Brascan  Brazilian Traction, Light and Power  Canadian controlled since 1950s  electrical power, real estate (Canary Wharf)  → 42% of Noranda  tenth largest employer in Canada in employees, assets of $10.9 billion.

Noranda →59% Falconbridge

Today’s Agenda  Noranda in play  Review  Freight rates and industrial location  Intermodal  Pricing

 Availability of substitutes and elasticity of demand i.e. response of demand to changes in price  Backhauling (costs loaded onto “front haul”)  Modal competition Within and between modes  Break in bulk doubles terminal costs Other factors affecting price structures

Front Haul

Backhaul not Technically Feasible

Piggyback: Early Intermodal System  Trailer on Flat Car  High terminal costs but low line-haul rates  No stacking  Trailers must be backed on

Containers, COFC

Intermodal Shipping  Canada’s intermodal rail traffic nearly doubled between  Indicator of overseas trade  Containers are standardized & stackable  Two-high is limit for rail  On ships, four-high seems to be the limit!  In hold and on deck

Expediter Service: Straight truck with sleeper known as a “D- unit” for rush shipments to “just-in-time” auto plants

Air freight: Converted from pax

747 Combi

Transportation “Innovation” and Time-Space Convergence  Temporal decline in the friction of distance between two hypothetical points in space Cost ($, time)

1. Demand for Accessibility 2. Technological Development 3. Transportation Innovation 4. Time-Space Convergence 5. Spatial Adaptation (e.g. centralization, specialization) 6. Increased Interaction Form: Stagecoach, railroad etc. Improvement: Road paving, power vs. sail, volume (oil tankers etc.) Reduced friction of distance Relative decline in transp. costs Alters Relative location of econ. activity: More concentrated, differentiated, geog specialized etc. “Engine” of economic growth Why: “Demand”, search for profits, etc.

Declining friction of distance, globalization, and trade  Trade and transportation depends on cheap energy  Energy supplies are finite…  Atmospheric effects of CO, CO 2, NO x, SO 2 will raise the costs of combustion as an energy source  Can we find new sources of energy in time?  Or will we look back nostalgically on the globalization era based on cheap fuel?