Junkyard Planet (Blog Assignment)

Chris Monsour
Chuck Stull
Economics of Global Travelers
14 May 2014

a. The vast majority of US scrap metal goes to China instead of India because it is cheaper. Desperate demand in China makes shipping to China more cost-effective than anywhere else, especially India, even if India has cheaper labor costs. India does not export enough products to the West Coast of the United States to create a strong demand for shipping routes going back and forth from California to India. Because of this, "the shipping companies aren't going to have much incentive to offer discount shipping rates for containers moving from Los Angeles to Mumbai."

b. The second page of this article explains the unsettling trade imbalance between China and other places around the world like the United States and Europe, mainly attributed to the fact that China is producing more and more while other places in the world such as the United States and Europe are consuming more and producing less and less. These trade imbalances not only harm economies to an extent, but they especially add stress to the shipping companies that are in the business of moving goods back and forth around the world. If China is exporting goods to the US but the US isn't exporting the same amount back to China, the shipping company has to figure out the cheapest and quickest ways to move their containers back to China so they can be restocked with more goods to ship back to the States. Shipping empty containers will damage the profitability of the companies. To most, including myself, this problem wouldn't have really crossed our minds. After reading more into it, the backhaul problem proves to be a pressing issue.

c. Geographic topics in this article mirror some of the geographic points brought up in Jared Diamond's, "Why Did Human History Unfold Differently On Different Continents For The Last 13,000 Years?" As said in this article, it doesn't make sense to ship containers to remote areas of the world when there isn't a huge chance for repeated business in that region. For example, the India to US route. Because India doesn't export many goods to the US, it doesn't make sense for shipping companies to frequent that route, both for cost-related reasons and geographic reasons. The Rocky Mountains and other geographical barriers in the US make it more expensive to ship something from LA to Chicago than from LA to China. Much like the Diamond article, people and industries flourished in the places that were accessible, popular, and offered opportunity for growth. This is exactly why massive sea ports pop up in the locations they do and it is also why there are certain shipping routes around the world that will always stay in place.