Curvature Hits Flat World

The World Is No Longer Flat

The cost of shipping a 40 foot container from Shanghai to the east coast of North America has gone from $3,000 in 2000 to $8,000 because of the cost of fuel, and for many products, the Asian cost advantage has virtually disappeared.

“In a world of triple-digit oil prices, distance costs money,” write Jeff Rubin of CIBC World Markets. “And while trade liberalization and technology may have flattened the world, rising transport prices will once again make it rounder.”

I am basking in the stagflationary aura. Okay, maybe basking isn't quite the right word. Cringing seems a better description.

Aggravating the problem is the fact that modern new container ships travel faster than old bulk carriers and so use up more fuel, doubling fuel consumption per unit of freight over the past 15 years.

Two quick comments. First, just look at how less reliant we are on energy these days. That's what we are told. Second, our impatience is going to be the death of US (United States). We want our subprime housing loan yesterday. We want our products from China yesterday. We'll let our grandchildren worry about how to pay for them.

This post inspired by kwark, who pointed out the $8,000 shipping container cost.