Talking a load of ship

A key technological driver of increased trade and global integration has been a pretty consistent decline in the costs of shipping. The key element was the introduction of standardised shipping containers, plus the lowering costs (and higher availability) of air transport. It became so much more viable to move goods from one location to another, whether they be intermediate goods (e.g. inputs that needed assembly), or final products (i.e. tuna that needed to be eaten).

The recent surge in oil prices, plus the spectre of possible imposition of greater tax burdens on the creation of carbon-dioxide, has cast the spotlight back on the role of shipping costs. This story in the New York Times has raised the possibility that trade growth might slow or even halt/reverse. There is some evidence of decline in the cut flower business (and attempts to innovate to maintain markets). Coupled with the push for localization by some consumer groups, we may be seeing a new threat to any greater globalisation.

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