So what was the impression you got from Mr. Bill's post, and how does it differ from the impression I got? Far as where I got all the analysis, I just responded to what he wrote. He appears to me to make the case that large ships which use Bunker Fuel are a better alternative and more economic than moving toward smaller sail powered vessels. Am I misinterpreting that? I am making the opposite case, that smaller sailing vessels represent the better strategy as the economy shrinks downward.

Please clarify the nature of what you think my misinterpretation is, and why you think this is a misinterpretation.

Reverse Engineer

link

maybe you'll have the best of both worlds: a 'return' to the age of sail while retaining modern size and cargo capacity.

Reversed, the argument seems essentially to be: you state small old-tech sailing boats will replace current container oil driven shipping. To start with you said this could happen now but you've now switched to saying it will happen sometime. This is vs Bill saying container based shipping will continue more or less as it is for a long time to come although they might switch to burning other fuels, no problem as they can burn pretty much anything.

To argue as to why I think you're wrong on this I am not going to argue 'properly' a couple of other posters have already done this and it doesn't seem to be going anywhere, instead I'm going to raise points as to why, looking from the outside and knowing nothing much about shipping I think they're right and you're wrong.

* The burden of proof is on YOU on making this claim, the market shows that it is currently economic to run oil driven container ships. To challenge that you need to prove something else is better.

* You make this claim, with no figures to back you up! So you're going on a hunch not a rigorous analysis of the costs. (These two points basically make me feel your and Bills argument is a waste of time)

* You write long waffly posts and have no 'killer fact', if for example you turned up and said 'Container based shipping needs large quantities of helium to function, helium is in short supply, therefore soon we will have to stop using container based shipping' you'd seem more factual and less waffly, you'd also waste less time writing your posts.

* You are emotionally attached to your argument. To start with you argued that small sailing boats are a better economic alternative right now. You then came to agree that this was not the case but then switched your argument to say they'd be a better alternative soon. This suggests you have come to believe a particular 'vision' and are now trying to defend it.

* You are arguing for two changes which are not connected at the same time. First that shipping will switch energy source to wind power, second that shipping will switch scale from large to small. This again suggests you are emotionally attached to this 'future vision' if you tried to argue either point singularly with facts and figures to back you up, I would think you less of a crack pot.

Anyway despite my slightly ranty and overly long post I do think you've got a valuable contribution to make on the board. If only you'd be more flexible in changing your ideas and less waffly in communicating them!

If my text made it appear I think small sailing vessels could succeed economically right NOW, then I was not clear. I don't think that at all, its a projection out into the future. Right NOW, Bunker Fuel style ships of the type Mr. Bill describes ARE the more economic form of transport. But they do depend on a large volume of goods to REMAIN viable into the future. How far away is the future of reduced intercontinental transport, and by how much does it need to be reduced before the economics of this mode fail? Nobody here really has demonstrated they can accurately project that one out, so aain it is a question of time frame to amortize out the cost of any type of ship you plan for and build today. My GUESS would be its a decade or so at best before global shipping shrinks to a trickle, so what is the point in spending a lot of money on building big new ships that run on bunker fuel and big new ports that require big cranes that need oil when there just won't be that much stuff to ship?

Insofar as my emotional attachment to such concepts goes, again if it appears emotional, this is my style of writing, I'm not REALLY all that attached to it. Where some folks like to use numbers to justify their concepts, I tend to appeal to the emotions with my writing. Having been trained as a numbers guy, I am fully aware that the numbers thorwn out and the way in which they are derived are in themselves subjective quantities, but by using them you can take what is really opinion and make it seem more factual. I don't play that game, you won't find me ever quoting "hard" numbers in my posts. If this bothers you and makes you feel my posts are without merit, so be it.

What I do is look at the big picture and look for motivations and social dynamics and historical precedents, and then I work up theories based on those things. They are just theories, they are not absolute predictions of the future. I have MANY theories, and I am not all that emotionally attached to ANY of them. LOL. However, when I write about any given theory, I'll use metaphor and emotional arguments to drive home the point I am trying to make, just as others will pound you to death with numbers.

If this does not suit your taste and does not hold enough weight with you to consider the arguments for their validity, that is fine. However, I still will write in this way because its how I THINK about the topics. I'm right as often as anybody else is who does it by the numbers, about 50% of the time. LOL.

Reverse Engineer

Okay that clarifies a lot.
For a while I mistakenly thought you were trying to debate with MrBill sailing ships vs. bunker fueled ships right now or the very near future. When MrBill said sailing ships can't "cut the mustard" he meant right NOW and not some distant past or future.
never mind....continue on....
//
There's a lot of talk of building BIGGER ships.
Imagine a Malacca-max container ship: 1/4 mile long, 18000 TEU capacity or 9000 standard 40ft long containers.
Will such a ship ever get built or have ships gotten as big as they will ever get?
If this Malacca-max container ship does get built will it become a white elephant?
interesting questions...
I think it's too early to tell if we have definitely reached "peak shipping". Maybe 10 years from now the anwser will be obvious but not now.

BTW we've reached "peak-Starbucks" that's for sure.

The "Last Mile" you describe is an important factor to consider in the overall cost of the moevement of goods. So whether the intercontinental transport is done via Sail or Bunker Fuel, you still do have the problem of taking the goods from the port of call to the final point of destination. Its the most energy intensive step in the process, and it of course drives up the cost of the goods at the end of the line to the consumer.

Thus the reason in da olden days, any goods which came from beyond the local area were very expensive, relative to the local economy. The scarcity of the item and its utility also contributed to the cost of the item. However, going right back to my favorite era of 1750, a fine watch made in Switzerland still could make its way to the Colonies in the pocket of a British soldier, it still could end up as a Trade item at a Fort in Albany. It would of course command a hefty price. Nowadays, a watch made in a Chinese factory which is better than that watch sits on every shelf in Walmart, and costs virtually nothing in comparison. All courtesy of Big Oil of course.

Some Bulk products were shipped in 1750, but not many. You did not really see shiploads of grain being moved about to feed populations far distant from the source of the grain. However, distilled products of agriculture were shipped, like Rum. It fetched a high enough price at the end of the line from a place it was cheap to produce to make it economic to ship, at least as a backhaul item.

In trying to peer into the Crystal Ball and see what life might be like in the aftermath of Peak Oil, the actual truth probably sits somewhere in the middle between some predictions that NOTHING from further than 1000 miles away will be available to that something MORE than what was available from 10,000 miles away was avaialble in 1750. How much more, and what type of stuff? This would depend mostly on how successfully individual areas develop surplus wealth beyond food production in their economies once the tractors go dry. The period of dislocation as the populations shrink down is not all that predictable in terms of its length, but during that period since there is about NO surplus beyond food production, about ALL trade has to stop. Eventually though, a balance is restored and as the surviving pockets rebuild, surplus will once again make trade a profitable thing to engage in. It of course starts small, just as it did in the 1400s as small sailboats matured into sailboats capable of navigating oceans. However, lots of advantaes over that time period. Theoretically in Libraries the KNOWLEDGE of how to build efficient hulls for a sailing vessel remain available. In dry dock, the rusting hulls of supertankers are available to use as raw material for new hulls rather than using wood, although that will be available also. Reworking it of course takes energy, but enough of that energy might be harvested throuh solar collection or geothermal power, besides of course using wood fired forges. Reardless of what is used or how its used to rebuild ships, clearly they can be rebuilt since they were once built before in the absence of oil. It doesn't happen in weeks or months or even years, it takes decades, because the actual surplus of labor to do it with is small in the absence of oil. However, since it happenned once before, it can happen again over time. In this incarnation however, we already know the best designs for the ships, we already know the geography of the earth and we already know how to fix longitude, though it depends on timepieces which will be hard to come by. Still, the DESIGNS are already there in the Library of Congress for good mechanical watches, they do not need to be reinvented. In someplace somewhere, Watchmakers will reappear. Maybe not Switzerland this time, maybe in the shop of some Peak Oil Survivalist in Wyoming, who knows?

Looked at in this way, Peak Oil does not mean The End, what it really means is the chance at a NEW BEGINNING. A chance to Start Over. No indivdual human life EVER has the chance to start over and not repeat the mistakes of the past. Society though if it survives even as just a kernel DOES have this chance. As long as we do not toast the planet completely and make it uninhabitable for human life, we can START OVER. 100 years from now, 200, 500, 1000 years; how long the process takes I cannot tell you. We will never have the kind of cheap energy Big Oil provided again, but that is a Good Thing. All Oil did was accelerate the tendency toward Greed in society, it devalued real Work and it turned the Planet into a vast sewer of pollution. We got a lesson in humility, Mother Nature RULES this planet, not Human Beings. Even with the Power of Big Oil, we could not really dominate the planet, in the end Mother Nature said NO MORE. A hard lesson, the punishment will be severe. Maybe it will be remembered the next time round.

Reverse Engineer

Mr Bill does have this one nailed. Maritime shipping will be the last user of fossil hydorcarbon fuel in the post peak era - because moving stuff by sea is by far the most energy efficient way of getting stuff around the planet.

Ships can even burn (very messily at present, without built in exhaust stack scrubbers, as found on power stations) Orimulsion - which is an emulsion of Venezuelan extra-heavy crude and water. Plenty of that's going to be available for the foreseeable future.

According to this and recent prices from Google's new search feature dealy, bunker fuel only accounted for ~5% of transportation costs as of 2006. After doubling as of recently, that's still only a ~5% increase in shipping costs, which is undoubtedly a much smaller part of the overall cost. If anything I'm guessing that the return of manufacturing in the US has more to do w/ the consistent 30% devaluation of the dollar compared to historic norms. I suppose LTL shipping could be impacted the most, possibly to the point where moving locally would be advantageous, provided their margins were tight enough, but for the most part globalization is here to stay short of something catastrophic IMO.

The assumption here is that there will be many goods to MOVE in the post peak oil era. But will there really be? One part of the board here expects a huge die off, and quickly. Another faction looks at the economics and observes the overall destruction of wealth on the paper level. Still others look at the food supply question within individual areas, related as it is to the transport of oil from areas which don't have so much industrial ag production.

Where in all this is a TIMELINE we can grasp hold of? What is the leading indicator, and by how much will the demand destruction affect the production? How LONG does it take to spin down to a catastrophic system failure? Clearly there is enouh oil to keep idnustrial ag running for quite a number of years into the future, but if the economic system crashes, then even thouh the oil is in the round, this portion of the infrastructure failing screws the ability to use it. It seems to me that the paper wealth is burning up faster than the oil is. Point of fact, if there is no liquidity and nobody will float you money to build a large ship, even if it WAS economic to run that ship you cannot build it. Without the credit, you can;t move in this direction. We all know the credit markets are frozen about solid, so from where comes the money to build the bunker fuel ships and Hub Ports Mr Bill speaks of? Ben Bernanke and Henry Paulson fabricate still more currency to do this with? What?

If you accept the idea the economy is shrinking, all debt of this sort cannot work. Plan to build the ship today, by the time it is built the market it might have served has been destroyed. Lots of folks here seem to think the whole world is on the precipice RIGHT NOW, yet at the same time its argued we should invest in bunker fuel ships to carry huge loads of goods nobody will produce in 5 years? Where is the logic in that one? Have it one way or the other, you can't have it BOTH ways though.

Reverse Engineer

The Southampton to Glasgow container train passes my house at around 10pm every day. Allways nearly full, mostly chinese / german boxes. God knows the cargo, but there heavy, this long train passes at about 80mph with 2 electric locos on front. Makes ornaments in my house shake a little.

Other freight trains seem longer & heavier too. No economic downturn here, yet, judging from passing freight trains.

Gasmon

ahh but how much of this demand for shipping is based on the "free market" vs. "government manipulation".

How much demand for global shipping would there be if China were to stop artificially lowering the value of it's currency to remain export competitive?
Furthermore, it's not just China but east Asia in general doing this. This is what I mean by government manipulation.
I think it's a safe bet the collapse of the US dollar would lead to "peak shipping". Whether this happens in 3 years or 30 who knows? How much longer will those freight trains continue to rumble past your house Gasmon is anybody's guess.

Since over half the containers are Chinese, I would agree that any fall in Chinese / far east trade = fall in containers shipped = shorter "deep sea container traffic" freight trains. Just dont see it at the moment.

I think a better traffic barometer would be the many "double stack" container trains crossing the USA from the pacific ports to big eastern cities. How are these currently loading ?

Gasmon

As we devalue our currency, in tandem with that the East Asian producers subsidize production. The products as a result remain cheap enough to buy. The price of oil to produce and transport the goods continues to rise though, so where in the world is the money cming from to keep this obviously out of balance equation IN balance? Answer, investors in the East Asian economies, perceived as great Future Growth possibilities because of their own internal demand and currently low level of consumption. Theory being here if the American Consumer Market dries up for Chinese goods, the Chinese can still sell it to the Chinese. LOL.

Lot of Paper Wealth still out there, and lots of it is flowing in the direction of East Asia, and this is the money being used to subsidize the production and transport. However, since there is about no chance the Chinese internal market could ever replace the old USA market based on cheap oil, eventually this flow of investor capital has to stop. How much is left out there of paper wealth to keep the economic machine running is anyone's guess. Merrill Lynch sold off $8B in collateralized debt for 22 cents on the dollar. Taking that one as a generalized figure, the true amount of Capital out there is less than 1/4 of what the paper says it is worth. Once the banks and hedge funds are forced by reality to write this down on their books, they just don't HAVE the money to keep investing more in China.

The whole process gets delayed and stalled through an inflationary spiral and through further mining of irredeemable debt. The governments take on the failures and issue still more Treasury Bonds which are supposed to pay a dividend down the line, but of course they never will. Still, the paper wealth has to fly SOMEWHERE if Equity stocks are tanking, and so it flies to perceived growth opportunities in China where it is being burned up through subsidies to current manufacturing. That paper is being flushed down the toilet along with all the other paper lost before it in the Equities market.

I personally thought the whole house of cards would go BUST pretty quickly after Bear Stearns, but boy the Central Banks sure do find creative ways to push the money around and issue still more credit and print more money! Since its Global and there is so MUCH of this capital floating around looking for a place to land, the economy keeps chugging along, although it slows a bit more each day with each factory closed, each home foreclosed on, each job lost. Its a HUGE engine though, with a LOT of inertia. It doesn't come to a crashing halt in an instant, at least so far anyhow this has not happenned. Its the RATE of failure you have to look at to determine how long it takes for the containers on the rail lines to start going single layer instead of stacked up two high. There is a Lag Time here between the fundamental problems and how long it takes for the brakes to slow down the train, so to speak. The braking process appears to be accelerating though, and so by next year at this time you will have many more failed banks, much higher unemployment and consequently fewer goods will be moving across the rail lines. 2 or 3 years maybe to peter down to a trickle? Just a guess. It could be disrupted in a smooth flow downward when you reach some as yet undefined Tipping Point. Then you could have a catastrophic failure that stops everything virtually within a month. Small Banks are going down left and right, but if/when Goldman Sachs goes down the financial panic would be about unstoppable. I do not think there is any way for the Fed to paper that one over. However, Ben Bernanke and his friends at Goldman are burning the midnight oil thinking of creative new ways to Socialize the Loss, while retaining the Privatized Gain. If successful, they can spin it down slowly and place most of the pain on the backs of the working class. There is a Tipping Point on that one also though, and once this is reached, the social fabric falls apart and you see a Revolution. CEOs will lose their heads, just as Marie Antoinette lost hers in the French Revolution. There will be no Cake left to eat.

Reverse Engineer

I hope no one interpreted my comments to mean that I believe there will be more container traffic in a post peak oil world? A decline in world trade would, of course, require fewer ships. The switch to larger ships, containers, intermodal transport and automated ports is in response to higher fuel costs and the search for efficiency gains to offset those higher costs.

But looking back at trade patterns during the merchantile period we see trade in low volume, high value products like coffee, tea, tobacco, etc. Bulky, low value goods were produced locally or sourced regionally and/or they were only available seasonally or in very limited quantities.

I do not happen to believe that we will run out of oil in the next 10 or 20-years. And I believe any die-off as the case may be will be more by attrition and declining birth rates. But these opinions of mine are a separate discussion. The difference between now and 1750 is not only do we have more than 10-times more people to support, but we are also facing over-fishing, collapsing wild fish stocks and marine habitat destruction, so it is not just peak oil that we are struggling with, but climate change and other survival issues at the same time. A return to the past is not currently an option.

My point was that IF you believe the whole world will run out of oil at roughly the same time; AND if you believe there is no alternative; AND if you believe that this will cause a fracture in, for example, agriculture and our ability to generate an agricultural surplus; HENCE the die-off; THEN there will be no demand for container ships, but also no demand for sailing ships either.

I do not believe that is the case. Some have suggested that we will have alternative sources of energy. We have no shortage of energy, but we do have a limited ability to convert sunshine into usable energy. Especially liquid transport fuels. However, stationary power is less of an issue. Ports can run on stationary power. Even if labor costs were very low a man simply cannot do the work of a machine as efficiently. As men need to be fed and housed in order that they can work you have to count the amount of food and the number of calories in order that they can perform that work, and compare it to the amount of calories that are needed to run a machine that can be turned off and on only as needed and does not have to be 'fed' when it is not producing any useful work. That is work that produces some positive economical value.

The switch from draught power to the internal combustion engine had the effect of freeing up approximately 25-percent of all agricultural production from animal feed for draught power to food production. An enormous jump in productivity that lead to lower food prices and subsequently higher living standards. As fuel prices rise, so do the costs of food and ferilizer. We start to give back some of those gains. As we have to spend more for food and fuel we have less disposable income for all other purchases. As we start to devote more arable land to the production of bio-fuels that have a lower EROEI than petroleum, for example, then we lose more of those productivity gains. Fuel, food and fertilizer become relatively more expensive. And living standards slip again.

We can only offset some of that loss in productivity if we have reliable sources of renewable alternative energy. If not, then living standards will irreversibly decline. A net loss of our ability to produce food combined with food, fuel and fertilizer being more expensive in absolute terms mean less disposable income and therefore less trade. Less trade, less demand for ocean going vessels. Fewer fish, fewer fishermen.

However, where any residual demand exists in a post peak oil world then a larger ship sailing less often is still economically more efficient than many smaller ships sailing more often. Even if it calls on a port less often. And containers are more efficient than bulky transport. Especially, if sources of alternative energy are found. Whatever changes in technology that we make on land will find their application at sea as well.

Therefore, as far into the future as I can see intermodal transport using ships, containers, barges and rail will be the predominate economic model. That means the bulk of our economic activity will take place in clusters around sources of renewable energy - hydro, wave, wind, geothermal, solar, nuclear, bio-fuels, etc. - and along coastal ports and inland waterways. Inland agriculture will be connected to ports by rail.

In poorer countries where they cannot maintain that infrastructure and/or they cannot produce anything of value to trade with there will be wide spread misery as food, fuel and fertilizer all become more expensive. Some of these countries may evolve, say becoming large producers and exporters of bio-mass, but that is far from a given seeing their current state of development even now with as yet abundant fossil fuels.

No one can accurately predict the future. There are too many variables and feedback loops. However, the value of scenario planning is in the analysis. Assiging probabilities to each outcome. But more importantly identifying the red flags. One of the biggest red flags we have identified is will there be economical sources of alternative energy in whatever shape or form in reasonable quantities? Change that assumption and the outcome changes.

But basically anyone that has not been able to successfully predict and act on economic developments, say in the last 5, 10 or 20-years, probably does not have any special or accurate insights into what will happen in the next twenty years or a century either. Just my opinion. I am just hear to learn from others that may have their own little piece of the overall puzzle. Like nobodypanic's concept ship. Will it ever get built? Who knows, but someone out there is thinking about it, so that is already a first step.

<I do not happen to believe that we will run out of oil in the next 10 or 20-years. And I believe any die-off as the case may be will be more by attrition and declining birth rates. But these opinions of mine are a separate discussion.>

For the most part we agree Mr Bill. I also do not think that the majority of the die off will come in a catastrophic form, but comes more gradually through attrition. There probably will be some blips in this die off from War or Disease, comes faster for while but overall it matches the general lifespan at least to the 50 year age range. The number of really old folks we currently support through expensive medical care though cannot be supported long. An interesting question is how many people in America are say 70 or above? If we just removed them from the population, how far back into balance do we get? Knocks off the Social Security and Medicaire problems pretty quickly. LOL.

Basically, to get at least a short term balance, I would bet if all the people 70 or above comitted volutary suicide, we would go a long way to resolving our economic problems. They aren't producing, they are a drain on society. Old folks need to DIE sooner. Love my mom who is 80, but really the amount of money in Medicaire these days it takes to keep her going is ridiculous. I personally will walk into the Soylent Green recycle bin the minute I am no longer productive in society.

<My point was that IF you believe the whole world will run out of oil at roughly the same time; AND if you believe there is no alternative; AND if you believe that this will cause a fracture in, for example, agriculture and our ability to generate an agricultural surplus; HENCE the die-off; THEN there will be no demand for container ships, but also no demand for sailing ships either.>

Here we do not agree, at least in these propositions which I realize are not what you believe, just what you state in abstract. I don't think that you see an immediate dropoff, rather I think it takes some time to occur. Some global systems will fail, but intermediate systems will not. One thing for sure though, total volume of trade has to decrease here and as it does in terms of what works in the shipping biz you over time work away from the large container ship down to smaller vessels. Powered by sail or bunker fuel who knows, but the ships just HaVE to be smaller to be economic if the overall volume gets smaller.

You have two choices, you can WAIT to fill up a big ship until its full enough to justify a voyage, or you can send out a smaller ship immediately since it fills quickly. If the volume is large, the big ships are more economic. Samll volume, small ships are more economic, that is obvious. Samll ships also have the advantage or being able to hit small ports. they are more flexible in this way.

As long as you do not think the failure will be catastrophic but rather a gradual devolution, then it definitely is true that the same technologies which worked on the upslope work on the downslope also, yo move toward them gradually as the movement in the reverse direction was done gradually. You would have to accept catastrophic failure to make the argument that the same structures which worked in 1750 would not work in 2050. You argue against the likelihood of catastrophic failure though, so it seems to me you have to accept that small vessels can trade economically as the volume decreases. Or am I missing something? LOL.

Reverse Engineer