World Turns Out To Be Not-So-Flat

Rising transportation costs are making a significant dent into the advantages that low cost suppliers once enjoyed:

Tom Friedman wrote “The World is Flat”, suggesting that globalization had leveled the playing field between industrial and emerging countries. Jeff Rubin of CIBC World Markets suggests that this is perhaps changing because of the cost of fuel.

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.

Maybe the end result of this will be foreign companies opening up plants in the US (much as the Japanese have done with auto manufacture) to largely escape the sea-based shipping costs altogether.

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