The Custom-House

Baltic Dry Index down 90% since May

Baltic Dry Index 2004-23OCT08: Bloomberg

The Baltic Dry Index is a standard measure of the cost of moving dry bulk commodities by sea.  The drop in 2008 (shown in more detail below) reflects a dramatic decline in the demand for international shipping.  This is a 90% decline in this index since May (`Biggest Bubble of Them All' Is Globalization: Chart of the Day )

Opportunity knocks: let's get rid of the anti-trust exemption for ocean shipping companies

Source: Wikipedia

Ocean shipping companies enjoy limited immunity from U.S. anti-trust laws and cooperate in setting freight rates. To make an agreement to fix prices above competitive levels work, you need to limit the quantity of shipping supplied.  U.S. exporters claim that shipping supply limits have been constraining U.S. exports.

John Frittelli of the Congressional Research Service sees the re-authorization of the Federal Maritime Commission as an opportunity to re-examine this self-imposed handicap (not exactly his words): Reauthorization of the Federal Maritime Commission (FMC): Opportunity to Reexamine the Congressionally Mandated Antitrust Exemption for Ocean Liner Carriers?:

Keeping the sea lanes open

The Canadians, French, and U.S. fight Somali piracy:  HMCS Iroquois, supported by U.S. helicopters, takes on comes to the aid of an Italian freighter carrying Ukranian barley to Iran: Taking on pirates off Somalia.  Meanwhile French special forces free two hostages from Somali pirates. The Germans are in the neighborhood, but haven't been able to intervene: Deutsche Marine cannot deal militarily with Somali piracy.

The E.U. sets up a special unit to fight Somali piracy: EU to pool anti-pirate efforts off Somalia:

Hat tip Mark Collins, The Torch.

The Arctic Bridge

Here's a YouTube Video of a November 2007 Canadian Broadcasting Corporation (CBC) story on the proposed "Arctic Bridge" shipping route between Murmansk and Churchill Manitoba (on Canada's Hudson Bay):

The Arctic Bridge

Map is from the New York Times.

"The Arctic Bridge" is the name its advocates give to the shipping route from Murmansk to Churchill Manitoba, in Hudson Bay (in the lower portion of the map).  The route is not fully developed, but this summer the Murmansk Shipping Company is sending its second ship across it in two years: Russians hope to show potential of 'Arctic' Bridge.:

Rising Fuel Prices And Changes in the Places Where Things Are Made

A few days ago Jeff Rubin and Benjamin Tal with the Canadian International Bank of Commerce created a stir with a briefing paper on the impact rising fuel prices were likely to have on restricting trade: Will the Rising Price of Oil Choke Off Global Trade? (The Custom-House, June 4)

Andrew Leonard at Salon asked, "Who needs tariffs when you have expensive oil?"(June 6). Leonard noted that services delivered electronically wouldn't be affected, and observed...

...that blue-collar workers who make physical things in the West will stand to benefit, newly protected from foreign competition by energy tariffs, while white-collar workers who live off their wits will still feel the immense pressure of competing with everyone else in the world.

Rubin and Tal discussed sea transport; Menzie Chinn added that airfrieght would also be affected: More on De-Globalization: Oil, Transport Costs and Inflation (Econbrowser, June 4).

This morning Timothy Aeppel reports picks up the discussion for the Wall Street Journal.  High fuel prices increase the cost - and the relative costs - of moving goods (see graphic) and create incentives to move manufacturing operations closer to markets.  Aeppel focuses on shifts from China to North America.: Stung by Soaring Transport Costs, Factories Bring Jobs Home Again (Wall Street Journal, June 13).  Aeppel focuses on the way manufacturers see the changing incentives, rather than on analytical estimates of actual impacts. 

Will the Rising Price of Oil Choke Off Global Trade?

Jeff Rubin and Benjamin Tal, researchers with the Canadian International Bank of Commerce World Markets, think it might: Will Soaring Transport Costs Reverse Globalization?.

Here's a summary from the latest issue of Bridges:

Supply and Demand for Arctic Sea Transportation

The authors of Arctic Shipping 2030 (Arctic Shipping 2030: From Russia with Oil, Stormy Passage, or Arctic Great Game?, 2007, Econ) lay out factors that may affect the volume of Arctic maritime traffic in 2030.  Each factor operates by influencing either the position of the supply curve for transportation services (the marginal cost of an increment of transportation services), and/or the position of the demand curve (the marginal benefit of an increment). 

Here's my summary:

Open-skies 2

The U.S. and the EU start a second stage of negotiations today to reduce restrictions hobbling international air transportation: Open skies negotiators check in for round two (Kevin Done and Andrew Bounds, Financial Times, May 14).   

From Atlantic to Pacific, Will the Traffic Be Terrific?

Not through Canada's Northwest Passage, reports David Ljunggren for Reuters: Navigating the Northwest Passage (via Globe and Mail, October 4, 2007):