The Mega-Containers: a nerdy econ article on something really important
Sounds like a bad action movie about TupperWare or trash cans...
Actually, the topic is "transaction costs"-- not very sexy, but vital to mutually beneficial trade (micro) and wealth/well-being creation (macro). The concept describes "the cost of making a trade happen"-- the costs of transportation and communication. For mutually beneficial trade to occur, each side will typically undertake "search" costs (each party finding each other), as well as efforts to physically bring the two parties together.
As transaction costs fall, trades that were prohibitively expensive become possible. Transaction costs have plummeted in the last 30 years-- with deregulation of key industries under Carter and Reagan (perhaps the only significant thing one can point to as a Carter success) and massive technological advance.
Here's John Miller in the WSJ with the advance of "economies of scale" (lower average cost as quantity increases) in shipping....
Container shippers are unleashing a wave of titanic vessels on the oceans...could keep sea freight rates depressed well into 2010. That's good news for their customers, the millions of businesses big and small that import parts and products from overseas. But it's likely to spell pain within the shipping industry itself and could precipitate consolidation as smaller players are pushed out....
The jumbo vessels -- many longer than three football fields -- carry everything from strawberries and tea to iPods and motorcycles, for thousands of customers at once. The economies of scale can be great if shippers can fill their holds....
The MSC Daniela is a glimpse of the future. The size of an aircraft carrier, the ship completed its maiden run from Asia to Europe this month packed with 13,800 containers, or equivalent units, each big enough to contain all the contents of a three-bedroom house.
Thirty-five ships of Daniela's scale are scheduled to hit water in 2009, doubling the number floating today....By 2013, some 200 ultralarge ships will be in service around the world....
posted by Eric Schansberg @ 9:53 AM
2 Comments
2 Comments:
This is very interesting to me. What interests me more though is how will the efficiency of say operations, shipping and outsourcing affect the glut of commercial properties on the market.
If people are working from home and from coffee shops and if businesses don't need 6 floors, now they only need 1 because of increased efficiencies; then what happens to all the unused and vacant space.
Solve that problem and make a fortune. My suspicion would be a glut of foreign investors relocating operations to our country. Reverse outsourcing. One of the things Japan or Germany along with many other countries lack is land and space. We have an abundance of it.
Everyday I drive around and see more old retail, office and warehouse space vacant. All the new construction just adds to the mix since a lot of it wasn't pre-leased.
????? Love to hear from the experts. I've thought about this concept since I was in college.
Commercial property recycling.
That's an interesting point. In an ideal world, capital/land/buildings would be flexible. In reality, they naturally, have varying degrees of flexibility-- and typically, not much. The resulting inertia is inefficient. If someone can find ways around that, they'll make a lot of money for themselves and help society as a whole.
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