The dwindling cost of transportation

Compared to the arrangements it replaced, [shipping] containerisation has damn near abolished the cost of transporting stuff by sea, which means that the economic significance of mere geographical proximity has now been, if not abolished, at least radically diminished. Regional trading blocks like EUrope now look like relics from that bygone age when it would take a week to unload a ship

Brian Micklethwait

From personal interest I can tell you that distance does still matter. If you, for example, manufacture something relatively perishable (e.g. 3 months shelf life) in China and ship it then you could save thousands in labour costs. The problem is the month spent waiting for the ship can seriously disrupt your sales process. And sure, you can unload a ship quickly, but those containers need to be sorted through and items re-united with their owners or their agents to be taken to the point of utilisation, which all takes time and money.

Delays like this mean it may be more affordable to pay for someone in the UK to produce your items, especially if your batch is small or product perishable. Of course, anything less perishable or higher margin and you’re onto a winner.

trans-asian-raliway-networkThey are not known for small batches, but HP have started shipping computers overland by train from eastern China to Germany. Getting the containers through the various borders and changes of gauge is a project in itself however they can shave off ten days compared to shipping, according to an episode of CNNs The Gateway . What the program didn’t cover is the fact that the destination in Germany was also well connected by sea. It would be nice to see that route fully commercialised, new tracks with standardised gauges, and a steady flow of traffic down the old silk road. Those ten days and potentially (even) easier loading and unloading times will help smaller manufacturers. There is a painfully slow UN process trying to do that politically as part of a big graniose scheme.

nepal-water-mill-mountain-stream-crppedAlso via The Gateway I found a much more modest scheme, though not short of vision, which is exporing the use of autonomous helicopters (drones) for the delivery of goods via a network of base stations. An “airborne internet of things”. The slideshow seemed to depict Africa as a deployment environement and mentioned that the scheme woukld allow them to leapfrog the building of roads in the way mobiles allowed them to leapfrog laying telephone cables. My immediate thought was that a mountainous environement would be a better use case. There are equally few roads, but more rich mountaineers would use the service for medicine and luxuries. Also you have ample water power available, which mountain some cultures already use. This might be cheaper to install and potentially better than expensive photovoltaics.

I’m happy to notice they are talking about using it for grocery deliveries in New Zealand. Happy days.