An article in Bloombergbusinessweek (December 20, 2012) describes plans by Hewlett-Packard to ship notebook computers by rail to Europe – the new Silk railroad, at 1/3 the cost of air transit, double the cost of shipment by sea, but taking just 21 days instead of the 40 days by sea. The new production locations in the interior locations in China are to reduce manufacturing costs given rising labor costs in larger urban cities. Other companies such as BMW, Audi and Volkswagen are using the return trip to ship auto parts back to China. Does this rail connection, the new Silk Road, which provides a balance of speed and cost between that of air and sea, have the potential to significantly alter the economics of global supply chain flows ? Will nations along the route now offer alternative production locations given the ease of transport ?
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