S. Artesian
The composition of capital is to be
understood in a two-fold sense. On the side of value, it is determined
by the proportion in which it is divided into constant capital or value
of the means of production, and variable capital or value of labour
power, the sum total of wages. On the side of material, as it functions
in the process of production, all capital is divided into means of
production and living labour power. This latter composition is
determined by the relation between the mass of the means of production
employed, on the one hand, and the mass of labour necessary for their
employment on the other. I call the former the value-composition, the
latter the technical composition of capital.
Between the two
there is a strict correlation. To express this, I call the value
composition of capital, in so far as it is determined by its technical
composition and mirrors the changes of the latter, the organic
composition of capital. Wherever I refer to the composition of capital,
without further qualification, its organic composition is always
understood.-- Karl Marx, Capital Volume 1 Chapter 25
1. What goes around, slowly, comes around, more slowly
Every year about this time the United Nations Commission on Trade and Development (UNCTAD) publishes its annual Review of Maritime Transport (RMT),
and every year for the last eight years we get to read, with charts,
tables, and graphs, the details of the troubles, and the struggles, the
shipping industry has encountered in sailing the rough seas more or less
of their own making.
We've had "over-investment" in maritime shipping based on projections of "future demand," and the immediate availability of cheap financing.
We've had "over-ordering" of ships based on that over-investment.
We've had overbuilding of the over-ordered ships by over-expanded shipyards.
We've had over-delivery of the overbuilt ships from the over-expanded shipyards.
We've had oversupply of the over-delivered ships.
We've
had so much "over" introduced into the networks of international
maritime transport that the industry is almost under water.
Shipyards
have closed. New orders have dropped. Shipping lines have merged,
linked into alliances sharing ships, berths, customers, and costs.
China Ocean Shipping and China Shipping Group merged. CMA-CGM has
formed an alliance with China Shipping Container Group and United Arab
Shipping, and has taken over completely Singapore's Neptune Orient
Lines. Maersk has taken over Hamburg Sud, and formed an alliance with
MSC (Mediterranean Shipping), and Hapag Lloyd.
Thirteen
shipping lines in China received more money in subsidies in China in
2015 than they earned from operations. In South Korea, Hyundai Heavy
Industry, Samsung Heavy Industry, and Daewoo shipbuilding have all
undertaken "voluntary" restructuring to satisfy creditors. Hanjin
Shipping declared bankdruptcy.
Despite the recent drop
in orders, more shipping capacity is on the ocean, slowly steaming the
trans-Pacific route, the Asia-Europe route, the South-South route.
Marx
wrote that "circulation sweats money from every pore." Sure thing.
Until it doesn't. Then it's "water, water everywhere, but not an
ounce to make into money." The slow down in circulation in the maritime
industry is summed up in two words, "slow steaming."
Originally
executed as a tactic to reduce oil consumption when the price of crude
was above $100 per barrel, slow steaming, slowing the speed of the ship,
and even sailing longer routes around the Cape of Good Hope to avoid
the usage fees for travel through the Suez Canal, slow steaming is the
response to the excess capacity in the industry. Turn-around times are
lengthened, and additional ships are required to handle the same, or
reduced, tonnage of freight.
This calculus of
operating cost vs.reduced revenues vs. "lay-up" costs for the excess
fleet has become the business plan for the entire industry. Slow
steaming is capital in a cold sweat.
2. How we see it.......
Despite their role in the circulation of capital, ships are fixed capital; that is to say means of production that transmit their value through the production process, incrementally, over more than one cycle, or turnover period of the production and value-accumulation process.
Value
expanding value, that's what capital is, or rather becomes. More
precisely, capital is the accumulated, objectified value extracting more
value from, and as, the condition of labor. Labor is compelled to reflect this condition by existing as an object for exchange. As an object, labor-power is assigned a defined space, and a defined allocation of time for
which it is compensated, with that allocation being the wage. The time
confined by the wage is what is required for the subsistence of the
laborer, that is to say for the reproduction of the ability to labor.
This
existence of labor only as means to its own subsistence rather than as a
vehicle for advancement beyond the limits of subsistence is labor as
the instrument of and for capital. The wage is provided to labor as
object and in exchange the capitalist obtains labor's power to produce
beyond subsistence; to produce surplus. The surplus labor-time is
surplus value. Labor objectified is labor power expropriated as the
power of the means of production.
So...(1) the means
of production, transportation, circulation are objectified past labor;
surplus labor- time expropriated as value, capitalized in the means of
production, and arrayed against the power of labor itself; (2) the
means of production, transportation, circulation can only transfer their
value through the extraction of additional surplus labor-time; (3)the
accumulation of capital is an accumulation of physical dimensions--
weight, size, density, power far greater than the labor power required
to animate the machinery (4)the accumulation of capital is
simultaneously the change in the components of value, where the value
objectified labor outweighs, overwhelms the living labor. The increment
of new value added to the existing values declines. Accumulation grows;
accumulation slows down. More ships, bigger ships, slower ships, ships
on the ocean, dragging the bottom, dragging their bottoms.
That's how we see it.
3. What they see..
The bourgeoisie don't quite see it that way. Indeed they can't; surplus
value, surplus labor-time being invisible, hidden, "disappeared" inside
the wage. The bourgeoisie see cost; they see revenue; they see market share; they see profit,
particularly when it's waving "good-bye." All the conflicts and
problems among these visions are supposed to be resolved in and by economies of scale, and the reduction in unit costs.
That and those, after all, are the historical trends of capital
accumulation, and as bad as things get for the bourgeoisie, they're
still the ruling class, so they're sticking with what they know, and
what they see, right to the end: economies of scale, the reduction in
unit costs.
In "good" times, economies of scale,
increased orders of larger ships to transport anticipated volumes, and
values, of trade. In bad times, economies of scale. In 2015, shipping
lines took delivery of 211 new container ships, only half the number of
ships delivered in the record year of 2008. This reduced number of
ships had a carrying capacity of 1.68 million TEUs (twenty foot
equivalents-- the "benchmark" for container shipments), a carrying
capacity 12.4 percent greater than the capacity of the 436 ships
delivered in that record year, 2008.
Economies of
scale: Since 2008, the average container ship capacity has grown 132
percent. In 2016, the average capacity of container ships on order was
8500 TEUs, twice the average of the existing fleet after the growth since 2008.
The
economies of scale= increased capital costs, and the reduction in unit
costs: The capital costs for the larger ships are about 50 percent
greater than those of the smaller ships, but the costs
per
container, per unit are less. Construction costs, capital costs, rise
less quickly than the additional capacity, so that construction costs
for ships with a capacity greater than 13,300 TEUs are 30 percent less per TEU than the costs for smaller ships.
Moreover, the increased capital costs embody reduced
operating costs. For the largest and newest ships with capacity of
between 16,000 and 19,000 TEUs, operating costs are estimated to be $50
per "slot" lower than the costs for operating older and smaller liners.
Operating
costs are controlled through lowering the vessel speeds, which reduces
the maximum horsepower required of engines. Maximum horsepower ratings
for liners of all sizes delivered in 2014 were 20-30 percent below the
ratings for liners delivered in 2007.
Fuel consumption
is related to vessel speed by a "cube factor;" that is to say, doubling
the speed increases fuel consumption eight-fold. Reducing the speed by
percentage, cubes the fuel savings. In 2014, design speeds for liners
were 8-12 percent below the design speeds for liners operating in 2007.
Reducing the operating speed by 10 percent, reduces fuel consumption by
27 percent.
These efficiencies are magnified by the
greater capacity of the new ships. A ship hauling 5400 containers
consumes .027 tons of fuel per container per day. A ship hauling 18,000
containers requires .017 tons of fuel per container per day.
Short version: daily per TEU operating costs in 2015 for an 18,000 unit ship were half the costs of a 4000 unit ship in 2008.
In
addition crew sizes increase less rapidly, if at all, than ship
capacity. Maersk's EEE class ships, capacity 18,000 TEUs, can operate
with the same-sized crew as the E class ships, capacity 15,000 TEUs,
requiring 13 crew members, including officers. Indeed, the increasing
applications of technology in the maritime industry have shifted the
composition of the crews so that today over half those employed are officers.
All
of these-- all these economies of scale, economies of design,
construction and operation; all this slow steaming and additional
capacity; all this sunk capital (pardon the expression); all this
massive accumulation both expresses and creates the conditions for the
slow-down in turnover of capital.
4. What it is, what it will be
Slow-steaming
indeed, and slow-steaming ain't the half of it. The ratio of TEUs
loaded to total fleet capacity, providing an index to the turnover, or
turnaround of the fleet; how many circuits of capital that fleet
completes in a year has fallen from approximately 12.5 per year in 2012
to 8.5 in 2014 to 8 in 2015.
What this means is that regardless of the decline in unit costs, the system costs of the expanded fleet cannot be "floated." Profitability declines, and capital has nowhere to turn except further attacks on labor in the entire system disguised as "productivity."
The larger ships, with the greater loads will require increased dredging
of channels to handle their passage. The loads themselves will
introduce greater costs into the system as each ship will require more
time to be loaded and unloaded, and thus occupy, for greater periods, a
container ports most precious asset-- berth space, berth time. The
"unevenness" of development, internal to capital's infrastructure
development places exceptional strains on the "inter-modalization" of
freight-- the movement from sea to rail to truck-- that has been key to
the efficiency of the service. Port authorities, government and
private, will respond to these additional strains by demanding
"productivity" agreements from the labor organizations, instituting
greater automation, but not just automation, but also elimination of
guarantees regarding working hours, overtime agreements, and a permanent labor force.
If
we are to oppose such "productivity" demands, and we do, we do so not
because we oppose "technology" or automation, but because we oppose the
power of, and increasing the power of capital over living labor.
"Productivity" is the subordination of the entire class to capital in
that living labor, need, is subordinated to capitalist property.
Please direct all comments to this Red Marx thread
BACK NEXT
