Random factoid from a recent New Yorker article (not online, unfortunately) on, among other topics, the international shipping business:
For a pair of shoes made in China and sold in this country for fifty dollars, only about seventy-five cents of the retail cost derives from transportation. And the main costs in international shipping come from friction in the pipeline, particularly at the points of ship loading and unloading. [Emphasis added.]
Wow: shipping shoes all the way across the Pacific accounts for well under 2 percent of their retail price. And most of the transportation costs cover things other than fuel: labor, capital, financing, etc.
So for finished goods shipped over long distances, the fuel costs of transportation are probably not much more than a rounding error.
Obviously, shoes are pretty high-value goods. If you’re shipping lower-valued goods — raw commodities, for example — the transportation costs are likely to figure more prominently in the final price. Still, it seems that the energy costs of shipping are generally pretty small, compared with the cost of goods themselves.
Which may explain why, even with diesel prices rising at least as fast as the price of gasoline, we’re using more diesel than ever.
For gasoline, per-capita consumption in the Pacific Northwest (which is the only place I know anything about) has declined since 1999, when gas prices were particularly low. Higher prices do seem to be making a dent, however slight, in our gas consumption.
But diesel shows no such sensitivity to price: diesel consumption has risen steadily in recent years, both per capita and total, even as the price of a gallon of diesel has basically tripled (not counting inflation). Apparently, even large increases in the cost of diesel barely affect the final price of goods — so businesses don’t mind spending a few extra pennies on fuel to get cheaper goods from farther and farther away.
Which presents quite the conundrum. Long distance shipping is a substantial source of greenhouse gas emissions and air pollution, and spreads invasive species, among other ills. (If you’re interested in the skinny on the overall environmental impacts of international shipping, this article is a pretty good place to start.) But with long-distance shipping not particularly sensitive to fuel prices, the standard economic tools to reduce consumption — things like rising fuel prices, or even taxes on oil or carbon — don’t seem to work. We’ll need other strategies; but as to what those might be, I have no particular insight.
