Six years ago, early in my tenure at Berkman, I wrote a blog post that tried to calculate the cost of shipping water from a bottling plant in Yaqara, Fiji to Cambridge, Massachusetts. I was interested in unpacking the everyday mystery of container shipping – how is it possible that we can sell a product for a couple of dollars a bottle despite shipping it 8,000 miles around the world – and in the odd idea that atoms might be more mobile than bits, as we get lots more Fiji water in the US than Fijian music, movies or news.
My estimate then was that a 40′ container filled with Fiji water would cost roughly $5000 to deliver from Suva, Fiji to Cambridge – I came up with the estimate based on a variety of statistics about international shipping that I bent and welded into a Fiji/Massachusetts estimate. At $5000 a container and 24,000 kilograms per 40′ box, it would cost $0.21 for a liter bottle of Fiji water to make the 8,000 mile journey. Not free, but a small fraction of the retail price of a bottle of “premium” imported bottled water.
I had occasion to return to this blog post today – I’m working on a book, and this Fiji example features in it. So I decided to recalcuate the numbers and see if I could find an answer that’s more defensible and satisfying.
Turns out I got a few details wrong. First, the 24,000kg figure applies to smaller, 20′ containers – the limit for 40-footers is 30,480kg. And the price from Suva to Cambridge for a 40′ container is just slightly higher – $5,540.30. That comes out to $0.18 per liter, three cents less than I calculated six years ago.
These new figures come from my new favorite toy, Maersk’s online shipping rates calculator. The Danish superfirm A.P. Møller – Mærsk Gruppen is the largest shipping group in the world, with offices in 135 countries, 120,000 employees, and roughly 600 container ships, capable of carrying more than 2 million 20′ containers at any given time. They’ve also got a thoroughly badass IT system, which they’ve now made accessible to the general public.
Okay, it’s not exactly Amazon.com, or even Fedex. To use Maersk’s calculator, you need to register with the site, download a client browser certificate and accept three server certificates from Maersk before you can access their secure site. But once you do, it’s just a few short clicks before you can calculate the cost of shipping a 20′ container of “umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, riding-crops and parts thereof” (yes, that’s one of the available categories, along with “bone and meal”, “ores, slag and ash” and “straw, esparto, other plaiting materials and articles of straw, esparto, other plaiting materials) from Auckland to Dubai: $2451.02
The main thing I’ve found playing with Maersk’s calendar: distance doesn’t matter as much as demand. Americans buy a lot of atoms from China. The Chinese don’t buy nearly as many from the US. A 40′ container filled with household goods, shipped from Shanghai to Houston, TX costs $6169.93. Reverse the trip and ship the same container from Houston to Shanghai and the cost is $3631.07. That’s because 60% of containers on ships coming from the US to China are empty, which means Maersk and other shippers are desperate to sell container space.
(The 2006 New York Times article that offers that 60% empty container statistic suggests that lots of full containers are coming to China from raw-materials rich countries like Australia, Brazil and the Middle East. That suggests we should see the opposite pattern – expensive containers from Sao Paolo to Shanghai and cheap ones in the other direction. Nope. $5101.70 from Shanghai to Sao Paolo, $1930.59 in the other direction. Perhaps containers from China to Brazil are riding the same ships as those to the US and paying the same premiums?)
Maersk also offers a set of maps that help you get a sense for how these trade routes actually work. It’s a four day trip from Suva to Auckland on the Pacific Islands Express, and then the bottles of Fiji water are transfered to OC1, the Oceania Americas Service. The Pacific crossing is a long one – 18 days to the Panama Canal, a quick stop in Cartagena, and we’re in Philadephia 25 days out of Auckland. It’s a truck ride from Philly to Cambridge, and that short hop is responsible for $950 of the total transit cost.
As I poke through these maps, schedules and tariffs, I feel like I’m glimpsing a secret world. Part of it may come from the sheer poetry of the names. Shipping routes include “The Boomerang” and the “The South China/Australia Yo-yo” and connect ports like Tin Can Island (Apapa, Nigeria, the main port for Lagos). And part comes from the sense that these routes and rates, the infrastructure that supports an economy where transPacific bottled water is possible, are the ley lines of globalization, radiating a mysterious and sinister power.
This post originally appeared on Ethan's excellent blog My Heart's In Accra.
"mysterious and sinister power"? Not really. This is just business and most of it is pretty obvious once you start looking into it.
The rates you're getting off of Maersk's site are only the published tariffs. No one actually pays these rates. Nearly everyone who ships internationally buys through a freight forwarder. Every year the forwarder buys up big, bulk consignments of space with the steamship lines (like Maersk) at a big discount and then re-sells portions of that space to people who want to ship goods (shippers).
Why does this happen? First steamship lines hate dealing with a lot of "little" customers and frankly aren't very good at. Second because the forwarder bought space as such a big discount they can actually re-sell to shippers at a much lower rate than what the steamship line publishes. Call a forwarder or check out one of their sites for more accurate rates.
I sing it as a song, the Intermodel Multinodal Yodel, remembering as I sing the immortal words of David Rockefeller, "Human order is economic order."
Commodity raw materials are generally shipped in dry bulk ships, not containers. So you wouldn't expect the prices of containers from commodity countries (Brazil, Australia etc) to be impacted.
It boggles the mind what occurs when transportation costs are cheap!
I suspect you'll find that the transport pricing structures are set up with some heavy-duty and not very obvious mathematical algorithms (as with oil spot pricing), whose intricacies are beyond the purvue of mere mortals like you and me.
Still, you have to wonder whether a few common sense tweaks can't be applied to the system when (according to Bob Hopkins) it allows several thousand tonnes of potatoes to be shipped from UK to Germany in return for... several thousand tonnes of potatoes!
Has anyone proposed a one-way disposable or collapsible container system?