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Cake day: September 30th, 2023

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  • tl:dr - 2021 Ever Given shipping blockage but worse

    It’s much more complicated and impactful than that. Commodities may take multiple trips through the canal in different forms before they become final products, and more sophisticated products that require multiple raw material sources spread across several vessels multiplies this problem. Vertical monopolies have min/maxed costs and revenue such that they’ve determined it’s cheaper to refine one material in country x, pay to ship it to county y for further refinement, then pay to ship it to country z for final assembly before shipping it a fourth time to where it will be sold. Companies that are not vertically integrated simply buy the materials they need to make their product but those materials have already been on a similar journey being sold from one company to the next, the price going up for each stage of refinement.

    The alternative route around the southern tip of Africa adds roughly 2 weeks to shipping time. Many companies rely on materials constantly arriving in a timely manner so they can continually produce products to be sold. Adding a 2 week delay to receive a material and a 2 week delay to ship their product immediately puts a company at least a month behind on production.

    If a product would require materials that went on multiple trips through the Suez canal then attempting to shift to an alternate route would dramatically increase the time it would take to produce. Simplistically, this causes a supply shortage and results companies losing profit and raising prices across all sectors.

    The Houthis are trying to stop the Palestinian genocide by hitting capitalism in the balls. In a nutshell, if large companies start seeing a significant hit to their bottom line then they’ll begin pressuring the lawmakers and world leaders that benefit from those companies to stop the genocide.

    Genocide stops -> Houthis stop attacking shipping -> companies get their profit

    This doesn’t even touch the quagmire of politics in the region…