Sunday, September 25, 2011

Shipping containers & cost of trade

Time was, plain old "how many miles away?" geography shaped trade networks. That didn't really last all that long, only until ships were invented and economic or trade geography became a thing of shipping routes. A millennia BC and Phoenicians were getting tin from Cornwall while people in Somerset weren't all that sure that Cornwall existed (a little extreme, yes, but not much). We're all aware of how the Portuguese navigators changed the spice trade, cutting out the various grasping hands in the Middle East looking for a slice, but the continuing superiority in cost of sea freight over land, even with railways, can astonish. It certainly astonished me to find that in the 1860s, getting wheat from Chicago to New York cost 17 per cent of the Chicago wheat value, while getting it from New York to London only cost 12 per cent of that Chicago value of wheat*.

What the shipping container has done is just about entirely take away geographical distance as a determinant of freight costs. It really doesn't cost much more to ship something from China to Europe than it does to ship something inside Europe. Beijing, Brisbane, Brindisi and Birmingham, they're really all just nodes on the container shipping routes and getting from one node to another costs about the same amount, wherever in the world they are.

OK, this is not entirely and strictly true, there are slight differences in shipping costs, but near enough as to make no difference. It's near impossible to pay more than $5,000 to get 40 tonnes in a container from any one node to any one other. [I]t costs $125 a tonne to get stuff from Shenzhen to Sheffield or from Santiago to Savannah.


Be pretty if you are,
Be witty if you can,
But be cheerful if it kills you.

Hahahahaaaa!!! That is ME laughing at YOU, cruel world.
    -Jordan Rixon

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