The Tyranny of Average Cost - part the fourteenth

Well, another episode unfolds. Not surprisingly, the Ever Given's plugging of the Suez is yet another example of overestimating the bigger-is-better mantra. Turns out, not necessarily so.

"They did what they thought was most efficient for themselves — make the ships big — and they didn't pay much attention at all to the rest of the world," said Marc Levinson, an economist and author of "Outside the Box," a history of globalization. "But it turns out that these really big ships are not as efficient as the shipping lines had imagined."

In other words, not only do the shipping companies have to run these ships at, or very near, full capacity to reap the reward of size, but they also shift some externalities to others. Like being able to navigate in cross winds, or demanding deeper channels in ports.

The article ends with a mind meld:

"There's still economies of scale, but less and less as the ships become bigger," Mr. Merk said.

The bigger vessels can also call on fewer ports and navigate through fewer tight waterways. They are also harder to fill, cost more to insure and pose a greater threat to supply chains when things go wrong, like Ever Given's beaching in the Suez Canal. Giant ships are also designed for a world in which trade is growing rapidly, which is far from guaranteed these days given high geopolitical and economic tensions between the United States and China, Britain and the European Union, and other large trading partners.

One might also wonder whether the fate of the A380 portends ill for these ships? Some times hub-and-spoke implemented on behemoth vehicles is the wrong idea. What's further amusing:

[T]the savings from moving to ships that can carry 19,000 containers were four to six times smaller than those realized by the previous expansion of ship size. And most of the savings came from more efficient ship engines than the size of the ship.
[my emphasis]

If that sounds a bit like passenger airplanes, you would be correct. With aircraft, the savings have mostly been due to more efficient engines, which in turn have been due to the ability burn fuel at ever higher temperatures. Turns out metal turbines are approaching passe`. And, here is a more recent blurb from GE. (Note that the basic research and funding came from the Damn Gummint.)

So, in terms of ship engines, not quite so sophisticated technology, but still ever more efficiency. In case you were wondering (I was), the Suez has, since 2015, both a north bound and south bound lane, simultaneously. You guessed it: the Ever Given could have T-boned a south bound fellow behemoth. Wouldn't that have been fun?