The Sunday, August 3rd New York Times featured an article titled, “Shipping Costs Start to Crimp Globalization.” The piece cites “what some economists call a neighborhood effect — putting factories closer to components suppliers and to consumers, to reduce transportation costs.”
“Cheap oil, the lubricant of quick, inexpensive transportation links across the world, may not return anytime soon, upsetting the logic of diffuse global supply chains that treat geography as a footnote in the pursuit of lower wages,” says Times writer Larry Rother. These effects are causing businesses with domestic customers to rethink their suppliers of everything from heavy manufacturing equipment to food to furniture production. However, with the silver lining comes another pitfall: though domestic producers are beginning to concentrate more operations in the U.S. again, businesses who rely heavily on exporting to build their bottom line face an even bumpier road ahead.
-Chris Carmody
Director, Sustainable Business Initiative
Institute for Sustainable Development
www.gogreenplus.org
Filed under: Performance | Tagged: neighborhood effect-gas prices-global supply chain-'Shi
