Shipping Costs Threaten Globalization

New York Times, August 3rd, 2008

Interesting article in the New York Times today regarding changes in globalization trends as a result of high transportation costs. This is something I started thinking about last year as gas prices started to increase. When your business plan depends on low fuel costs which allow you to have raw materials and finished goods shipped all the way across the world, what happens when low fuel costs no longer exist?

From a local perspective, this may allow a resurgence of local manufacturing and production, which could be good for the Chicago region, especially given Chicago's central role in the US rail network. The Midwest, as a whole, may lose a little bit of the rust in its belt.

Obviously, the downside is that it'll be more expensive for exporters based here to ship goods overseas. It'll take several years before we see how this trend pans out.