We should start off by deciphering the title, "impacts" of a technological "improvement", I consider these two sentences used together a paradox, because how do improvements create impacts.

Talley's article focuses on the ocean container shipping industry within America since the 1950's. The article explores how movement of cargo was revolutionized since the introduction of the container (20 to 40 feet long) meaning the cost and efficiency concerning the movement of goods were dramatically improved as opposed to break bulking which was used in the past (placing individual items on wooden crates to be moved).

Efficiency was a result of the following:

• Valuable goods were able to be moved with regular goods
• Movement from one destination to the other was more feasible (crane would carry the container from the ship, then would load onto trucks or trains - which were designed to be able to carry the containers)
• Container rates were constant, so despite how valuable a good was to ship the cost of having it containerized was constant as opposed to break bulk.

The article furthermore explores how organizations and shipping corporations would merge together, forming alliances which resulted in less financial burden for individual shipping companies. In regards to the fixed pricing for container shipping rates, it meant that shipping and movement of cargo dramatically increased between 1980-1996 (433%).

As a result of improvements associated with the movement of cargo (containers), the carrying capacity of ships also increased. It has been noted by Talley that most ships constructed today have a carrying capacity of 5,000 to 6,000 Twenty foot equivalent unit, (TEU's - the measurement of an individual container) or 1,049 feet wide. The reason for the push towards larger ships as noted by Talley (2000) is because a 6,000 TEU container ship can result in 18% - 24% cost saving in movement and trips compared to a 4000 TEU; bigger is better in this case.

As the article progresses, Talley introduces us to the technological improvements container shipping underwent, the next phase introduced was the double stack trains - capable of moving containers stacked two high. Once again, this upgrade from the one container per flat car train is a result of finding more efficient and effective ways of moving containers and thus goods.

Talley then explores how as time progresses the runners of Ports are finding themselves "pawns" within the container moving game, instead of making their own decisions on which goods are moved or which shipping lines may be docked at their ports. This issue of not being in control has been attributed to the fact that when containers arrive at ports, they ultimately require land transportation to deliver goods to its final destination, this has meant that Ports located in areas with poor infrastructure or access(lets say freight/train lines) will not be chosen, as opposed to ports located in close proximity of infrastructural services for docking.

As a result of the competitive nature of container shipping and the increase in ship size ports have opted for major upgrades in its services merely to attract potential shipping lines to use their ports over others and to accommodate the mass vessels which need to dock there. Talley has noted that this major investment in capital has left many American ports in major debts. The investment in capital as noted by Talley, does not secure a good flow of ships using the ports, so at times the investment will not guarantee full port usage. With many ports affected by large amounts of debt, the following options serve as remedies;

• Taxes are raised to combat the debt
• Some publicly owned ports will move towards private bodies and result in the privatization of many ports.

The overall point Talley is trying to get across is that over time, many technological improvements towards the movement of goods (in this case shipping) has occurred, but the upgrades, for efficiency and financial viability has resulted in various impacts to the actual ports which are:

• larger ships require deeper channels
• larger ships require a larger port
• Infrastructural upgrades

So in order to keep up with the upgrades, competitive market and high rates of container movement, many ports have resorted to mass upgrades in, internal services and capacity.

Some questions to consider:

• It was briefly expressed that some publicly owned ports needed to resort to privatisation to reduce their debts, are government operated services that inefficient?
• Should tax payers be paying for the debts that have been generated by ports (even though they are performing well but due to competition they have been indebted)
• Is it fair on the ports to have to keep up with the continual upgrades associated with cargo/container movement?
• Do you agree that at times sacrifices are needed to be made in order to achieve an outcome (in the context of melbourne, blocking off roads to increase capacity etc)?

Reference:

Talley, W. 2000, "Ocean Container Shipping:Impacts of a technological Improvement", Journal of Economic Issues, v.34, i.4 p.933

11. Infrastructure 19th May, 2008 23:49:40   [#] 

Comments

Talley, W. 2000, "Ocean Container Shipping:Impacts of a technological Improvement"
Publicly owned ports, aka governmental operated services may become inefficient because it has to compete with other infrastructure upgrades for funding by governments. If it may mean some ports need to be privatised in order for them to obtain funding by other successful means then this might be a possibility. It may not mean governmental operated services are inefficient but privatisation can obtain funding from other sources and other avenues.
In some certain situations specific ports have to keep up with the continual upgrades associated with cargo/container movements because other suitable ports have been ignored or not specifically appropriate to attract big cargo transportations. This is due to the minimal support offered by its current infrastructure.
The question is if ports don’t continue to upgrade then they will no longer be suitable to obtain cargo goods. Therefore to maintain current infrastructure that is suitable in receiving goods some sacrifices are needed to be made in order to achieve a certain outcome. This is the example of the dredging of the Port Phillip seabed area in Melbourne to allow larger container ships entry into the Bay. This is a situation were if the upgrade was not achieved then the profits associated with importing and exporting goods will go to other ports in Australia and will deal an economic setback to Victoria’s economy.
The example given to consider, ‘the blocking of roads to increase capacity’ may be a sacrifice similar to the dredging of the bay. A careful approach would need to be taken to make sure overall social, environmental and economic gains would be long term and not just short term. Other decisions need to be made in conjunction with ‘the blocking of roads’ and ‘the upgrades of ports’ so dealing with problems takes a multi dimensional approach.
B.T (Bachir Tanios)  20th May, 2008 14:08:21  

Talley, W. 2000, "Ocean Container Shipping:Impacts of a technological Improvement"
At the first, I want to state that it was disappointing that the impacts listed with the technology improvements didn’t refer to the environmental impacts associated with channel deepening (as we are experiencing right now in Melbourne). It also is of great concern that given the history of such major infrastructure upgrades, that some actually have a precedence of putting the port in concern into debt!! I hope the Port of Melbourne have done a thorough risk assessment to this end.

In answer to your questions…. Not sure if it has to do with efficiencies of publicly run assets, perhaps the Government cant handle the losses in their budgets and therefore they sell of the rights to the ports to a private organisation who will do their best to make a profit – the private companies can get away with charging more rates and charges etc much easier than the Government can.

The poor tax payer ends up paying one way or another – be it in the end price for a commodity or the Government subsidising the costs for the infrastructure (meaning that Govt money is not spent on community needs as we would prefer).

Is it fair to keep up with the rest of world – no its not but that’s life! We live in a global community and the shipping industry (both imports and very importantly exports) is a global trading system. To keep up – you need to keep matching it up with the best as it is so very competitive.

It depends on the sacrifice – ie the improvement the Port of Melbourne – we are possibly sacrificing significant sections of the bay and all the associated externalities of that (marine life, fishing, businesses associated with using the bay etc). The almighty dollar always wins – we need to keep ourselves ahead economically to ensure we can all live the kind of life we enjoy today – well with a few less fishes I suppose!

KS  20th May, 2008 14:12:12  

Talley, W. 2000, "Ocean Container Shipping:Impacts of a technological Improvement"
This article was interesting to read in light of the very controversial dredging of Port Phillip Bay. The Industry we are discussing is a massive and in most cases a very affluent industry and has a great deal of power. The trade industry is the fuel for our economy, you just have to buy anything these days and turn it upside down and see where it has come from,most often China to see that we are heavily reliant on these big container ships and the maintenance of our ports in order to survive. We are apart of a global economy, China is leading the way and our consumption patterns are not going to change in a hurry. How do we stop people wanting consumer goods that are so cheap to inport from overseas? We cant. We simply cannot compete with Chinese manafacturing goods, they have cheap labor,lots of it and that is it. I dont like the dredging, in fact I hate it. It is such an environmentally dangerous situation that even the thought of it makes my stomach turn.
I think the key to solving this problem is innovation. As a nation we need to become more innovative,we need to start producing the most environmentally responsible, high-tech and most importantly desireable applicances and manafacturing goods so instead of looking overseas and buying from overseas we start to buy locally and invest in our own country. We will still need investment in our ports but if we can start pioneering the way with the newest and best quality technology there is no doubt that will stop having to import so much of these good from overseas.

Vanessa  21st May, 2008 14:42:59