Why Tracy's Furniture Is Stuck on a Grounded Ship

I couldn't. Basically I couldn't get on a ship. I kept getting bumped um and bumped and bumped, and finally it seemed like it was going to be six months until I could even get space, and so it didn't seem morph it. And now now that I've moved to New York, I got to repeat this entire experiment, um, you know, in reality, and I got to put all my apartment belongings into a container, put them on a ship, and actually ship them from Hong Kong to New York.

Except it turns out I still can't actually ship anything from Hong Kong to New York. I love how like no one has more experience with the physical realities of our commodity and infrastructure system than you between the teddy bear, between the barrel of oil that you bought and kept under your desk for a while, and now this. You seem to have a knack for experiencing firsthand what the rest of us just see is lines on the chart.

I think I have a knack for failed logistics. But for our listeners, those who haven't been keeping abreast of all the shipping news, there is another ship that is stuck. This time it's stuck in the Chesapeake Bay, just outside the port of Baltimore, and um you know, ironically, I guess that irony isn't the right word here, but it happens to be owned by the same company that owned UM the Ever Given, the boat that got stuck in

the Suez Canal. Uh. This time the container ship is called the ever Forward, only of course it's not going forward. It's stuck in the mud with all my belongings in it. So they Ever Given got a lot of attention, obviously in part because it blocked all the traffic of the Suis Canal, which everyone knows. I take it the ever Forward. It doesn't seem to be blocking as much, I think, but it has all your stuff on it that is correct.

So there were some some news reports around this, but definitely not as much attention as the Ever Given, given that that thing was blocking an actual percentage of global trade. Who can no longer go through the canal? Um the Chesapeake Bay remains open. But it's interesting to me personally for obvious reasons. But it also the fact that this has happened again feeds into a number of the themes

that we were discussing all throughout last year. And I know we've been talking about a lot of other stuff recently, but I think we have to dive into this one. We owe it to odd lots listeners and ourselves. So we are going to be speaking with sal Mercogliano. He is a maritime historian and day history professor at Campbell University. He also runs an excellent YouTube channel which has been going in depth on what's actually happening with the ship

The Ever Forward. Sal thank you so much for coming on the show. Well, thank you for having me. Why don't we start with the basics, because you know, I read the news articles. This thing has been stuck for just over a week. Now, What exactly do we think happened here? How can a massive container ship have this kind of incident for a second time, sure, so Ever Forward was on a routine voyage. She had come through the Panama Canal and was stopping at four East Coast

US ports, had stopped already at Savannah and offloaded. It had gone up to Baltimore and offloaded part of its cargo, and it departed on the evening of March thirteenth and was heading down to Norfolk and then eventually to New York. So the ship departed routinely, came off the birth late late in the evening early morning, and she seemed to be allowing all the rules. I mean, everything seemed to be fine. They were maneuvering. There seemed to be no

incidents with her. And she's part of this new class of what's called the neo Panamax vessel. These are vessels that can use the new lane of the Panama Canal that was opened in so these East Coast ports have been dredging and building to accommodate vessels like this. And Ever Forward was heading southbound through the what's called the Craig Hill Channel. This is the channel out of Baltimore down to the Bay Bridge at Annapolis, and the ship was following the track that it normally does in the

Dredge Channel, which is well lit, well charted. She had a chess Peak bay pilot on board in addition to her normal crew and master, and the vessel went through the buoy's at the top of the channel, but proceeded to keep going out of the channel. Didn't appear to make the change at all to the course to head southbound, and what she wound up doing was plowing into the mud on the east side of the channel. She draws about forty two ft of water in the condition she

was when she left Baltimore. She is now sitting in anywhere between eighteen to twenty four ft of water about an entire ship lengths off the channel. She's over a thousand feet long. So what is what's being done right now? And you mentioned the ship has been stuck for a little over a week. What's been tried and what is this sort of basic idea of what people are trying to do to get the ship moving again. Sure, so again we're not exactly sure what causes incident. Let me

go back that for a second. So you know there's either a mechanical issue which is you know, she couldn't steer, or it is a human error. Was there a miscommunication between the pilot and the crew. Was there an issue regarding uh the proper helm water? Did they lose their situational awareness? I find the ladder the least likely because this is a well lit channel. It's like a landing zone for an airplane, well lit with the Booey's heading

to the bay bridge there. So we're probably looking at a mechanic goal or communications error in regards to the salvage of the vessel. So we're a week into this at this point, and again, ever given took just six days to get free, and now we're over a week into this, and what they've begun to do is start dredging in two areas, one off the stern of the vessel and one off the forward bow of the vessel,

off the right side of the vessel. And what they're trying to do is remove the mud and spoil from around the propeller and runner of the vessel and also trying to clear the forward bow an attempt to pull the chan of the ship into the channel. The problem

is the amount of spoil that is there. This is the material that had actually been removed from the channel, and the method they're doing with the dredges they have there are big for the United States, but they're not like the vacuum dredges you see in the Suez Canal.

Give you an idea. The biggest dredge on seen here can move about sixty cubic yards of material in each of its moves with its big clams l The massuit, which was the dredge used in the Suez Canal, could move seventy thousand cubic yards of material in an hour with its vacuum suction. Wait was that the was that the little one that turned into a meme? Or was that something else that was the big dredge? So was bright? It wasn't the little digger, although I've seen a lot.

I've seen a lot of memes right now with a little with the little digger on the way to the United States. Can you just say those two numbers again, how much could the Suez dredger do verse the one that we have operating right now. Sure, so there's two dredges right now and operating. The one off the bow of the vessel can move about a fifteen cubic yards in each move. The one off the stern, the Dale

Pilot Piet can move about sixty cubic yards. The Masure, which is the big dredge that was used on every given can move seventy thousand cubic yards an hour. Okay, here's my question, why don't we have a bigger drudger? Well, and that's a big issue, I would argue. You know, one of the things that we've been talking about with port infrastructure is the focus I mentioned the expand nine the Suez Canal. So we've been dredging channels, we've been

bringing in these large ship to shore cranes. But one of the things that has really lagged is our dredging capacity. And we've seen recently through the Infrastructure Bill, money being contributed or being allocated to build new drudges, and we're seeing new dredges build. It is a priority that really

needs to be done. We we do not have sufficient dredging capacity in the US, and there's a law that requires there's the Dredging Act of nineteen o six that requires dredges within the United States to be US owned, US built, US crewed, very similar to the Jones Act. Of and this is because we want dredges within the United States. The problem is we just haven't a lot of a lot of money to it, and there really hasn't been the impetus to fund this, and I think

this incident is really highlighting that danger. I can't believe, Tracy, We're gonna have to now do an episode an hour just talking about America's systematic under estament in dredging capacity. But at some point we're gonna have to do this. But also why haven't we, I mean, why, like why has there been this sort of underappreciation. I mean, I understand, like dredging isn't just about getting ships unstuck, So why

this sort of systemic under investment. Well, it has to do with the way we handle ports in the United States. So you've you had Jean Saroka on Jean, what is the CEO of the of the Port of Los Angeles. Ports in the United States are owned by the states

and municipalities, so they are a local entity. Yet the waters that connect those ports to the ocean are federal, and so they fall under the Army Corps of Engineers specifically, and so the Army Corps of Engineers has been tasked to basically maintain the dredging, and they do it either with their own fleet of dredgers or they contract out

with that. And you know, this comes back to everything from Hurricane Katrina and and and the dikes and all the waterways maintenance, and we just have under invested in this. It's not a very sexy topic. No one likes to talk about it, No one likes to pay money for a dredge. It's you know, it's just not not not as sexy as an aircraft carrier or something, you know,

more nautical. But it's absolutely essential. And one of the things that we've seen happen again over the past decade is these East Coast and Gulf Coast ports have been using what dredges are available to get those channels down to accommodate these larger vessels, these ultra large container vessels. And while ever Forward is not an ultra large container vessels, she's actually substantially smaller than ever given by about four

hundred feet and eight thousand boxes. She is still a mammoth vessel when you look at her compared to the vessels that have previously come into US ports. So we build these massive container ships. And you know, Joe and I have had a number of guests on at this point talking about how the ships get bigger and bigger

and the reasons why that happens. But at the same time, it doesn't seem like, again, we've made sufficient investment in the infrastructure, if you include dredging in the category of infrastructure, to actually make the whole system work efficiently, right And I think that's that's a key element right there, because one of the things we're watching is Okay, how can we better improve it? And we've talked about, you know, improving throughput in the ports everything from road, rail, dra

edge trucks, you name it. But again, the maintenance of the ports are really essential and and be able to flow the cargo. And in particularly one of the things you're seeing right now is because of the backlogs on the West coast that have been going on now for over a year, you're seeing shippers, those who want to

move cargo are shifting over to the East coast. You know, the ports of New York, of Charleston, Savannah, Baltimore, Norfolk, Houston are actively seeking this this cargo and it's it's successful. They're getting it you're seeing this matter fact, you're seeing where you had seen backlogs off the Port of Los Angeles, which they were over a hundred ships. Now they're down to forty. Now we're seeing them off Charleston, we're seeing them off Norfolk, we're seeing them off in New York,

and and we're kind of moving the issue. And Port of Baltimore in particularly is a very interesting port because it does not just containers, it does bulk cargo coal in particularly, a lot of vehicles moved through. It's an active moving port, and so moving ships in and out as expeditiously as you can becomes a priority. And there's gonna be a question about was ever Forward going too fast for the channel she was in, because the faster you go, And it's literally the same thing with ever

Given too. If every Given hadn't going been going as fast thirteen knots and ever Forward was doing thirteen knots too, had they been going slower, the salvage and the damage and the ability to get the vessels off would have been minimized. Is that faster than they should be going in either in either the Suez or the chest Peak. Well, it's funny you said that because I had Traffic, which is an A I S tracking app which does all

the kind of monitoring. Ever, Forward came through this same area in December, and when she came through in December, she did roughly the same speed, so it was roughly about twelve thirteen knots she was using coming in. So I was able to see her her her departure and it seemed to be the same exact Now she may speed it up just a little bit prematurely before turning into the channel, and that's something that's going to have

to be investigated. So I want to ask a question which is very important to me personally, but what are what are the chances that something really bad happens in the situation and my entire apartments belongings is just like jettisoned into the ocean, or I don't know, if the ship cracks up and I lose everything. Is that is that an above zero percent chance? Uh? I would say, You're not without some worries, Tracy. I think I think one of the reasons we're seeing this this salvage taking

time again. I think the coast Guards announcement that she'll be free this week is very premature. Bill Doyle, who's the CEO of the Port of Baltimore headed the Dredger Association of the United States. I mean he he knows stredging, and he says this is gonna take several weeks. UH. Since the vessel is fully aground, meaning its bottom is touching again, she draws water. She's an eighteen to twenty four ft of water. She's literally up higher than she

normally is sitting on mud. They have to be concerned about several issues. Number One, this vessel cracking UH. She ships are designed is a ship that brand new. UH ships are not designed to touch anything. They're designed to be buoyant, and the hulls are very thin in certain areas, I'm talking millimeters thick. And you know what you have to worry about is the vessel shifting, moving and cracking. This could necessitate an oil spill, for example, or fuel spill,

so they want to move her very carefully. The other thing is, since she's there's no buoyancy acting on her, there's nothing pushing her up to keep her afloat. Everything is pushing down. And what you have to worry about is if you pull her back into the channel, she's she went out to the channel to the east side, so you have to pull her to the west. You don't want the vessel to roll, and that's the worst case scenario, in which case your apartment goods would then

be wet in the ocean or in the bay. This leads to my next question. I guess it's there's it's the two potential A. If Tracy's entire apartment good to go into the ocean, who pays her for that? But be who is paying right now? Assuming Tracy does get her stuff? But how are the sort of costs of delay allocated? Right? We all we all remember the law of general averages from previous episodes. So I'm also worried about my liability and whether or not I end up

paying for the contents of this entire ship. Well, I'm glad you mentioned Tracey, because that's what I was gonna lose. Tom. I'm hoping you have insurance on this because right now, this this entire salvage is being done by Evergreen, the company associated with this, and they have not yet declared general average, in which case the cargo would have to bear a portion of the salvage. Right now, it's under the protection and indemnity club that ensures the vessel. So

they're paying for the salvage right now. And you know they contracted with Don John SMIT, which is actually a combined company doing the salvage. SMIT had done the salvage on ever given in the Suez, and so now Don John Smit are doing this. And again there are certain liabilities they're gonna have to be looked at. Number One, cargo delay. Uh, this cargo is not going to be delivered on time, so there may be liabilities against that. But again, if the vessel has a catastrophic issue, then

that may be something that has to be done. And under shipping agreements, the cargo bears part of the responsibility. If they declare general average, then the question becomes does the cargo pay. This is why whenever you ship anything you need to get insurance on it because if not, you open yourself up to huge liability. They may have to start taking containers off this vessel if they really if they think they can't move it safely. She didn't have that much ballast on her because the ship has

offloaded cargo. Ships tend not to take ballast in what they call brown water. They like to do it out in the ocean and blue water, because they have to run that ballast water through a system to clean it, to purify it. And that's expensive because you have to pump off that material at the end. So this ship probably didn't have very much ballast on board. They were probably gonna ballast after they left New York. So that

means taking fuel off. And if that's not enough, the problem with that is it raises the center of gravity of the vessel. That means you're gonna start taking those loaded containers at the very top off and that is a complicated problem. You need huge cranes to come out to do it. It's a very slow process, but that

may be necessary. While we're here and look at reading a little bit more about the Foreign Dredge Act of suddenly really that you know, I know, sometimes like you talk about, oh, can the President suspend or pause the

Jones Act? And sometimes you hear about that during emergencies, can the president do anything that could we get a bigger dredge from another country just temporarily you can waive the Dredge Act and bring it in the problem you have, of course, is whatever foreign dredge exist is not here, it's gonna be a delay to get it over here.

And one of the reasons that this Dredge Act was enacted was to ensure that we had dredges in the United States that could do this, so that in case of an emergency, in case of an accident like this where a ship runs aground. Unfortunately, ever Forward went out of the channel. She hasn't blocked Baltimore, so you know, we still see the free movement. However, when they do salvage her, she's going to temporarily block the channel to bring it out. But I think this again goes to

that idea of infrastructure. You know, one of the things we're not talking about two is the size of tugs. You know, it was estimated that this ship grounded and there's a grounding force. The amount of poll you would need to pull her off, according to naval architects. I've talked to the marine industry uh AXCUME ME, the Marine Innovation Safety Lab. They've estimated it's going to take anywhere from twenty to two thousand metric tons of pull to

get her off. A normal tug pulls about sixty tons, So it gives you the idea of of what you need. And again we're not investing a lot in our tug boats, which sounds very small. I know it's not a very sexy topic, but in truth, as these vessels get bigger, they're much bigger than the tugs that were designed to handle vessels ten twenty thirty years ago. You know, we've seen okay, at least two of these incidents at this point involving large ships getting stuck somewhere and then all

the efforts to actually move them. What are the chances that, instead of building out the infrastructure, so getting bigger dredgers, getting bigger to boats, widening channels and things like that, that we settled for smaller container ships. Is that realistic or desirable at all? Well, I would say two things on that trace. Number one, we will continue to get vessels bigger and larger than even this, because insurance companies will keep ensuring them, and ports will keep accepting them,

and operators will keep getting them. I should say that right now, right in the midst of this grounding, Evergreen, the parent company, just ordered three ultra large container vessels, twenty four thousand box vessels. They did the same thing, by the way, when ever given had run Ashore. Literally a day or two after ever Given ran Ashore, they placed a huge order for these vessels. They love these vessels because their economy of scale. Again, you know, the longer, wider,

bigger makeum, the more efficient it is for them. There are things that can be done to do this. The problem is it shifts cost onto transportation, which in turn in turn gets passed on to the consumer. If you slow down these vessels, if if you you know, require tug escorts and things like that, you're going to make it more expensive. And if you go for smaller vessels, that becomes even more expensive. We can talk for hours

about this. I found this conversation to be riveting. But you know, just my last question is basically we had the ever Given, now the ever forward a. How like rare is this? I mean, like, you know, normally I don't think ships running aground, particularly if they don't either in the US or if they don't block the Swiss Canal probably get much news attention. How rare is it to have these sort of two big incidents within the

span of I guess, I guess a year. But then also, how much generally is are these attributable to the overall shipping conditions, which we talked about being extremely tight. I'm thinking about, Okay, they are going maybe a little faster than they should be, or going to ports that they might not otherwise be going to do to redistribution of port capacity. So how much how unusual is this? But how much can we sort of tie these in it

into the tight global shipping market. Well, I think in terms of the size of the vessels, that's that's the big issue we're seeing right now. So ships du ground fairly commonly. It was just a mare ship that grounded on the approaches into Germany, for example, but they were

able to free her fairly quickly. The problem with big vessels like ever Given, like ever Forward, is that when an incident happens with them, they magnify the level of of salvage needed because there's so much bigger than we're talking about. Again, ever Forward is smaller than ever Given, but she still were a thousand feet long. She's is

longer than the largest aircraft carrier we have. So they're tremendous vessels that we're talking about, and any incident involving them requires a lot more resources than we've had in the past. So I think you have that element about it. And again, this fuels the world economy because we're able to move goods seamlessly at very low transportation costs. And particularly again you know, ever forward is a good indication of that movement of cargo from the West coast to

the East coast. I think on the other aspect there that you were kind of alluding to, I think we also have issues we have to remember during COVID, This has been going on now for two years, and one of the stories that doesn't get a lot of attention, unfortunately, is the one point eight million mariners who crew these vessels and issues with everything from being able to get

them off for normal crew rotations. Uh. You know, as the ships get bigger and larger, the crews get smaller, and and you know now with with cruise, because most of this is done by feign crews top five you know crewing nations in the world. You know Indonesia, India, China, Philippines and Russia. You know, those crews can't get off in Baltimore typically and fly home for a crew rotation, and some ports during COVID wouldn't let the cruise even

step on the dock. And so where you would have crews on board for two, four or six months there over a year on board, and so you know, I think I think crew rotation, crew fatigue, and you know what we expect of these marriage. Plus we're we're shopping around for the cheapest mariners out there too, so you know we're looking. You know, hey, you're getting too expensive. So I'm going to go to this country next and and go get them. And unfortunately, you know, mariners don't

really register very well. Look at the you know, nearly dozen dozens of ships stuck in Ukraine right now that you know the mariners are trying to get off, and and not a lot of stories about those unfortunate Yeah, we had COVID and people stuck because of those restrictions, and now the situation in Ukraine as well, it just

seems never ending. We're going to have to leave it there because we are rushing this out as a bonus episode, so we're a bit limited on time, but really appreciate you coming on, and I have a feeling we might end up speaking about this again. We've got to have Sale back. I could talk to Sale. Thank you so much coming on. Thank you for having me guys. So

that was a sal Murcogliano. I should just say his YouTube channel is called what is going On with Shipping, and he's providing really detailed updates of what's going on with the ever forward, So if you're interested, you should definitely check those out. So, Joe, I just have to clarify one thing because our producer actually messaged me while we were discussing, um, what's going on in the intro, and he asked me if I'm joking about my stuff being stuck on the ship. For total clarity, I am

not joking. There's a lot of nervous laughter here because it is quite stressful to think that everything that I have might be stuck on a ship that's you know, there's a question mark over whether it's going to be able to get off of its mud bank. But yes, my stuff is actually on that ship. Yeah, this is so crazy and so wild, and I'm like, I just want to say, I'm thinking about making my entire identity be one of repealing the Foreign Dredge Act of I think that could be like a new like I might

make that my thing. It is like a really like to learn, like we have a shortage of dredge capacity. We have a shortage of tugboat capacity in the US. So many interesting things I learned in that short period of time. And I'm very sad that you don't have your stuff from Hong Kong, but I'm selfishly happy that this turned into such a illuminating discussion we get to

talk more about it. I would just say, you know, I am now the face of structural under investment in our ports and our tugboats and our dredges, and you know, it's inconvenient not being able to sit on the couch for over two months now. Um, I would like to have a couch at some point. But I did also think that Sala's point about what's going on with seafarers is an important one because that has been two years of a regulatory and logistical nightmare for people who are

actually working on ships, and especially in Asia. We heard stories of people, you know, who had been stuck on board and couldn't get home for months, if not more than a year at a time. So definitely worth mentioning. Yeah, we talked about the physical infrastructure a lot, but the toll on the people actually keeping it going it is obviously met. Yeah, all right, well, it looks like we have a lot more to discuss on the shipping front, and I'm sure we'll have some future episodes on this topic,

but for now, shall we leave it there? Let's leave it there? All right? This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway and I'm Joe Why Isn't All? You can follow me on Twitter at the Stalwart. Follow our guest Sam Rcagliano. He's at marcagliano s. Also definitely check out his YouTube's big thanks for our producers,

Magnus Hendrickson and Colin Tipton. Follow the Bloomberg head of podcast, Francesca Levi at Francesca Today, and check out all of our podcasts in Bloomberg under the handle at podcasts. Thanks for listening.