Thomas Holmes (University of Minnesota)

Thursday, November 17, 2016 - 3:40 pm to 5:00 pm

Thomas J. HolmesLocation: 368A Heady Hall

Description: Thomas J. Holmes
"Indivisibilities and Shipping Containers"

Abstract: The forty-foot ocean container is a symbol of globalization and most imports that arrive from Asia come in one of these boxes. With proliferation of product varieties and short order cycles, it is often necessary for importers to combine different kinds of products (including from different suppliers) to fill boxes completely. In this paper, we analyze detailed micro data on the contents of millions of import containers. In our estimated model, we show that the indivisibility of containers leads to significant economies of scale. We use the estimates to evaluate the cost advantage of Walmart and other large retailers compared to small firms. We also determine scale-based cost differences within the same firm across source locations, such as ports in China or India. We show that economies of scale are not fully exhausted even for Walmart.