Tuesday, February 11, 2014

Is it worth it?: Environmental impact of transportation across the global supply chain

The article http://www.fastcoexist.com/3016687/10-fascinating-facts-about-the-hidden-industry-that-touches-90-of-what-you-own discusses Rose George's new book, Ninety Percent of Everything. This book intends to provide a telling picture of the often-overlooked shipping and transportation component of the global supply chain. Ms. George suggests that customers are more concerned with the conditions of product production (e.g. fair labor practices, environment impact), and forget to consider these same dimensions when it comes to product shipment.

Shipping--the container industry in particular--enables the global supply chain to operate on enormous scale. The development of large container-carrying ships is impressive both as a stand-alone technological innovation, and as an illustration of globalization. The Financial Times video below contrasts pre-container shipping with today's technology, where "the only constraint is the size of the port."

Good shipping technology perpetuates remarkable practices: "Rather than fillet its own fish, it is cheaper for Scotland to send its cod 10,000 miles over to China to be filleted and returned to Scotland"*. When I consider the environmental impact of shipping ("In 2009, the largest 15 ships emitted as much greenhouse gases as 760 million cars--or about two cars for every American."*), I am disturbed by the example above, and by the overall extent of the global supply chain.

Clearly, in order fillet its own fish, Scotland would have to build its own facilities. Perhaps for a small nation with low demand, it is more cost-effective to transport fish to China, with existing factories and low labor costs. However, it seems that if Scotland were to build its own factory, it would both provide employment opportunities for its citizens, and no longer damage the environment through shipping. Although the net impact on the environment requires further analysis (perhaps building and maintaining a new factory versus using existing ones in China is more damaging to the environment), I think shipping should be challenged from the environmental policy perspective. I would support restrictive trade laws and tariffs that favor low-environmental impact production and transportation.

Question: Do you believe rising energy prices would deflate the global supply chain and encourage home production?


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