Hello, and welcome to another episode of the Odd Lots Podcast.

I'm Tracy Alloway and I'm Joe Wisen't thal So, Joe, I have something to admit to you.

Oh boy, here we go.

Okay, I'm worried you're going to think less of me.

There's no chance of that.

Just just tell So.

One of my long held ambitions in life is to travel via container ship perfectly, you know, a long journey across the Pacific.

I think I know someone who did that.

I think I know someone who went from Japan to the US as a traveler on a industrial contender ship.

Yeah, it's something you can do, or I should say you were able to do it before the global pandemic.

I'm sure it's not allowed right now for many reasons.

Obviously, you have restrictions on travel, you have border restrictions.

But the other big reason is that global shipping is kind of just a mess at the moment, right and that's related to the pandemic and the supply chain disruptions, and of course they've been happening for about a year now, but they don't seem to be abating like the general disruptions that we've seen.

I mean, the world seems to be getting by, and maybe we haven't had as severe shortages of things that we might have feared last spring, but there are still all kinds of reports about how sort of messed up everything.

Yeah, and I think people were expecting it to get better.

So, as you mentioned, when the pandemic first started, we saw a bunch of countries suddenly close their borders, and this meant that ships that were supposed to head somewhere and then head somewhere else, we're all sort of knocked out of place.

So it takes a lot long time to get them back into position and to get them on the routes that they're supposed to be going.

But now what we're seeing is that even you know, almost a year on from the start of the pandemic, at least in China, this problem seems to be getting worse.

And I'm looking at a headline on Bloomberg right now saying that surging shipping rates are a new headwind for the global economy.

So it's gotten so bad that we could actually feel an outsized economic impact from all of this.

Yeah, you know, it's funny like when when the crisis first hit, there was a lot of talk here in the US about, oh, are we gonna start reshoring more of our manufacturing?

Are we gonna buy less from China over time?

And maybe that will happen at some point, who knows.

But in the meantime, people are spending a lot on e commerce.

They're buying things.

They're buying things from Walmart dot com and Amazon dot com, and a lot of those things come from China.

So there is an extraordinary amount of demand for imports ship from China.

I don't think there's as much going in the other direction, and I think that's sort of like part of the story is that although there has been this revival of economic activity, it's not the same patterns as it was before, and so this sort of like equilibrium stability of global global supply lines has not been established yet.

No, that's exactly right.

I think I saw some anecdote about how it's cheaper to send a container from the US to China empty.

So you ship something over to the US a full container, but then when it gets there, you just send it back empty because you can make more money by making more trips versus actually spending the time to load it up in the US.

So it's stuff like that.

Well, anyway, that's a good one.

That's a good one.

On this podcast, we're going to hit all of these big themes.

So we're going to hit it um, how shipping actually works, what's going on now?

And you know when we say stuff like the rate on a standard container has quadrupled versus a year ago, what do we actually mean by a standard container?

And how did we get into a place where shipping and global trade was standardized in this way?

So we're going to talk to someone who has actually fulfilled my ambition in life, someone who has traveled on container ship.

We're gonna talk to Mark Levinson.

He's an economist and a historian and the author of a really good book that I read quite a few years ago, but it's called The Box, How the shipping Container made the World smaller and the World economy bigger.

He also has a new book called Outside the Box, How globalization changed from moving stuff to spreading ideas.

So the perfect person to talk about this, all right, Marca, Welcome to odd Bots.

Good to be with you, Tracy.

So it's nice to meet someone who shares my affinity for container shipping.

Could you maybe explain how you got into this as an area of interest because I think, I mean, I'm pretty sure that your book is well one of the only ones that I know of certainly that deals in the history of container shipping.

Sure, I'm I'm not a shipping person.

I'm a trade person.

I'm very interested in international economics and international trade.

And my observation was that economists paid a whole lot of attention to things that governments did as being responsible for the growth in trade, for example, cutting tariffs, and that they really hadn't paid much attention to these changes in transport costs and the greater reliability that came with container shipping.

So I decided to take a look at that, and that's really where my book The Box came from, was really trying to under stand how this technology developed and how it then affected the international economy.

My argument that globalization as we know it today wouldn't have been possible without the container originally struck a lot of people as strange, but I think many people have come around to understand that that's true.

What is the core thesis of the book, that this standardized container that can guard ships and rail is so crucial to globalization as we know it?

The core thesis is that the shipping container made such a huge difference in not only the cost of shipping but in the reliability of shipping, that it led businesses to adopt new strategies.

The containerization made what we think of today as long distance value chains possible.

The idea that you would ship inter idiot goods from here to their products that have been partially processed and they're being sent to some place else to be incorporated into a component, which will be sent someplace else to be incorporated into a finished product.

That wasn't common before containerization came along, because the transport was too expensive and too unreliable.

And so this type of globalization is really a consequence of containerization.

So you made the point in the book, or I mean a big chunk of the book is actually about this.

The standardized container didn't just happen.

Someone had the idea for it, and then actually getting it adopted in the wider roles of trade took a lot of investment and and quite a bit of time.

Could you describe that process?

Where does the container actually come from?

And how was it uh spread around the world.

The container was actually not a new invention by any stretch.

There's evidence of the use of containers to ship goods more efficiently since the eighteenth century, and it makes sense, right.

It's more efficient to handle things once like a box with a lot of little boxes inside, than to handle each of these different boxes.

So there's been a lot of use of containers in different ways, including in the United States, but none of these made any money.

It proved to be not a very efficient way to move goods.

And then what happened Starting in ninety six, US entrepreneurs, notably a trucking industry magnet named Malcolm McClain, began to use containers aboard purpose built ships and tied the container into a system, so it wasn't simply uh, something that went on a ship but could also be put on top of a rail car, could be attached to a truck, and you then had the development of intermodal freight.

Containers were a domestic US phenomenon for a dozen years, and then starting in n there was international container shipping, first across the Atlantic and then across the Pacific, and this led to a steep drop.

I think readers may not recall, but before containers came along, doc work was very, very labor intensive.

To load a ship, the ship had to spend a couple of weeks at the dock, and you had workers literally handling two hundred thousand separate items, getting them out of the warehouse and into the ship, and then at the other end of the trip doing the reverse.

So shipping things took a long time.

Many things got lost, stolen, broken, and the cost was extremely high.

And what that meant was a lot of things just weren't worth shipping.

Once container shipping developed internationally, then all of a sudden it made sense to send things like socks and cheap wine and electric fans and other relatively inexpensive goods around the world, and so the container really made that possible.

Was Season two of The Wire a pretty accurate depiction of them, sort of the intersection of new shipping technology against or sort of with sort of traditional union power and workers strongholds.

It was different in every country.

Typically, the pattern prior to containerization was that doc work paid well when there was work, but because of the nature of shipping that was fairly labor intensive, there was this it was necessary to have a surplus of workers.

So you have all of these guys showing up at the dock every day trying to find work.

Some days there was work for everybody because the ship had just come in.

Some days there was work for only a handful of guys.

And so then how do I get a job while you get your job for your friend?

And and it became rather a racket infested in some countries.

Uh, that was, you know, definitely an issue.

Um.

In other countries, this was simply an important source of work, and there was a lot of resistance to these jobs disappearing.

So every country had to resolve this in its own way.

So I think you've laid out the importance of standardized shipping to global trade beautifully.

If we fast forward to today and the disruptions that Joe and I were talking about in the intro, what's your understanding of what's going on right now and how much of a problem is it.

Well, let me give you just a little very recent history of containerization, and this is some of what I deal with in my my new book, Outside the Box.

Starting in the early two thousand's, the container ship lines built bigger and bigger and bigger ships.

Okay, the first ship that carried only containers back in carrying sixty eight containers.

Okay, now the biggest carry more than twelve thousand containers what they call twenty ft units, and it was really in the early two thousands, around two thousand, five thousand six of these big ships started to come online, and then they got bigger and bigger over time.

These were built on the assumption that international trade would continue to grow very quickly, as it had for decades up until that time.

What happened then was in the financial crisis, trade crashed, and after that the growth of trade never recovered.

Okay, international trade as a share of the world's GDP actually peaked back in two thousand eight, and so there was all his excess capacity in shipping, and every time a new ship came online that had the capacity to carry thousands of containers, the excess capacity got worse, to the point that you can send a container across the Pacific for for under a thousand dollars.

At one point when this happened, many ship lines went bust or else found merger partners, and so what had been a very competitive industry was transformed into what's basically an oligopola.

To day, there are three groups of ship lines, and between them they probably can troll five or so percent of the trade on the major trade routes, and that means that they are able to control over capacity.

You don't have as many ships being built as you had a few years ago because of these three big groups kind of keep a handle on things, and so that means that when all of a sudden there's a spike in demand, as there was towards the middle of that, rates are going to go up.

That's really what's happened.

After years and years of extremely low rates, rates really popped starting in August or September of last year.

Why did this happen aside from the demand, Well, in the early days of COVID, there were a lot of foul ups.

Trade dropped off precipitously for a brief period, uh, and then that it picked up again.

And at the same time, you had consumers in the wealthy countries who couldn't spend on services.

So you actually had in the midst of this crisis, people with a lot of money to spend.

They couldn't go out to dinner, they couldn't go on vacation, they couldn't go to the theater, they could buy things, and so that actually increased the demand for physical products, and that's a lot of what we're seeing now in this um sudden surge of exports from China.

Let me ask you a sort of technical question, because I'm sort of fascinated about where prices come from.

So you know, I have a Bloomberg terminal and I can look up the Shanghai Shipping Exchange Containerized Freight Index, and I see that now that long ago as a thousand.

Anyway, now it's significantly higher than that.

It's exploded.

Where do these numbers come from?

If I'm trying to think how I want to phrase the question, if a manufacturer of a good or a buyer of a good, is there a transparent price?

Did they negotiate directly with the shippers?

And then how did those get fed into a unified index.

That's a terrific question, Uh, Joe.

If you show up at the dock with a container and you say, hey, I want to send this off to Hamburg or Long Beach, well the ship line will do business with you reluctantly.

But that's not really how the shipping business works.

Okay, the shipping business works almost entirely under contract, which is to say, a big shipper Walmart for um Caterpillar will reach an agreement with either a ship line or with a freight forward or which will negotiate with the ship line on its behalf.

These agreements typically last six months, sometimes longer, and they're typically filled with contingencies, which means you can't actually know what the cost of the shipment is.

A typical contract might say something like the shipper, that is, the company with the goods export, agrees to have at least fifty containers on the dock going from Shanghai to Los Angeles every Tuesday, and any week in which it has less than fifty containers, the agreed price will be higher.

And if over the entire six months of the pure it uh it has fewer than so and so many containers, the price will be this much higher.

And if the ship line misses a sailing, then it will have to pay a penalty of so much per container.

And those kinds of contingencies, and there are many of them, then determine what the total prices.

So actually a company can't tell you what it would cost to send a container from Shanghai to Los Angeles today.

It will only know at the end of the six months when it adds up all of the payments that's made, all of the penalty payments that's received from the other party, and and then it becomes obvious in retrospect what the actual cost per container was.

So this is not public information.

Just sorry.

So then like I'm looking at this chart again, so is it a thousand and now it's it's not public information.

How does it then get fed into an observable index?

What you're looking at is the market forecast of a spot rate.

Okay, as some of the contracts are pegged to that index, some are not.

Uh, And and there's a question here about what kind of information and index like this has.

Okay, you may have some players in the industry who want this information to get out about what they actually are paying for freight.

You have some players in the index in the industry who don't want it to get out.

And so this is, as is the case with many other traded commodities, many of the transactions occur in private and what is known in the public sphere is not the full story.

You don't really know what what the actual prices are or were.

So we described it the outset this idea that the pandemic had caused chaos in shipping in part by putting a bunch of the big container ships out of place.

So you know, they expected to go somewhere, they were turned away at the border, or they got stuck somewhere, and so you have like all these ships out of position.

How difficult is it to get them back online and sort of going where they need to be going?

I guess, I guess.

My question is how flexible are these giant container ships.

There are a couple of things that make them not very flexible.

One is that these big ships don't necessarily fit at all ports on some routes, they're simply not enough demand to handle a ship that can carry ten thousand containers, or perhaps the harbor in some places isn't deep enough to handle that ship, and so a ship that can serve one route may not be able to serve another route profitably.

The other factor to understand here is that no one in the container shipping business sends out a ship.

When a ship line is offering a route, it's offering a regular service.

Okay, So every Tuesday, to take an example, there will be a ship that leaves ching Dao in China and it will stop in this place, and it will stop in that place, and it will stop in Singapore so many days later, and it will stop in Umhis Sirius in Spain so many days later, and eventually, so many days later, it will end up in Rotterdam.

And it will do that on the same day every week, and it will be a ship of the same design every week in most cases.

So this is called a string in the shipping industry.

And so if you have a ship that sales between China and Rotterdam and my example, every Tuesday, you're probably going to have seven or eight versions of the same ship about the same size ready to go on that date, and you're trying to keep on the schedule, which means if one or two or three of them are out of position, it takes a while to get back on that regular rotation.

You can't just put any old ship on that run, because that's not what the traffic requires.

Coordinating these is quite a task.

Typically these days, ships are built with the idea that they will be used on a specific route, uh and and so you don't want to just plug them in any place.

So you know, there's sort of I guess a couple of things going on here at once.

There's the acute disruption that we're still working through.

I mean, the coronavirus crisis isn't over.

Basically nobody's economy has really returned to normal, so we're dealing with the aftermath of that, and that's obviously snarled shipping and uh scrambled the situation.

What about I mean, is there any prospect long term for there to actually be a sustained capacity shortage if the economies around the world, you know, you have like lots of governments doing fiscal stimulus and they're going to need supplies and so forth, that if we have this sort of boom, I mean, perhaps could we have a sustained capacity constraint the likes we haven't seen since prior to the Great Financial Crisis.

The capacity shortage such as it is, comes from the fact that you've really only got these three alliances, and so people are not building so many ships now because they don't have to worry about their competitors so much.

I think though in the longer term the concerns are actually in the other direction.

We had for many, many years international trade growing probably twice as fast as the world economy since two thousand eight, international trade has grown more slowly than the world economy.

And I think that's going to continue, and the growth of international trade is going to slow down even more.

And and that means that we have the prospect of overcapacity returning as the pandemic receipts.

You know, I think that there are a couple of reasons for this in the long run.

One is that you've got demographics right in a world in which most countries except in Africa, are filling up with older people.

There's less demand for physical products.

People are spending more and more of their money on services, and I think that that's really just going to affect the amount of trade in physical goods over the long run.

You're seeing a lot of manufacturers and retailers change their sourcing decisions in way that will affect the demand for container shipping.

One of the things I write about is that there was a lot of misjudgment of risk in globalization.

A lot of companies looked at production costs and transport costs and said, we've got to make these things in China.

People have now taken risk on board, you know, they understand that risk has to be factored into their calculations, because if the good one arrive on time, it can really be very bad for the bottom line, and it can harm their reputation in the long term.

You've had many companies now starting to diversifying.

There's a lot of talk in the States about reshoring.

It's not exactly re shoring, though.

What's going on is rather redundancy.

Firms are concerned about making a product only in one place, being reliant only on one supplier, or on one ship line, or on one board, and so people are looking for options in case something goes wrong somewhere.

This raises production costs a little bit, but provides better insurance effectively in case there's a fire, a hurricane, a strike, ship sinks, whatever the issue is.

And then the other big thing you've got obviously coming along is a concern about climate change, and as the costs of making production and transportation more sustainable but begin to be felt, that's going to raise the cost of international shipping and domestic freight transportation and is going to make these long distance value chains more costly to operate.

I have a dumb question, but what's the downside of over capacity of mega ships?

So you know, I could see it maybe hitting profits of the big three shipping companies.

But why is that bad for the overall global economy?

Well, I wouldn't say necessarily that it's bad for the overall global economy, but it's really bad for a ship lines for sure.

But be these mega ships have generally fouled up the transportation system.

Okay, you actually have fewer ships calling at most ports today than you used to have.

They're much bigger, and so think of what this does to the operation of the port.

You don't have a smooth flow of cargo going through the port.

Now you've got nothing happening in the port.

It's dead today, and then tomorrow a ship shows up and it wants to unload three thousand containers in your port.

What do you do with this?

How do you get it unloaded?

Where do you put the containers?

One thing that's happened is that ships spend more time in port, which is very wasteful because it just takes more time to get so many containers on and off.

The trucks are lined up at the gate because there's so many containers to bring in to send out on these ships are so many containers to deliver the railroads can't handle this sudden flood of containers, so you have the cargoes sitting around longer before it gets removed from the port.

All of these things have tended to make transit times longer uh and have made it harder for shippers to get their freight where it's supposed to be on deadline, and that's bad for everybody.

Who are the three big players right now in shipping and is there hold on the industry?

Like is it sustainable?

Do you expect in ten years from now it will probably just be those three big players.

Still, the big players have formed what are called alliances.

So these alliances have kind of squeezed most of the smaller players out of the business.

One alliance involves IMMERSK, the Danish company, and Mediterranean Shipping, which is based in Switzerland, and between them those two companies have a little bit over a third of all of the container shipping in the world.

There's another alliance that has um Costco, the China Ocean Shipping Company, the French company m c M a c GM, and Evergreen, a Taiwanese company, and it has about of the world's shipping.

And then there's another alliance that has the German company HAPAG Lloyd and the Japanese lines and the Korean line, and it has about so if you put those three alliances together, their market share and container shipping is close to Will those alliances stay together.

At the moment, the system looks pretty stable.

You can imagine that at some point a government will step in and say you, guys can no longer have this alliance.

It's anti competitive.

But so far that hasn't had them.

Is there anything that shipping companies could do right now to unsnarl traffic and get it going again?

A part of the snarling of traffic is due to things beyond their control.

For example, traffic into and out of the UK is totally snarled for reasons related more to Brexit than to problems with container shipping.

I think that in general, ship lines have decided that these giant ships were not a brilliant idea, and so we're seeing now that the ship lines are interested in building vessels that were a bit smaller.

You know, as I mentioned earlier, the average ship size went from carrying the equivalent of containers to the equivalent of twelve thousand truck size containers in the in the span of a dozen years.

But I think the ship lines have discovered that these ships that have twenty thousand, two thousand t e u s okay divide by two for the number of containers, that those ships really don't work very well.

It takes too long to load them, it takes too long to unload them, there are too many places they can't go.

It's too often the case that they're not needed.

And so the ship lines are interested in building vessels that are somewhat smaller than that.

Now, as that happens, I think that may resolve a lot of these problems that are caused by these ships just being too damn big.

Is that just the bigness?

Was that just unanticipation of a sort of never ending in world trade such as we saw pre grade financial crisis, Like had that vision materialized, had that continued, had the so called bricks got bigger and bigger and the commodity boom gone on, would that have made sense?

And it was just that was a different world, and now the equipment build for that world and making an increasingly less sense.

The slump in the growth of trade wasn't really the only factor here.

Ship lines, like companies in many other industries have relentlessly pursued economies of scale.

Bigger was better, and it was true.

When you could build a ship that could carry three thousand containers instead of two thousand containers, the costs per container dropped a lot.

And when you could build a ship that could carry ten rather than five, the cost per container was much lower.

So ship lines were aggressively pursuing economies of scale.

What they didn't count on was that at some point the hstles would get so big that diseconomies of scale would set in.

And that's what's happened in shipping.

The point at which ships got built beyond perhaps seventeen or eighteen thousand tu s was the point at which they just got too big, and that's when you started to have this confusion in the ports.

That's when you started to have these delays in shipping.

That's when you start to have h the the entire industry become less reliable, and the diminished reliability is one of the things that is leading manufacturers and retailers to have a new sourcing pattern, to make their products in different places, and to have redundant value chains.

Size isn't everything, and many of the ship lines mistakenly thought that it was there any other sort of key idea, mark that you think we're sort of missing or that would help us understand the current situation.

There is a lot of concern now about shortages of containers and shortages of chassisas and that sort of thing.

In general.

Part of this is that the ship lines have gotten out of that business and left it to other people to to to deal with.

Yeah, there is a huge amount of of confusion.

And let me put this way, international trade after all these years, still doesn't work very smoothly.

There are still lots and lots of manual steps in the process of arranging a shipment.

There are still lots and lots of unexpected delays, and and this situation really hasn't gotten better in recent years.

You would have thought that we'd be better at it by you would think so.

What happens in a system like we've got in shipping is that the ship lines built ships that they thought were best for their own needs.

They didn't really give much consideration shan to the system.

And the system includes the container terminals in the ports.

It concerns the ports themselves, It concerns the railroads that pick up and deliver to the ports.

It concerns the truck lines that pick up and deliver to the ports, and various other players in the business, the companies that provide containers, the companies that provide the chassis that trucks use.

All of those folks are players in this ecosystem.

And what was most efficient for the ship lines alone hasn't been most efficient for this whole system.

It's really made it less efficient over time.

Well, Mark, that was a fantastic conversation, and I'm always grateful for the opportunity to talk about shipping.

And I don't know, part of me I understand it's still kind of crazy that global shipping isn't as smooth as you might think it would be given the amount of global trade that we currently do.

But part of me also likes the romance of having, you know, a system that's very physically based where you're moving goods, uh, you know, in these big packages and you can kind of see the flow of goods, you can see them unloaded up ports.

I don't know, I kind of like that in the modern economy.

It's nice that there's something still analys Do you recommend everyone at least do that one to take a global ship as a as a passenger?

Is that a fun experience?

Are you asking me?

Yeah, I will tell you the truth.

I've not done that.

Oh oh sorry, I thought I thought Tracy said that you did.

No, I was not going to contradict Tracy on the air.

No, I have not done that.

Uh.

And you know most of what happens.

There have been several people have tried to write books about the experience of traveling on a container ship, and they're not very good books because nothing happens.

Yeah.

Well, you know what.

One of the books turned out to be an interesting book because the author wrote about things that didn't happen on the container ship that she was traveling on, but she had heard happened on other container ships.

But I mean, what do you do?

Look?

Was that because I think I'm I think I was thinking about a different book where it starts out with the author taking like this big container ship journey.

That Rose George wrote a book on container shipping a few years a couple of years after I did.

Yeah, that must be it.

I think I've read both of them.

And Rose George's book was called in the US Everything, it had a different name.

In the UK and what she found and it was it was a fun book to read.

But her conceit was that she was going to write about what went on during this voyage and the book wasn't successful in that sense because nothing went on during the voyage, which is typical of you know.

So she was talking about piracy that had occurred on other ships and problems with the treatment of workers on other ships.

A ship from Shanghai to Los Angeles, it takes the days somewhere U sixteen seventeen days.

It actually takes a couple of days longer than it did twenty years ago.

The price of fuel is one of the most expensive costs in shipping, and so initially the ship lines slowed down their vessels when the price of fuel went up.

This was called slow steaming and UH the idea was that they would operate more slowly to hold down the total cost of fuel.

UH.

Then newer generations of vessels were built, like these ships that carry EU, and they were built to steam slowly, so they can't speed up.

And one of the reasons for these delays is that it's harder now than it used to be for a ship to make up time.

Okay, It used to be that a ship would sail let's say, an average of twenty one knots, but if it got behind, it could sail it, it could steam it twenty four knots for a while to get back on schedule.

The ships can't do that anymore.

They're typically sailing at seventeen knots and they can't go much faster than that, so once they're behind, there behind.

I'm glad we brought this up because I it really is painting this picture of global trade is a complicated problem and why even after all these years, it's not an efficient solved one, Because even something like that, it makes total sense the trajectory.

They concerned about fuel costs, but then you end up building these boats that can't accelerate.

Super interesting and sort of just really sort of drives home how how tough this whole thing is, and probably helps explain why these prices are so volatile, because I mean, I know, like when I pull up these charts, I mean they just swing back and forth all the time.

Yeah.

One thing that hasn't come to the four yet because interest rates are very low, but it will is that this drives up inventory costs.

Uh, you think about time you're goods spend on the ship, right, that's those are goods in inventory, and so if it's taking you three days longer to send your stuff, then your cost is effectively higher.

Well, right now, with money going out for free, that's not really a big deal.

But if interest rates become significant again, this is will be a cost burden.

It'll be costly to have their their goods sitting on these vessels.

All right, Well, Mark, I think we're gonna have to leave it there.

But absolutely a great conversation.

Yeah, I really appreciate it, and you've laid it out very clear.

Well, I've enjoyed it.

I've enjoyed it.

Thank you very much for having me on.

Thanks Mark.

I can't believe if I mixed up the intros of these two books on shipping that I've read, but yeah, one of them started with someone going on an actual container journey and the other one didn't.

Both are are pretty good, although I mean Mark laid out his thesis in a really great, clear and concise way, and I think he was very good at illustrating why global trade the shipping industry isn't as flexible or as efficient as you might think it should be at this point in time.

Yeah, absolutely, I mean, like I would not have guessed that at all.

Like I, you know, I sort of had some intuition that prices were volatile because okay, you you can't just supply that fast relative to demand, and so you could have a modest hit to demand and then suddenly of a glut and vice versa.

But then adding in all the different layers of why it's so complicated and delays at the ports and all that kind of stuff, you really started to see and you know, anyone should just sort of look up some of these great index charts and you can see they really like swing wildly in a way that very few things do.

And I think he laid it out very well.

And of course, right now all of these charts are basically you know, surgery.

I guess the other question is whether or not the current experience, the gridlock and the snarling that we've described, whether or not that does leave lead to a reconsideration for the shipping industry about how they do things.

So Mark mentioned this idea that everyone's been obsessed with mega ships because they were more efficient for the shipping companies themselves, but they don't actually work that well for a lot of the customers, and he made a pretty convincing argument about why they might not work well in a sort of post coronavirus, post globalization trade environment where things become a lot more localized.

People need to be more nimble, people are worried about supply chain vulnerability.

You can see an argument for going smaller.

Yeah, you know, we didn't get into it, but I once watched a reality TV show on like Discover channel about ship building that also seems insanely complicated and really, you know, really difficult, and not many people like actually know how to like engineer the process of a big building a ship.

So we didn't get into that.

But another aspect of this that seems very hard.

Yeah, Actually, that reminds me there's one other really important aspect of this, which is that because all these ships are out of position and in some cases stuck off the coast of various countries, there are people working on the ships who have been stuck on them for months at a time, you know, in some cases, without medical care, in some cases, without being paid, while they have families back at home.

That's been a humanitarian crisis that we've actually been writing about it.

Bloomberg.

We've done a series on this topic.

It also lays out some of the problems and issues in getting um these ships back into into position.

The idea of who bears responsibility for the crew and for the vessel itself is not as clear cut as you might imagine.

But if you're interested in this topic, you know, google Seafarers and Bloomberg and you'll get some really good stories on this.

H this issue, all right, uh, and this crisis just needs to take Yeah, it's a sad note.

Yeah, it's a sad note to end on, but you know there is a humanitarian cost to global shipping as well.

Okay, let's leave it there.

This has been another episode of the All Thoughts Podcast.

I'm Tracy Alloway.

You can follow me on Twitter at Tracy Alloway.

I'm Joe Wisn'tal.

You can follow me on Twitter at the Stalwart.

You should check out our guest Mark Levinson.

Check out his UH books, particularly At the Box, as well as his new one Outside the Box.

Follow our producer Laura Carlson.

She's at Laura M.

Carlson.

Follow the Bloomberg head of podcast, Francesca Levie at frances Good Today and check out all of our podcasts at Bloomberg unto the handle at podcasts.

Thanks for listening.