»Issue 04, Volume 08                                                          www.scarbrough-intl.com                                                         » April 2008 

IN THIS ISSUE:

·  Cover Story

·  Business Monitor

·  Business News

·  Scarbrough News

·  Entertainment in the   

   Industry

·  New Requirements

 COVER STORY

China’s cost advantage could come to an end as early as 2010

A recent article “Rising costs threaten China’s advantage” published in the Shipping Digest written by Peter T. Leach suggests that rising costs could end China’s labor advantage by 2010. Jon Monroe of Jon Monroe Consulting in Sausalito, Calf. stated that currently China’s labor costs are rising at an annual rate of about 20 in the Pearl River Delta around Hong Kong where so much of the country’s manufacturing sector percent and labor shortages are starting to develop “especially in the Pearl River Delta around Hong Kong where so much of the country’s manufacturing sector is located” (April 14, 2008 p.12).

Still there are several other factors that will contribute to China possibly losing its edge in the near future. Most notably is the ever increasing cost of bunker fuel. This year carriers are looking to fully recoup those costs by implementing a floating bunker surcharge. Adding to the increase in fuel prices (not only for bunker but diesel as well) are a recently approved Los Angeles-Long Beach Clean Air program, requiring drayage companies to upgrade to newer, cleaner burning trucks; PierPass; and a Transportation Workers Identification Credential, that will require LA-LB harbor truckers to raise costs to fund it. Two proposed items that will also add to the increasing costs are a California port-based infrastructure improvement fee and a federal infrastructure improvement fee.

Never the less with the weakening dollar and the above mentioned cost increases the cost to import will continue to rise. U.S. Exports on the other hand recorded a record increase of over $176 billion from 2006 to 2007 according to the U.S. Census Bureau’s trade data. That is a 12.2 percent increase compared to a 5.9 percent increase for U.S. Imports. 

  -Jason Shank, Chicago Branch Manager

BUSINESS MONITOR

Air Cargo News, issued March 28, 2008, announces that the “Airports Council International (ACI), has revealed its preliminary airport cargo tonnage figures for 2007.  It puts total cargo, including mail, at 80.3 million tones, representing a growth of 2.5%” since 2006.  The following table demonstrates that Memphis, Tennessee, FedEx's main hub, is ranked number one globally for the highest number of cargo tonnage.