Economy Essay No. 7: Homework Assignment

Let's discuss the benefits and costs of using the biggest cargo ship available.

The benefits:

I think there will be less pollution per unit carried. The capacity is massive because this ship can transport many containers at the same time. Also, transporting with the biggest ship available will reduce the price for the consumer. This is because the price for transportation per unit carried is less when there are more containers onboard. That is an result of the lower labour costs per unit carried and lower fuel costs per unit carried. As the amount of fuel being used does not increase as at the same rate as the amount of units carried does. The labour costs remain the same as you won't need more crew than you do on a regular sized cargo ship.

The costs:

The construction of the biggest ship will cost a lot of money. Also, if a ship has such an incredible large volume, it's speed will be reduced because when they want to pass a canal (i.e. the Suez Canal), it will take a lot of time. As we all know, time is money. So if a ship takes a long time getting from point A to point B, it costs a lot of money. Also, if you want to make (the highest possible) profit when transporting with a big ship, the ship must be filled up to it's maximum capacity. Otherwise the costs will increase.

The next thing I would like to discuss is the specific scenario in which trades are being made between the UK and China. When the UK trades with China, the UK can spend less money on import. This is due to the transportation costs. However, the need for transportation between those countries does create jobs. The Chinese goods are cheaper compared to their British variants, so importing from China reduces the inflation. But on the other hand, British manufacturers might go bankrupt because of the intense Chinese competition on the market.