Business Insight Zone

That’s the important question raised by this Foreign Affairs article written by Marc Levinson, an expert in container shipping and its economic impacts:

Freight Pain: The Rise and Fall of Globalization

The entire article is available only to Foreign Affairs subscribers, but here’s a key excerpt:

That [container-shipping-based] globalization process [which started in the 1960s] is now beginning to shift into reverse. Because international freight transport is becoming more expensive and less reliable, companies are reconsidering whether it makes sense to depend on products made half a world away. Global sourcing is losing much of its allure.

While one big driver of this change is the high price of oil, Levinson talks about other factors, including the logistics of loading and unloading ships in ports like Long Beach, as well as more stringent environmental requirements. Reviewing these factors, Levinson predicts various impacts for U.S. commerce, including:

• imported goods will probably get more expensive across the board;
• U.S. companies may do more of their manufacturing in North and Central America;
• top manufacturers like Dell and Toyota may have to adjust the timetables — and the costs — associated with their super-efficient just-in-time production methods.

More directly, I would note that the shifts Levinson talks about stand to impact big container-ship operators like Maersk, railroads like BNSF, and trucking outfits from YRC on down. And all of that is before we factor in the consequences of the current economic downturn.

Here are just two recent news headlines that emphasize the damage all of this is doing to container shipping business:

• Financial Times — NOL warns of severity of shipping downturn
• Lloyd’s List — Analysis: Box shipping battered from all sides

If Levinson’s analysis is on target, and especially if the trends he sees continue to be exacerbated by a long global recession, he may be right that the shipping-led product globalization we’ve seen across the past 40 years may be firmly in decline.

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You can find out much more about all of these transportation industries via our Hoover’s industry pages:

• Marine Shipping
• Trucking
• Railroads

(And, if you’re in the market for premium content, you can find out much more by contacting us about a Hoover’s subscription.)

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Photo by nix-pix, used under a CC-No Derivative Works license.

Category: Globalization, Transportation