China is the world’s foremost manufacturer of consumer goods. They are exported in intermodal sea containers (20-foot and 40-foot). The demand for container transportation from China to North America greatly exceeds the return movement. Half of all the containers come back to China empty.
a) Draw and explain an appropriate model(s) that illustrates the nature of transport demand for containers on the Pacific routes between China and North America.
b) The US trade war with China could expand to a currency war in which China allows the value of its currency to fall relative to the US dollar. Use a diagram to illustrate what will happen to the number of empty containers returning to China if this happens.
Answer: a
An appropriate model that illustrates the nature of transport demand for containers on the Pacific routes between China and North America: The empty containers needs to be shipped back to china so that china a use these containers for their next shipments to North America region. We can develop the model here such that these China containers of 20 ton and 40 tones can be used by the other logistics and transportation service that brings the materials from North America to Asia. Thus the materials dispatch from North America to Asia can utilize these containers and these containers can be unloaded and return to China for their shipment use to North America. So the return of the China containers can be reused by the other transportation services. Thus China will get the benefit and other transportation service providers will also get lower freight for the containers.
The model could be as below
From China ---- to North America
From North America ----- to Asia Region ----then to China location.
Answer b:
The US trade war with China could expand to a currency war in which China allows the value of its currency to fall relative to the US dollar. If this happens, then it will have negative impact on the process defined for the return containers to China. Because the margin for business saving will be minimized in this scenario. If the saving is reduced and does not meet the desired level, then it will be difficult to manage this model of container return to the China locations. So in order to continue the model of container return to China, then margin level needs to be ensured. It should not get impacted due to the currency reduction of the China
China is the world’s foremost manufacturer of consumer goods. They are exported in intermodal sea containers...
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