Sunday, October 10, 2010

Interesting ideas in trade

Akbar's transport of ice

In the ferocious height of the Delhi summer, Akbar setup a mechanism whereby horses started out with ice in Kashmir and rode south. The ice was handed from one horse to another, keeping it constantly on the move. In the end, what reached him was a few kilos of ice.

(I'm unable to recollect where I read this, and google doesn't seem to have heard about it. Please do tell me if you know something about this.)

The Indian ice trade

In 1833, merchants figured out that it was profitable to transport ice from the US to India. The existing technical skills enabled the production of low-grade ice in Calcutta for six weeks of the year at a price of 4p per pound. Transport by sea made possible perfect Boston ice, available round the year, at a price of 3p per pound. Ships would start out with 150 tons of ice and reach Calcutta with 2 tons of ice.

`Ice houses' were built to store ice. The ice houses in Bombay and Calcutta no longer exist, but the ice house in Madras, built in 1841, still exists [location].

In 1878, manufacturing of ice began with the formation of the Bengal Ice Company, and this transport of ice from America dwindled away. By 1882 -- a short four years later -- it had ended. In 1904, there was an ice plant in Peshawar.

Sources: Better than Hooghly slush by Jayakrishnan Nair, in Pragati, June 2010.

The world's largest refinery on the coast of Jamnagar

India's biggest company, Reliance Industries, runs the world's largest refinery off the coast of Jamnagar. Crude oil is imported here, products are made, and re-exported. Here's my interpretation of what's going on. The natural place to put a refinery is in the Persian Gulf, but the political risk in that region is too great, given that the fixed assets in question amount to Rs.2.3 trillion.

What's the most efficient way out? To transport crude oil on the shortest possible hop from the Middle East to a place with political stability. That takes you to the coast of Gujarat.

A new trade: Alaskan water

I just read a story by Sambit Saha in the Telegraph about a new frontier in trade. A firm named True Alaska Bottling has obtained rights to transport 11.34 billion litres of water (i.e. 11.34 million tonnes) out of a lake in Sitka, Alaska. This will be transported to a plant near Bombay, which will be run by a firm named S2C Global, thus yielding bottled water to be sold in India and in the Middle East.

This seems to me to reflect an extension of the themes above. If you want to deliver product into the Middle East, it is better to build a factory in India given political stability and low labour cost. In this sense, it's a bit like Reliance. And, it reminds me of the old ice trade; except that this time we're transporting water.

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