August 03, 2008
Rising fuel prices cause rising shipping costs and make the flat world a little bumpier. In recent years the cost to ship an ocean-going container from Shanghai to the US has almost tripled in the past few years. To the extent fuel price increases are driven by increased demand from China’s fast-growing economy, they might eventually also drive the delivered price of China’s goods high enough to reduce it’s export growth.
It’s in the nature of all rapidly-growing systems to eventually self-correct. Mortgage-bubbles tend, after a time-lag, to beget credit-crises.