Rising shipping costs hit global trade hard | DW

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The offshoot conflict in the Red Sea has meant higher freight costs and increased expenses for insuringĀ commercial trade goods.

Moreover, movesĀ to avoid the Suez Canal for safety reasons and instead navigate around the Cape of Good Hope, have greatly increased travel times and led to significantly higher fuel consumption.

Simon MacAdam, an analystĀ at the London-based financial consulting firm Capital Economics, says shipping companies are being forced to become more flexible.

"The shipowners have seemingly adapted quite well to the situation, considering the limitations on using the Suez Canal," he told DW, adding that costs briefly droppedĀ this spring "after skyrocketing in January."

Shipping bulk commodities like wheat or liquefied natural gas (LNG) across the US is economically unviable, he added, leaving shippers with no alternative to the very long and dangerous detour routeĀ around Cape HornĀ on theĀ southern tip of South America.

Water levels in the canal, he told DW, have "recovered somewhat" in recent months, and the La Nina weather phenomenon should "further ease the situation soon."


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43 Comments

Avid Amoeba

Hoffmann also pointed to another unwelcome side-effect of longer shipping routes: rising greenhouse gas emissions. "Ships have increased their speeds, which has led to a rise in emissions, for example, by 70% on the Singapore-Rotterdam route."

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Adderbox76

Is it that time of the year already? How time flies...

And by that I mean the time of the year where *they* manufacture some bullshit reason for our prices to keep going up...

Eximius

Good? Manufacturing should overtime move locally, and local business should boon.

Flying Squid

But even local manufacturing needs supplies to manufacture. You can't mine cadmium locally if there's no cadmium to mine. Global shipping would still be necessary to maintain modern lifestyles. Local manufacturing might reduce global shipping in some cases, but there would still be a huge amount of it.

Eximius , edited

But then, for Europe, the sources would be Kazachstan, USA, and Africa. I would much rather have Kazachstan or Africa get money for it than China. And shipping raw rare earth metals should surely be less impacted than shipping full finished products that include cadmium (that take much more shipping volume).

Hell, maybe this will also push for more recycling of Cadmium (and other special metals) as the source becomes less reliable / more expensive.

I only see a problem for companies that try to milk every cent and are terrified of raising the price which will impact their profit margins and CEO bonuses.

Flying Squid

For cadmium? Sure. But not for everything you need in every step of the manufacturing process. Cars don't go from steel to car in one factory. Bits are made in different places and those bits are assembled into other bits which get assembled into other bits and eventually the biggest bits gets assembled into a car.

Cars aren't like what they were when the Ford Model T was being cranked out. They're incredibly complex machines which can't be made in one local or regional factory anymore without a global supply chain. There's just too many things to manufacture.

I absolutely think there should be more local manufacturing, if for no other reason than to make the world less reliant on China, but if you're talking about generalizing that process, it will only ever be the final assembly stage. You're just not going to see a European computer company manufacture the dye that goes into the circuit boards that get printed with circuits which go into their computers. And that's just one small chain in a huge supply web.

Eximius , edited

I would be fine with cars being made more dumb. The chips cars need (to work, without half-assed shit infotainment systems) don't need to be manufactured by tsmc.

Computer chips are so expensive per volume, I feel they will not get impacted too much, but it would be nice to have fabs for it in Europe.

Flying Squid

You might be fine with it, but the world is not. And you still seem to not be seeing the forest for the trees. This applies to virtually every modern convenience you are used to. None of them can be produced locally when you get down to the components.

Eximius

I disagree that cars are incredibly complex machines. They are certainly more complex than Ford Model T, but it is generally just iteratively sometimes useful bloat. When you say they are "incredibly complex" it usually means population's understanding of it is lacking. To the point where people are afraid to jump start a dead battery, because "it has this complex computer and stuff"

Flying Squid

Okay, remove the word 'incredibly.' The point is they aren't just basic mechanical devices anymore. There are all kinds of things cars have now that likely would not be able to be manufactured locally or maybe even regionally, be they various sensors or power steering fluid or airbags- or the components needed to make those things.

filister [OP] , edited

And you will pay a lot more for literally everything and some products will be either unavailable or with much lower quality. This will also drive inflation to new highs affecting the consumer purchasing power.

I can only assume you are an American, and I am sorry to disappoint you but you don't have neither the manufacturing power, nor the workforce to handle all the manufacturing that is happening overseas anymore. Even if you want to switch to local manufacturing there would be decades until you build the know how build and equip the factories and to train the workforce.

Where do you think your TV or phone or microwave, vacuum cleaner, dishwasher, etc. are produced?

Not to mention that this will also affect your GDP in a negative way, as you will stop being able to export locally produced goods, because of those protectionist policies.

But yes, let's do this /S

Eximius

Nice edit. I keep talking about European climate from a European perspective.

Importing less directly increases GDP. One would assume it would have 0 impact on exports, unless other governments suddenly are bitchy and angry that they cannot export to us (see: China).

filister [OP]

I am sorry but are you an economist or an engineer. The Chinese market is one of the most important for a lot of European companies.

And it is kind of naĆÆve to believe that protectionism would benefit the general population. Look how great North Korea or Cuba are doing.