Shipping costs curb exodus from U.S.

Aug. 12, 2008 at 12:09 PM
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NEW YORK, Aug. 12 (UPI) -- Rising oil prices are slowing the tide of U.S. companies moving to foreign lands because it's costing more to ship products home, a research group said.

In a survey released July 31, RSM McGladrey found 52 percent of 357 businesses surveyed expected "dramatic increases" in shipping costs, compared with 20 percent three months earlier, USA Today reported Tuesday.

Shipping a loaded 40-foot container from Asia to the U.S. East Coast rose to $8,000 this year from $3,000 in 2000, causing manufacturers to rethink corporate strategies, the report said.

" Where things are being made is going to change," McGladrey executive Tom Murphy told the newspaper.

In effect, increased shipping costs are erasing gains made in hiring cheaper labor overseas, especially for products where shipping costs represent a high percentage of their value, the report said.

For example, steel imports from four Asian countries, India and Australia fell 14.6 percent January through April. Meanwhile, Ohio steel maker, AK Steel, reported second quarter profits up 32 percent from a year ago, the newspaper reported.

"I'm not saying all of that's coming back," said Jeff Rubin, a CIBC World Markets analyst said, referring to the outsourcing of production jobs. "But this is something that's already started," he said.

Topics: Tom Murphy
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