Economic Geography

Transportation and communication systems
Among the classical social theorists, it was Marx who was the most fascinated by
transportation and communication systems for the development of capitalism.
He considered them most directly in volume two of Capital where he recog-
nized their centrality in reducing turnover time by increasing the velocity of all
types of capital. These technologies form the arteries by which economic actors
are interconnected. Their importance in terms of enabling both greater speed and
greater throughput has been recognized by many (Chandler 1977; Fishlow 1965).
When a new medium of communication or transportation emerges or a previous
media is dramatically transformed, such as recently occurred with the transformation
of telecommunication networks from analog to digital transmission, opportunities
are created for entrepreneurs to utilize the new media for both organizational and
spatial transformations (Fields 2004).
Transportation
In The Wealth of Nations Adam Smith recognized the importance of transporta-
tion for the development of markets. And yet, until the application of the steam
engine to locomotion, for all intents and purposes, transportation was limited to
either animate power or the speed provided by natural forces such as winds and
currents. The steam engine began revolutions in transportation, both on land
and at sea, and then eventually in the air that permitted the relocation of produc-
tion sites, e.g. internal combustion engines dramatically increased the power
available for locomotion and speeding the movement of goods and people.
These innovations are in fact sociotechnical. For example, the global maritime
infrastructure was the result of a long coevolution of networks including shipping
firms, freight forwarders, ports, insurers, brokers, and many other intermediaries.
Digitizing services
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Transportation technology has also affected organizational forms. Braudel
(1982: 371) reminds us that in the 1400s trade was so risky and difficult that
most merchants fitted out their own ships because ‘the risks and the cost price
relative to the cargoes transported were so great in long-distance shipping that
they made transporting as a simple freight industry virtually unthinkable’. In
other words, the merchant had to integrate ship ownership and operation – there
was no opportunity for a division of labor. Later, the development of the ship-
ping networks would coevolve with the increase of trade and the further devel-
opment of international finance (Miller 2003: 4).
For today’s industries, the most important transportation technologies 
are air freight, which has grown remarkably during the last two decades, and
shipping containerization, which has sped surface transport and lowered its costs
and risks. Containerization is at the core of intermodalism, for example, the abil-
ity to move cargo in the same containers by sea or land. With the standardiza-
tion of the shipping container’s dimensions, logistical planning was simplified. As
the stevedore was replaced by crane operator loading and unloading 20- and 
40-foot cargo containers from specialized container ships, the delays at the ports
were drastically reduced.
The intermodal shipping container provided a base for further innovations
that would have significant geographical implications by reducing the friction of
geography. For example, United States retailers monitor their sales in real-time
permitting them to reorder goods electronically shortening lead times. The
orders are not only transmitted, to say China, but they also inform the vendor
loading the order. The United States delivery route for the container has been
established prior to loading eliminating the need to send the products to a ware-
house for storage or sorting. The container is lifted off the ship directly onto a
truck that then delivers directly to a store.
The shipping container has become the critical package in world trade, and
container traffic, along with air cargo, is the fundamental measure for the growth
of trade. The emergence of China as the global workshop can be seen in the
rapid growth in the number of containers moving through its ports. In 2003, the
container throughput of Chinese ports reached 48 million ton equivalent units
(TEUs), the largest number of containers traversing any nation in the world.
From January through September 2004, container throughput was 43.7 million
TEUs, a 27.2 percent increase over the same period in 2003. Hong Kong, which
serves South China, is already the busiest port in the world, but Shanghai area
ports are rapidly gaining on it.
Air transport was the other key transportation system and it has been growing
rapidly also. Though the bulk of the finished good flows through the medium 
of shipping containers, for the highest value-added items that are most subject
to decay or obsolescence air transport is the method of choice as it is for people
traveling long distances. For semiconductor chips, hard disk drives, fresh fish,
and many other products that lose their value rapidly airfreight has become crit-
ical. Elaborate service infrastructures have developed to ensure that goods air
transported are not delayed in their movement (Leinbach and Bowen 2004). 
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In terms of costs, air transport has been decreasing at a rate of 3 percent per
annum. For locations wishing to ascend the value-added hierarchy an international
airport is a critical infrastructural requirement, whether one is exporting cut flow-
ers from Bogota to Miami or newly packaged integrated circuits from Penang,
Malaysia. The ‘fastest growing market of all for air freight is in IT goods from
Asia to Europe and North America, [and this represents] 40% of the total shipments
by tonnage and nearly 75% by value’ (Butterworth-Hayes 2005). To be a global-
class industrial center, global quality infrastructure has become a requirement.