Posts Tagged ‘trade’
“We shall not cease from exploration, and the end of all our exploring will be to arrive where we started and know the place for the first time.”*…
… a circular journey of discovery that can be accomplished much more quickly today than 110 years ago…
In 1914 John G. Bartholomew, the scion of an Edinburgh mapmaking family and cartographer royal to King George V, published “An Atlas of Economic Geography”. It was a book intended for schoolboys and contained everything a thrusting young entrepreneur, imperialist, trader or traveler could need. As well as the predictable charts of rainfall, temperature and topography, it had maps showing where you could find rubber, cotton or rice; maps showing the distribution of commercial languages, so that if you wanted to do business in Indonesia you knew to do so in Dutch; and maps showing the spread of climatic diseases, so that if you did find yourself in Indonesia you knew to look out for tropical dysentery. It also contained the map you see here, which told you how long it would take to get there from London: between 20 and 30 days.
This is an isochronic map – isochrones being lines joining points accessible in the same amount of time – and it tells a story about how travel was changing. You can get anywhere in the dark-pink section in the middle within five days – to the Azores in the west and the Russian city of Perm in the east. No surprises there: you’re just not going very far. Beyond that, things get a little more interesting. Within five to ten days, you can get as far as Winnipeg or the Blue Pearl of Siberia, Lake Baikal. It takes as much as 20 days to get to Tashkent, which is closer than either, or Honolulu, which is much farther away. In some places, a colour sweeps across a landmass, as pink sweeps across the eastern United States or orange across India. In others, you reach a barrier of blue not far inland, as in Africa and South America. What explains the difference? Railways.
In the early 1840s an American dry-goods merchant called Asa Whitney, who lived near New York, travelled to China on business. It took 153 days, which he thought a waste of time. When he got back he began lobbying for a transcontinental railroad connecting Lake Michigan with Oregon, which had a trade deal with China. The railroad, he thought, would cut the journey time to China to about 30 days and open up the market. Similarly, the British invested so heavily in the Indian railway that between 1860 and 1880 it extended from 838 miles to 15,842 miles. If you compare this isochronic map to one from the 1870s, by Francis Galton, you see the difference. Bombay is quickly accessible by sea; the rest of India less so. Likewise, there is no spit of pink reaching across the Russian Empire on Galton’s map, because there was no Trans-Siberian Railway. As the geographer L.W. Lyde says in his introduction to Bartholomew’s atlas, “isochronic distances…change with every additional mile of railway brought into use.” What was the one thing a young entrepreneur needed most? A train ticket…
“Time Travel,” by Simon Willis in Intelligent Life/1843 Magazine
That was then. Now entrepreneurs and other travelers are reaching for a different kind of ticket– now we have aviation…
In late 2015 the Rome2Rio team spotted a beautiful travel map on Intelligent Life. The map, which was published by venerable mapmaker John G. Bartholomew in 1914, illustrated how long it would take to travel from London to destinations across the globe.
We were excited to see such a fantastic visualisation of travel times and we were curious to see what had changed in the 100-odd years since; especially at such a world-changing juncture in travel technology. The first commercial flight took place on January 1st, 1914, so travel times started changing drastically soon after this date.
We created a new map using Rome2Rio’s routing engine and unique repository of transport data… It is clear that travel times have improved immensely. Modern air, rail and road infrastructure has led to a ten-fold increase in travel times across the dark pink parts of the map.
Globalisation is also readily apparent. Journeys that would have taken 10 to 20 days by boat and train have been replaced by the speed of air travel, with most of the world now accessible within ½ to 1 day. This change is most apparent in Asia. In 1914 reaching Beijing, Shanghai, Hong Kong and Tokyo would take up to 40 days. Now, these powerhouses are a day’s travel from London.
Island destinations have benefited from the advances in technology as well. Locations such as the Bahamas, Bermuda, Seychelles, Mauritius and Madagascar are all with ½ a day’s travel, suggesting demand for direct flights by holiday makers. For those who prefer colder locales, visiting the world’s coldest city, Yakutsk, is a breeze in comparison to the area surrounding it; from London, it takes ¾ of a day…
“Time flies? According to these maps it does,” from Rome2Rio
What a difference a century– and a new technology– can make…
* T. S. Eliot, “Little Gidding,” The Four Quartets
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As we fasten our seatbelts, we might recall that it was on this date in 1935 that was Amelia Earhart became the first person successfully to fly from Honolulu, Hawaii to Oakland, California. It had been attempted numerous times before by other pilots who’d been foiled by mechanical trouble; Earhart had none. Indeed, it is said that during the final hours of her flight, she relaxed to the broadcast of the Metropolitan Opera from New York.
Sadly it was just two year later that she went missing while attempting to fly from Lae Airfield in Papua New Guinea to Howland Island (about 1,700 nautical miles southwest of Honolulu). She was never seen again.
“The way we eat has changed more in the last 50 years than in the previous 10,000″*…
And that change is coming for China… Even as trade tension tighten between China and the U.S., foreign investment in China drops, and talk of decoupling grows (see, e.g., here and here), one sector of American business is doubling down on the Chinese market…
There’s been no shortage of tough news for China’s economy as some of the world’s biggest brands consider or take action to shift manufacturing to friendlier shores at a time of unease about security controls, protectionism and wobbly relations between Beijing and Washington.
Count Adidas, Apple and Samsung among those looking elsewhere.
But as a tumultuous 2023 for the Chinese economy comes to a close, there has been at least one bright spot for Beijing when it comes to foreign investment: American fast-food chains have decided a market of 1.4 billion people is simply too delicious to pass up.
KFC China’s parent company opened its 10,000th restaurant in China this month and aims to have stores within reach of half of China’s population by 2026. McDonald’s is planning to open 3,500 new stores in China over the next four years. And Starbucks invested $220 million in a manufacturing and distribution facility in eastern China, its biggest project outside the U.S.
This is surely not what Chinese President Xi Jinping had in mind as he made the case to American CEOs about the upside of China’s “super-large market” last month while he was in San Francisco for a summit of world leaders. The investments in fast food and other consumer goods, while Washington is curbing exports of computer chips and other advanced technology, don’t fit into China’s own blueprint for modernizing its economy…
Unlike manufacturing plants, fast-food franchises are relatively easy to set up and break down and don’t have to worry about IP security/theft. So, even as trade policy hardens and manufacturing/tech companies lean away, “American fast-food companies find China’s 1.4 billion population too delicious to resist,” from @BusinessInsider.
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As we supersize that, we might spare a thought for Fred Turner; he died on this date in 2013. One of the first employees hired by McDonald’s entrepreneur Ray Kroc, Turner rose quickly through the ranks, and succeeded Kroc as CEO in 1977.
Turner founded Hamburger University in 1961 and was a co-founder of Ronald McDonald House Charities.
“Clothes make the man. Naked people have little or no influence on society.”*…
On the defining characteristic of civilization: Peter Frankopan, Marie-Louise Nosch, and Feng Zhao on the history of textiles, with special emphasis on silk…
Some say that history begins with writing; we say that history begins with clothing. In the beginning, there was clothing made from skins that early humans removed from animals, processed, and then tailored to fit the human body; this technique is still used in the Arctic. Next came textiles. The first weavers would weave textiles in the shape of animal hides or raise the nap of the fabric’s surface to mimic the appearance of fur, making the fabric warmer and more comfortable.
The shift from skin clothing to textiles is recorded in our earliest literature, such as in the Babylonian Epic of Gilgamesh, where Enkidu, a wild man living on the Mesopotamian steppe, is transformed into a civilised being by the priestess Shamhat through sex, food and clothing. Judaism, Christianity and Islam all begin their accounts of their origins with a dressing scene. A naked Adam and Eve, eating from the forbidden tree, must flee the Garden of Eden. They clothe themselves and undertake a new way of life based on agriculture and animal husbandry. The earliest textile imprints in clay are some 30,000 years old, much older than agriculture, pottery or metallurgy…
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… The technology behind silk had long been a historical puzzle. The recent archaeological discovery of a 2nd-century BCE Han dynasty burial chamber of a woman in Chengdu has now solved it. Her grave contained a miniature weaving workshop with wooden models of doll-sized weavers operating pattern looms with an integrated multi-shaft mechanism and a treadle and pedal to power the loom [see illustration above]. Europeans wouldn’t devise the treadle loom, which enhances power, precision and efficiency, for another millennium.
This technology, known as weft-faced compound tabby, also emerged in the border city of Dura-Europos in Syria and in Masada in Israel, dating to the 70s CE. We can, however, be confident that the technique known as taqueté was first woven with wool fibre in the Levant. From there, it spread east, and the Persians and others turned it into a weft-faced compound twill called samite. Samites became the most expensive and prestigious commodity on the western Silk Roads right up until the Arab conquests. They were highly valued international commodities, traded all the way to Scandinavia….
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… The word ‘text’ comes from Latin texere (‘to weave’), and a text – morphologically and etymologically – indicates a woven entity. We can therefore say that history starts not with writing but with clothing. Before history, there was nudity, at least in the Abrahamic tradition; clothing thus marks the beginning of history and society. The representation of nudity as part of a wild and pre-civilised life mirrors the European colonial perspective of the naked human as ‘wild.’
Across the world today, there are two main ways to dress: gendered into male and female, and stylistically into clothing tailored to fit the body, or draped/wrapped around it like the Roman toga or the Indian sari. Fitted clothing dominates globally, especially after the Second World War, with blue jeans and T-shirts now ubiquitous across all continents.
Today, a T-shirt on sale in any shop around the world is the result of a finely meshed web of global collaboration, trade and politics. From cotton fields in Texas or Turkmenistan, to spinning mills in China, garment factories in Southeast Asia, printers in the West, and second-hand clothing markets in Africa, a T-shirt travels thousands of kilometres around the world in its lifetime. On average, a Swede purchases nine T-shirts annually, and even if they are made to last 25 to 30 washes, consumers tend to discard them before. Greenpeace found that Europeans and North Americans, on average, hold on to their clothes for only three years. Some garments last only for one season, either because they fall out of fashion, or because the quality of the fabric, tailoring and stitching is so poor that the clothes simply fall apart.
This is the impact of fast fashion that has taken hold since the beginning of the 21st century: for millennia, clothing had always been expensive, worth repairing and maintaining, and made to last. Along with the acceleration of consumption came falling prices and an ever-narrowing margin for profit. The fast-fashion business model requires seamless global trade, inexpensive long-distance transportation, cheap flexible labour and plentiful natural resources. That equation is changing in a world that is warming and where trade barriers are coming up. The future of fabrics, textiles and clothing is bound up in the great themes of the present – and the future…
Eminently worth reading in full: “A silken web,” from @peterfrankopan and @NoschMarie in @aeonmag.
For more, see the full UNESCO report from a chapter in which (“The World Wide Web”) this was adapted: Textiles and Clothing Along the Silk Roads (2022)
* Mark Twain
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As we dress, we might recall that it was on this date that American audiences in America first encountered a heroine whose costumes went from regal to humble then back to regal: Snow White and the Seven Dwarfs premiered. An animated musical fantasy film produced by Walt Disney Productions and released by RKO Radio Pictures, it was based on the 1812 German fairy tale by the Brothers Grimm (here and here), it is the first full-length cel animated feature film and the first Disney feature film.
“As people who deal with the ocean you must see the irony. We are facing a shortage on a planet whose surface is covered two-thirds with water.”*…
The Panama Canal has become a vital link in the web of global trade, especially that trade that connects Asia and the U.S. U.S. commodity export and import containers account for 73% of Panama Canal traffic, representing about $270 billion in cargo. That trade is now constrained, as water shortage has reduced the Canal’s throughput…
For months, the global shipping community has been closely watching the Panama Canal, as a severe drought has threatened water levels and forced the Panama Canal Authority to enact restrictions on the maximum weight and size of vessels that can transit its waters. The impact of the Panama Canal Authority’s restrictions has been negligible, as lower shipping demand offset any vessel weight restrictions–until now…
It takes almost 200 million gallons of water for every ship to transit the Panama Canal. And, in a drought, that’s become a problem. The Panama Canal operates with a lock system that is fed via freshwater drawn from Lake Gatun. The water flows from the lake, the high point of the canal, down through the lock system and is then discharged to sea. While the canal’s newer locks can recycle about 60% of its water, it still requires a tremendous amount of water for every ship to pass through.
At this time of year, the lake’s average water level should be around 87 feet, but the lake currently sits at 81.8 feet and is forecasted to remain at or near that level through January. To make matters worse, the lake is only receiving 70% of the intake it needs (largely from rain) to satisfy the canal’s water usage.
To combat this, about a year ago the Panama Canal Authority began limiting the draft of vessels (the distance between the waterline and the deepest point of the boat) that are using the canal. The current draft limit is 44 feet (from a normal 50 feet). A lot of factors influence the draft of a vessel but the number one factor which can be controlled most readily is the vessel’s weight. For every one foot of draft reduction, a container ship has to reduce its weight by the equivalent of 300-400 TEU (at 14 tonnes of cargo). Therefore a six-foot reduction in draft equates to 1800-2400 TEU of reduction in vessel capacity.
As the reduction in vessel draft proved to not be enough to manage Lake Gatun water levels, the Canal Authority began to limit the daily transits of vessels. The canal normally sees 34 planned transits per day. This has been reduced to 24 transits and is forecast to reduce to 18 by February 1, 2024…
“What You Need To Know About the Impact of the Panama Canal on Global Logistics”
Consequently, shipping companies are faced with a thorny choice: They can risk waiting for days, pay a big fee to jump the line (currently running at $4-4.5 million per passage), or avoid the canal entirely by taking a longer route… any of which increase the cost of transit– a cost that likely to show up in prices…
… Shipping companies are set to incur heavy losses due to the bottleneck. Maersk, which is the second-largest shipping company in the world, said it was working to ensure the backlog did not disrupt its deliveries. “We follow the guidance from the Panama Canal and adapt our intake on relevant services in advance of the departure at origin. Maersk remains committed to minimizing disruptions to our operations,” it said in a press release. The Danish company moves more than four million TEU (Twenty Foot Equivalent Unit) vessels every year. In 2021, it saw its revenues reach $62 billion. Maersk added that the low water levels in the Panama Canal were a stark reminder of the climate crisis, and its ripple effect on global supply chains.
There is still no estimate of how much the Panama Canal jam will cost shipping companies, but the situation is a reminder of the 2021 crisis in the Suez Canal in Egypt. In that case, shipping companies suffered multi-billion dollar losses when the Ever Given container ship got stuck and blocked access to the canal…
“The economic impact of the Panama Canal jam: Inflation and shipping losses“
Capacity is down; time-to-market is up; and costs are rising: The Panama Canal is under environmental pressure.
See also: “Drought Saps the Panama Canal, Disrupting Global Trade” (gift article).
* Clive Cussler, Blue Gold
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As we deal with drought, we might recall that it was on this date in 1982 that a soil sample taken in Times Beach, Missouri, was found to contain 300 times the safe level of dioxin (c.f. Agent Orange). A byproduct of the manufacture of hexachlorophene (banned in 1972) by NEPACCO (the North Eastern Pharmaceuticals and Chemicals Company), the dioxin was meant to be stored securely onsite, but was eventually improperly disposed of in a trench in the facility, and by a local waste handler.
Times Beach– well over 2,000 residents– was completely evacuated and relocated early in 1983. The land that was once Times Beach is now Route 66 State Park. One building from the town still exists: the park’s visitor center was once a roadhouse from Times Beach’s glory days and was the EPA’s headquarters for the area.
“We hear all this talk about integrating the world economically, but there is an argument to be made for not integrating the world economically”*…
… and indeed, those arguments seem to be holding increasing sway. Tyler Cowan ponders the possible economic implications of a future in which global economic interdependence recedes– a future in which globe’s economies, freer of each other, don’t rise and fall with each other (as they largely have for decades) to the same extent…
Will we see less co-movement in global economic growth?
That is the question behind my latest Bloomberg column (soft pay wall). China is now, and looking forward, less of a common growth driver around the world. Oil price shocks may not be less important for humanitarian outcomes, but they matter less for many of the largest economies. America is now an oil exporter, and the EU just made some major adjustments in response to the Russia shock. More renewable energy is coming on-line, most of all solar.
The column closes with this:
In this new world, with these major common shocks neutered, a country’s prosperity will be more dependent on national policies than on global trends. Culture and social trust will matter more too, as will openness to innovation — and, as fertility rates remain low or decline, so will a country’s ability to handle immigration. A country that cannot repopulate itself with peaceful and productive immigrants is going to see its economy shrink in relative terms, and probably experience a lot of bumps on the way down.
At the same time, excuses for a lack of prosperity will be harder to come by. The world will not be deglobalized, but it will be somewhat de-risked.
Dare we hope that these new arrangements will produce better results than the old?
Or perhaps a more general rising tide was the only way many countries were going to make progress?
Marginal Revolution
Byrne Hobart reflects further…
When economies were tightly linked, growth in the US led to more demand for manufactured goods from China, which created more demand for raw materials from other parts of the developing world. But if that link is weaker, it’s entirely possible for there to be a boom in some places and a bust elsewhere. That probably increases the personal returns from global macro investing while decreasing its social return: when the world is closely-linked, there are massive positive externalities in predicting recessions, because there are so few places to hide. It’s comparatively less essential for the world to know that German is slowing down but growth in Indonesia is picking up, but it also means that macro questions are more tractable.
The Diff
* Arundhati Roy
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As we think tectonically, we might recall that it was on this date in 1865 that the U.S. first issued Gold Certificates.
Americans began to move out west in the first half of the 19th century. Banks started printing their own money to fund land purchases, and that quickly led to two problems: loose money-printing had a volatile effect on prices, and it became increasingly hard to tell what was counterfeit from what wasn’t.
To tackle these problems, the government decreed in the 1830s that it would only accept transactions in gold and silver. But of course, lugging metals around is nobody’s idea of fun. So in 1863, Congress paved the way for the first “gold certificates” to be printed two years later, in November 1865.
A gold certificate was, in effect, a form of paper currency backed by gold – although not entirely. The Treasury was allowed to issue $120 in gold certificates for every $100-worth of gold it held in its vaults…
MoneyWeek
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