Left-handed Complement

© Lowerkase | Dreamstime.com

MUDGE’s Musings

Went after everyone’s favorite hateful big business, Wal-Mart, a couple of posts ago, as we explored their ham-fisted attempts at influencing presidential election politics.

Slate’s Daniel Gross, whom after all gets paid to write these things, did a nice job exploring the issue (but yr [justifiably] humble svt was there with typically cogent commentary the previous evening, thank you very much; my son sent me the Journal story well after I had harvested it into WindowsLiveWriter, in preparation for the post. Just setting the record straight! ).

Lately, we’ve become intrigued as we learn that the mechanism that allows Wal-Mart to be Wal-Mart…

After all, these are the guys who have rolled back prices so relentlessly that they’ve rolled up entire industries and sent the jobs and our treasure to China, at the expense of zillions of decent paying blue collar jobs in the U.S.

… globalism, is under ferocious attack.

Shipping Costs Start to Crimp Globalization

By LARRY ROHTER | Published: August 3, 2008

…. Cheap oil, the lubricant of quick, inexpensive transportation links across the world, may not return anytime soon, upsetting the logic of diffuse global supply chains that treat geography as a footnote in the pursuit of lower wages. Rising concern about global warming, the reaction against lost jobs in rich countries, worries about food safety and security, and the collapse of world trade talks in Geneva last week also signal that political and environmental concerns may make the calculus of globalization far more complex.

“If we think about the Wal-Mart model, it is incredibly fuel-intensive at every stage, and at every one of those stages we are now seeing an inflation of the costs for boats, trucks, cars,” said Naomi Klein, the author of “The Shock Doctrine: The Rise of Disaster Capitalism.”

All of that consumer stuff that packs the shelves of Wal-Mart, and, to be fair, its competition, and all of the so-called big box stores: the toys, the apparel, the electronics and decorative accent pieces for your great room; all that stuff got to Wal-Mart in 40-foot shipping containers.

Containers loaded in a teeming factory near Shanghai (or, 100 other industrial centers in China), trucked to a gigantic container port, loaded aboard huge ships filled from hull to high on the deck with identical 40-foot boxes, and sent sailing off to Long Beach, or Tacoma, or Norfolk, or Elizabeth, NJ, where the containers were unloaded onto railcars for express shipment inland, or onto heavy trucks for local warehouses.

Very fuel-intensive. And oil doesn’t cost $10/barrel anymore, nor will it ever.

The cost of shipping a 40-foot container from Shanghai to the United States has risen to $8,000, compared with $3,000 early in the decade, according to a recent study of transportation costs. Big container ships, the pack mules of the 21st-century economy, have shaved their top speed by nearly 20 percent to save on fuel costs, substantially slowing shipping times.

The study, published in May by the Canadian investment bank CIBC World Markets, calculates that the recent surge in shipping costs is on average the equivalent of a 9 percent tariff on trade. “The cost of moving goods, not the cost of tariffs, is the largest barrier to global trade today,” the report concluded, and as a result “has effectively offset all the trade liberalization efforts of the last three decades.”

Shipping Costs Start to Crimp Globalization – NYTimes.com

Globalization won’t go aground because of fuel costs, but some of the oddities of foreign trade, like shipping timber to China to be made into furniture and promptly shipped back, are already beginning to be replaced by Chinese-owned furniture manufacturers in the U.S., a reflection of the cheap dollar, as well as the costly petroleum barrel.

Thus, world trade may be subsiding into regional trade, not necessarily a good development for the U.S., as always a strong source of commodities but whose industrial base has been eviscerated by the rapacious, red-neck buyers at Wal-Mart, and the poor product line choices made for the past 20 years by General Motors and its ilk.

This post is illustrated by a container ship, because they embody for me the modern romance of the sea. Many such ships have a global schedule: for example, dropping off and picking up containers in Long Beach, through the Panama Canal (if they fit!) to New Orleans, to Baltimore, to Rotterdam, to Barcelona, to Ashdod, through the Suez Canal (if they fit!) to Dubai, to Hong Kong, Singapore, Sydney, and back to Long Beach, to begin the cycle all over again. Only in this new world of $125/barrel petroleum, it’s going to take 20% longer.

And, perhaps that 50-inch high definition television you’ve been counting on Wal-Mart to roll back to a price you finally find approachable, perhaps it’s not going to get down to that price, as the cost of shipping it from central China climbs precipitously to reflect the climbing price of oil, and the declining value of the dollar.

Actually, courtesy of my temporarily (oh, God, we hope it’s temporary!) returned younger son, we have such a high definition television, a few years old and not ever state of the art, in our family room (only right — we paid for it!).

But, here I am in the home office, blogging and catching my White Sox on a 13-inch low def CRT television. Priorities.

And, I still won’t set foot in a Wal-Mart.

It’s it for now. Thanks,

–MUDGE

This entry was posted on Wednesday, August 6th, 2008 at 9:14 pm and is filed under Business, China, Global trade, Globalization, Transportation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.