Re: India's Labor Costs to Rise ??

On Wed, 24 Aug 2005 08:56:36 +1000, the renowned Clifford Heath
<no@xxxxxxxxxxxxxxx> wrote:

>Joerg wrote:
>> Ultimately the whole world will balance out.
>
>Only if global transport remains cheap, and that
>will depend on our choice of fuels.

Sea shipment is very cheap, and very efficient in terms of fuel. Only
5-10% of the cost is fuel (maybe $75-150 per TEU), so doubling fuel
costs won't really make much difference.

Relative expensive (>10:1 by cost/weight) air cargo has the potential
to be displaced by regular sea freight or new fast
high-fuel-consumption ships, but especially with new larger freighter
aircraft such as the A380 coming on line, it should be able to hold
onto the higher value end of things.

Transport costs are interesting and sometimes non-intuitive. Back when
the US had a steel industry, and the Japanese were kicking the
stuffing out of it, the Japanese could get coal thousands of miles
from Australia to Yokohama cheaper than American companies could
transport it (by heavily unionized railway lines) the few hundred
miles from the coal mines in W. Virginia and Kentucky to Pittsburgh.
At least if the article I read in the HBR was correct.

Some routes are a lot more competitive than others, too. It would be
interesting to create a distorted map of the world based on
transportation costs of some reasonable class of goods- the oceans
would be fairly narrow and the land masses would be wider.


Best regards,
Spehro Pefhany
--
"it's the network..." "The Journey is the reward"
speff@xxxxxxxxxxxx Info for manufacturers: http://www.trexon.com
Embedded software/hardware/analog Info for designers: http://www.speff.com
.

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