their cost, the amount of materials put in to them, is once again a rounding error.
the large ones would probably just go around the continents the old fashioned way
Spaceships are scrapped in a high orbit or in the pole of inaccesibility in the South Pacific Ocean.
The Japanese and the Germans built some battleships that were too wide to pass through the Panama Canal locks of the 1940s. The largest, last US Navy and Royal Navy battleships (the four Iowas and HMS Vanguard) can/could slide into those locks with a few molecules of air to spare.
A lot of warships these days aren’t sent to scrapyards but are sunk during live-fire exercises and turned into artificial reefs.