Posts Tagged ‘international trade’

Chicago 2016 Had its Rewards, But Also Risks

Wednesday, October 7th, 2009

So Chicago was eliminated in the first round of International Olympic Committee voting as the host city for the 2016 Summer Olympics, a source of great surprise to many, particularly in light of Barack Obama making the final pitch personally.chicago202016

Still, one thing bears repeating:  no city hosting the games has ever made money from the Olympics. Los Angeles’ $233 million surplus only took direct expenses into account; it did not include indirect expenses such as security and infrastructure.  Montreal took 30 years to pay off their Olympic debt.  Nagano, Japan’s Olympics were so costly and controversial that the city’s Olympic organizers destroyed the games’ financial records.

“There has never been an Olympic Games that has made a profit,” notes Robert Barney, director of the International Centre for Olympic Studies at the University of Western Ontario and co-author of Selling the Five Rings:  The International Olympic Committee and the Rise of Olympic Commercialism.  Add in all costs and revenues “including federal allotments, state allotments, it’s always been that a debt has to be paid somewhere.”

On the plus side, Chicago 2016 would have been a tremendous boost to the city’s international trade, (though it would have impacted tourism only slightly).  Then there’s the unquantifiable brand enhancement.  Chicago 2016 might have been the catalyst to wipe away the moniker of the City of Al Capone forever.

In the spirit of good sportsmanship, we send our congratulations to the host city of the 2016 Summer Olympics – Rio de Janeiro.  The first South American city to host the games, few in Chicago can begrudge Rio its victory.

High Costs Could Impact Shipping Routes

Wednesday, September 24th, 2008

Two trends in international trade worth highlighting:

American exports are booming, thanks to the dollar’s current weakness.  This considerable increase in volume has made it virtually impossible for U.S. manufacturers to get space on container ships within a four-week window, especially for products shipping from the ports of Los Angeles or Long Beach to any Pacific Rim destination.  To illustrate the scope of the change, container space from these ports was available on demand just one year ago.  And, according to a recent Reuters article, waiting times for cargo space have jumped from two days to three weeks on the East Coast.

Fast-rising transportation costs that are a direct result of the cost of fuel is another important logistics trend – one that could negatively impact globalization.  According to an August 2 article in the International Herald Tribune by Larry Rohter, shipping a single loaded 40-foot container from Shanghai to the United States has soared to as much as $8,000 per unit, compared with just $3,000 earlier in the decade.  Additionally, there are cost add-ons, primarily in the form of fuel surcharges and government-mandated fees.  To save on fuel costs, container ships have shaved their top speeds by nearly 20 percent, which means it takes longer for products to reach their intended markets.

Shipping to and from Prince Rupert in British Columbia is slightly less costly, because the distance to Asian ports is shorter than from Los Angeles or Long Beach.  Still, space amounts to several thousand dollars per container.

“If prices stay at these levels, that could lead to some significant rearrangement of production, among sectors and countries,” said C. Fred Bergsten, author of The United States and the World Economy and a director of the Peter G. Peterson Institute for International Economics in Washington.  “You could have a very significant shock to traditional consumption patterns and also some important growth effects.”

A far better alternative could be to ship to and from Asia from the southern border regions, where the going rate is approximately $800 per loaded container.  That price differential could potentially lure companies to move production facilities to Mexico or the Southwestern United States – primarily Texas.  This would give them the opportunity to leverage the more attractive shipping rates through the growing Mexican ports of Lazaro Cardenas and Punto Colonet.