Friday, June 6, 2008

High Fuel Prices may Impact Trade

Following links from Paul Krugman to Econbrowser leads to some interesting information about raising fuel prices and shipping. From a CIBC report, The New Inflation (pdf) from May 08:
Recent changes in transportation have led to increased
sensitivity to higher energy prices. Most notable of these
changes is the massive trend towards containerization
that effectively makes shipping costs more vulnerable to
swings in fuel costs. Container ships can be unloaded
much faster than break cargos so they spend much more
time at sea than in ports.
Another factor is speed. The shift to container ships has
increased the importance of ship speed. Over the past
two decades, container ships were built to go faster than
bulk ships and since container ships were steadily gaining
share, the world’s fleet speed picked up. But greater speed
requires greater energy, as it does in all other modes of
transport. In global shipping, the increase in ship speed
over the last fifteen years has doubled fuel consumption
per unit of freight.

Container ships can dial down a notch or two, do economist know that? From my post Higher fuel prices means ships are slowing down:
"A 10% speed reduction can cut fuel consumption by 30%, which means a ship with a daily bunker fuel consumption of 250 tonnes can cut its fuel bill by about $40,000 per day when the price of fuel reaches $533 per metric tonne (pmt)."

That is from Fuel saving strategy causing rush on ships

The site is Sustainable Shipping.


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