Transport costs could alter world trade

On the high seas, giant vessels stuffed with furniture, toys and electronics are slowing down in a bid to conserve fuel.

Customers are pulling packages from costly air shipments and sending them by ship instead.

And some are beginning to wonder what an era of persistently high oil prices will mean for the multinational corporations that have come to rely on globe-girdling supply chains.


Crude prices have backed off last month’s run toward $150 a barrel. But they persist above $110 a barrel, a level that was hard to fathom even a year ago. The end of cheap oil heralds a potentially dramatic reshaping of the globalized trade flows that have emerged in the past two decades. Rising transport costs are suddenly a key factor in decisions about both where to place factories and how much inventory to stockpile.

For now, the trend seems to favor the United States. Swedish furniture maker Ikea opened a new plant in Virginia. Midwestern steelmakers are thriving. And consumer products giant Procter & Gamble is considering new distribution centers. All, some say, because the cost of moving things from far-away places is beginning to trump the savings involved in using far-away, low-wage workers.

“Globalization is reversible,” says Jeff Rubin, an analyst at CIBC World Markets in Toronto.

USA Today