Shipping Costs Start to Crimp Globalization

From the New York Times courtesy of Eschaton:

The industries most likely to be affected by the sharp rise in transportation costs are those producing heavy or bulky goods that are particularly expensive to ship relative to their sale price. Steel is an example. China’s steel exports to the United States are now tumbling by more than 20 percent on a year-over-year basis, their worst performance in a decade, while American steel production has been rising after years of decline. Motors and machinery of all types, car parts, industrial presses, refrigerators, television sets and other home appliances could also be affected.

Plants in industries that require relatively less investment in infrastructure, like furniture, footwear and toys, are already showing signs of mobility as shipping costs rise.

Until recently, standard practice in the furniture industry was to ship American timber from ports like Norfolk, Baltimore and Charleston to China, where oak and cherry would be milled into sofas, beds, tables, cabinets and chairs, which were then shipped back to the United States.

But with transport costs rising, more wood is now going to traditional domestic furniture-making centers in North Carolina and Virginia, where the industry had all but been wiped out. While the opening of the American Ikea plant, in Danville, Va., a traditional furniture-producing center hit hard by the outsourcing of production to Asia, is perhaps most emblematic of such changes, other manufacturers are also shifting some production back to the United States.

And

One likely outcome if transportation rates stay high, economists said, would be a strengthening of the neighborhood effect. Instead of seeking supplies wherever they can be bought most cheaply, regardless of location, and outsourcing the assembly of products all over the world, manufacturers would instead concentrate on performing those activities as close to home as possible.

Much more here.

Okay, I guess there's some silver lining here after all.

That is, I don't expect rising shipping costs to end the employment free fall the US has been experiencing throughout the Bush years, but I do expect that good, old school, middle class manufacturing jobs might see something of a return. Many of these large product manufacturing jobs are in already unionized industries, excluding, of course, furniture jobs in the anti-union South, but even those are decent jobs relative to the service industry McJobs with which they have been replaced.

Don't get me wrong. Things will continue to hurt pretty badly for most American workers--I don't think outsourcing of manufacturing is ending by any means; the article mentions Mexico as a likely source for new North American manufacturing, which means the race to the bottom game in terms of wages can still be played to a great extent by US capitalists. But as long as the energy crisis continues, a small number of Americans will probably be better off than they were beforehand.

If debt and inflation don't pull them under first.

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