Rockin’ the Boat

S. Artesian

1. Marx distinguishes circulation time from production time as a tool for examining the different phases of movement that make up that total rotation of capital from money to more money.  The separation is performed to better integrate the examination of capital, and the examination of those conflicts and antagonisms intrinsic, immanent, to accumulation.

Circulation time appears as an obstacle to capital’s expansion.  The time required to transport, and/or communicate, the surplus value to the point where it precipitates out of the process as more money represents more time with less money, or more time until the more money returns.  Circulation, the acts of exchange themselves, appears as the excruciating interruption in the self-expansion of capital to a ruling class intensely intent on instant gratification.

This disruption, or antagonism between production time and circulation time is real enough in its own terms.  However, the real significance is that the dis-junction is determined, mitigated, made acute and becomes chronic by the very same laws that propel capitalist production to overproduction.  The delay circulation represents to realization is but the ever-present image of non-reproduction, of no return, that is itself capital’s mirror.

2. In its compulsory organization of labor power as a commodity– as value-producing value, capital reduces that power, that ability to reshape space, to its abstracted essence, time.  “Time is everything; man is nothing; he is at most time’s carcass,” wrote Marx.  He wasn’t messing around.

In its moments of circulation too, capital converts, exchanges, distance for time.  Seeing always and everywhere time as cost, capital struggles against the costs of circulation with the same methods it uses in reducing production time.  Most important of these is the substitution of previously appropriated labor power, value, embodied in the means of production, in this case the means of transportation and communication, for living labor.

3.  Circulation becomes the target and repository  for massive investments in fixed capital; in railroads, aircraft, and those machines that handle 80% of the volume of global trade and 70% of its value, maritime transport shipping.

The years 2012-2016 presented 5 successive years of slowing growth rates in the maritime fleet carrying capacity.  Having placed construction orders and expanded itself right into a slump, the shipping lines accepted increased deliveries and capacity right in the teeth of the 2007-2009 recession, with year to year capacity growth rates of 8% in 2007, 7% in 2008 and 2009, 10% in 2011, 8% in 2012, 5% in 2013, 4% in 2014, and 3.5% in 2015.  Growth measured in 2016 at 3.2%, brought total capacity to 1.86 billion deadweight tons worth about 829 billion dollars. Despite the slower growth in tonnage, the increase in capacity exceeded 2016’s 2.6% increase in world trade. (see the UN’s Review of Maritime Transport 2017).

Container capacity in 2016 increased 3.1%, about half of the pre-2008 rate. Still, container ships as a percentage of the world fleet have increased 70% since 2000, despite the fact that the capacity delivered in 2016, 904,000 TEUs (twenty-foot-equivalents) was half that delivered in 2015.  In 2016, 127 ships were delivered contrasting with the 2008 peak of 436 ships delivered.

Of critical significance is the doubling in capacity of the “average” container ship between 2005 and 2016  from less than 4000 TEUs to 8000 TEUs.  This reflects  the delivery of ships with capacities of 18,000 -22,000 TEUs and the renovation of the Panama Canal to handle the New Panamax size ships of up to 14,000 TEUs.  Between 2016 and 2017, the number of “old Panamax” ships still in service dropped by three-fourths.

The increasing size of ships on the Trans-Pacific and Asia-Europe routes has had a “cascade effect,” pushing container ships of lower capacity, but still larger than the previous fleet sizes,  into intra-coastal and short services.

The growth in capacity drove the shipping rates down, with rates on the Shanghai to Europe routes falling more than half  between 2009 and 2016 to less than 700 dollars. China-US rates have declined about 10% in the same period.  South-south rates declined by 70 percent on some routes as volumes and values plummeted.

While shippers attempted to offset overcapacity by “slow steaming” techniques,  ports have no such luxury to delay the unloading of ships.  Berth times for container ships average less than 24 hours, with Japan and Korea notching average turnaround times of less than 12 hours.

The world average turnaround time for all ships declined from 2.62 days in 1996 to 1.4 days in 2011.

In 2017,  the “liner” operations underwent some dramatic consolidations that put the top 10 container carriers in control of 77% of the container trade market.  But capacity growth accelerated as the liners expanded capacity by 1.19 million TEUs. More than half of this additional capacity was concentrated in ships capable of carrying 14,000+ TEUs .

Orders for new ships in 2017 were 140 percent of the 2016 mark and the container in 2018 is theoretically lined up for a 5.6 percent expansion.

Capacity outgrows trade; ships slow steam but ports have to reduce turnaround times to keep berths available; and the industry consolidates to fill its mega-ships– all of which means that container shipping is growing itself right into its own impairment.  Already, Cosco Shipping, which has the  largest order book for new ships, has announced that it will defer taking delivery in 2018 of 10 of the mega-ships until some time in 2019.

Downward pressure on rates will increase.

In addition, the increase in the size of the ships has disrupted port productivity with crane productivity dropping 10% when the size exceeds 14,000 TEU.  Hoists, cranes, trolley distances all have to be re-engineered to maintain productivity levels on the bigger ships.

So in keeping with my tradition of predictions, 2018 will be the end of a party that never quite got started in the maritime industry.  World trade growth rates will diminish rather than decelerate and the mega-ships on the ocean will be left high and dry in 2019.

February 12, 2018

 

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