by Alex Evans | Jan 15, 2008 | Climate and resource scarcity, Global system
A coalition of international shipping companies have banded together to create a ‘Container Shipping Information Service’ to counter what they worry may be an increasingly negative image. As FT coverage explains,
There has been particularly strong criticism in Hong Kong – which, with neighbouring Shenzhen, handles about 28 per cent of world container movements – and southern California, which handles 40 per cent of US container imports. Research published last year claimed 60,000 people died each year as the result of ships’ high levels of sulphate emissions.
The shipping lines are also nervous of growing calls in the US for all containers to be searched before being sent to the US, because of the perceived threat of a container-borne terrorist weapon. Information put out by the service … will stress the benefits brought by container shipping, particularly the sharp reduction in global transport costs achieved by the industry.
One of the bits of data posted on the site is a graph comparing the CO2 emissions from moving a ton of cargo 1 kilometre with the emissions that would result from moving it instead by rail, road or air. For shipping, the figure is 12.97 grammes of CO2 – as opposed to 17 grammes for rail, 50 for road and 552 for air. Presumably, the shipping companies involved think this constitutes a good argument in shipping’s favour. But in fact, the surprise is that shipping’s emissions are so high relative to the other three transport modes, rather than so low.
It’s no great shock to see aviation emissions outstripping shipping’s by such a big margin – but remember that air freight is used for much smaller volumes and weights of cargo, usually of highly perishable goods. The fact that shipping emissions are all of two thirds of those of rail, though – and well over a fifth of those of heavy goods vehicles on the road – is really surprising.
I would have expected shipping to be a great deal more efficient than that, given the massive volume of cargo that a 3,700 TEU container ship can carry. The fact that shipping’s CO2 emissions are in the same order of magnitude as those of road and rail – which move much smaller cargoes over much shorter distances – places a pretty big question mark over the long term viability of bulk trade in food and raw materials. It also makes for a strong argument in favour of what development advocates have wanted for years: value-added processing and manufacture from raw materials to take place before export.
by Alex Evans | Jan 14, 2008 | Climate and resource scarcity, South Asia
Charlie Edwards at Demos points us towards news from the BBC:
The authorities in Pakistan have deployed paramilitary troops to guard wheat supplies around the country amid fears of a massive shortfall. The government has blamed hoarders and smugglers for the problem. Wheat is a staple food in Pakistan and shortages have led to large scale rioting in the past.
Flour shortfalls initially pushed up market prices. Later flour ran out on the open market when officials fixed prices and warned against violations. Now Pakistan’s national disaster management authority has deployed thousands of paramilitary troops at wheat stores.
Other BBC coverage notes that last week Afghanistan appealed for international help to combat a wheat shortage, while Bangladesh has warned it faces a crisis over rice supplies.
Here (again) is a link to my briefing note from December on international implications of rising food prices. Food prices will be one of this year’s standout issues. Donors and multilateral agencies are not looking well prepared…
by Alex Evans | Jan 14, 2008 | Global system, UK
Sterling’s down nine per cent against the euro since November, which as the FT helpfully reminded us this morning is
a rate of decline not far off that seen during sterling’s enforced exit from the European exchange rate mechanism in 1992, when it fell 11 per cent against Germany’s D-Mark.
Ralph Atkins and Chris Giles continue:
The list of causes is long. UK interest rates are expected to be cut, Britain’s trade position looks increasingly precarious, capital inflows from companies buying UK assets have slowed sharply, and a perception of poor economic management has grown since the credit squeeze hit the world in August.
But most economists think the adjustment is necessary even if it hurts in the short run. The UK’s current account deficit is seen as increasingly unsustainable; it is now the largest among the Group of Seven leading economies after big downward revisions to foreign income at the end of last year.
Over the course of today, news also emerged that annual factory gate inflation reached a 16 year high during December, as the fall in the value of the pound made imports of food and fuel even more expensive. Meanwhile, Britain has slipped from fifth to sixth place in the world’s rich list: the French are now worth £70 billion more than us (the top four remain the US, Japan, Germany and China).
Sigh: more chickens coming home to roost. National Institute of Economic and Social Research director Martin Weale comments that sterling’s hitherto sustained strength had fooled people into believing that
you can run the economy permanently on the back of consumer spending and rising land prices.
by Alex Evans | Jan 10, 2008 | Global system
The latest report of the Global Risks Network at the World Economic Forum is just out – here it is if you fancy a look. The report begins with the words:
Over the last year, a series of risk issues – from the liquidity crisis in the financial markets to the emerging concerns over the long-term security of food supply – have focused global attention on the fragility of the global system.
So it is a pleasant irony indeed that one of the sponsors of the report is none other than – Citigroup!
Nor does the irony stop there. Last time the Global Risks Network met in London, on 10 July, the participants (of whom David and I were two) were treated to a quite fantastically complicated presentation by two Citigroup staff – the gist of which was “innovative financial instruments are great because they reduce risk in the global financial system”.
Who knew? And it gets better still.
For as you’ll all recall, 10 July is of course the very same day that then-CEO of Citigroup Chuck Prince made his infamous comment in the FT that
When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.
Oh dear. A couple of us did ask the Citi staff at the time how their sophisticated presentation on risk management squared with their boss’s snappy dance moves; but hey, benefit of hindsight and all that. As the introduction to the WEF report continues,
Under conditions of global stress, one core questions of global risk management will become more salient than ever: who owns the risk?
How true, how true – and never more so than in the case of all those pesky CDOs that Mr Prince has left us with. Anyway, the report is excellent, and well worth a look.
by Alex Evans | Jan 9, 2008 | Economics and development
Lawrence Haddad, the thoughtful Director of the Institute of Development Studies at the University of Sussex, has published a list of eight events and trends to watch out for in 2008: here it is. All eight are interesting, but none more so than Haddad’s discussion of a largely unnoticed event last year: the World Bank’s quiet revision of Purchasing Power Parity (PPP) estimates for developing countries.
The new calculations involved big downward revisions for China, India and Brazil GDP after PPP is factored in. In Africa, thirteen countries were revised upwards – and thirty three downwards. According to Haddad, the new estimates will “significantly increase the estimates of those living under a dollar a day in Africa, Asia and Latin America”. While the new figures don’t contradict the basic reality of strong economic growth in emerging economies, Haddad notes that they do…
1. accentuate inter-country estimates of inequality (the rich country GDP estimates were largely unchanged), thus changing the dynamic of discussions around climate and trade.
2. force us to question our assumptions about the elasticity of poverty reduction with respect to economic growth. Has it changed in the last 5 years? This is a key question to be answered given the new development cooperation focus on various forms of economic growth.
3. force us to think about the newly increased number of poor within China and India – are they really living in the midst of a sea with a rising tide that will lift them out of poverty or are they caught in an inequality trap that is every bit as unforgiving as the traps in which Paul Collier’s bottom billion are caught?
If one thing’s missing for me on Haddad’s list, it’s scarcity trends. Rising oil prices and rising food prices are already causing real problems for developing countries that rely on imports of fuel or food – c.f. the IEA’s pronouncement between Christmas and new year that oil prices alone have already offset increased aid and debt relief to African non-oil producers over the last three years.
A pronounced downturn in the US and other western economies may ease the pressure in the shorter term – but the long term trends still look tough for developing countries. As I argued in my presentation last year to the PM’s Strategy Unit on international implications of rising food prices, donors need to pay a lot more attention to scarcity – and resilience to scarcity shocks.
