City Analysis: Brisbane

Brisbane, located on the eastern coast of Australia, is one of the largest cities in the country. It is a major Australian port city.

Brisbane, Australia

On the hierarchy of central places, I would say that Brisbane is likely a national metropolis - but that doesn't mean it is necessarily similar to cities like Chicago - the national metropolis we mentioned in class. In fact, Brisbane has a lower population than Detroit - a city we discussed as a regional metropolis.

So then what makes Brisbane a national metropolis?

It's really a matter of perspective in my opinion - Chicago, with a population of 10,000,000+ has just 1/30 of the entire US population around it, though is considered a national metropolis. Brisbane on the other hand has over 2,100,000 people. With Australia's total population around 22,000,000, Brisbane has just under 10% of the entire nation's people living in or around it.

Of course, Brisbane isn't the largest central place in the entire country. Melbourne and Sydney both top it in terms of population. Cities like Darwin, Albany, Perth and all of the other cities are smaller.

As far as things that Brisbane offers that smaller areas might not, Brisbane houses the Queensland University of Technology - an entire university right downtown. In addition, there are subway systems designed to help people get around.

Brisbane has many other attributes, but I can't seem to find a China town area at all - something that a larger city like Sydney is bound to have. Of course, just because I can't see it on a map doesn't necessarily mean it isn't there!

EGT Executive Summary

From this market analysis, EGT advises incorporating in Australia and supplying sedans and limousines. Producing these vehicles abroad using cheaper labor and materials would be optimal – Australia has many ports, with the ports along the east and south coasts the most cost effective. With an expansive railway system, transporting containers filled with vehicles is very easy, and bringing them to dealerships is simply a matter of transferring containers onto trucks. Establishing dealerships will bring the most familiar environment for individual customers, and limousines should be marketed to large firms, with the possibility of purchasing entire fleets. Of course, it is also important to take into account the substantial taxes that both individuals and firms will have to pay. With population growth of approximately 1%, the market will continue to grow and increase profit margins for the company.

Record Shipping to Come

The Sydney Morning Herald reports that Atlas, an iron ore company, expects to have record shipments this year.

"The iron ore miner says its on track to achieve shipping guidance of 7.4 million tons for 2013."

Of course, with the mining industry the largest industry in Australia, this comes as no surprise. Strong demand for iron ore is cited as the main cause for this increase in shipping volume.

This links directly to the ideas that we've been discussing in class - shipping goods overseas. As mentioned, Australia has many ports, and is isolated from other continents. This makes the use of freighters essential.

But iron ore isn't sent overseas in containers, like all other goods we've discussed so far. The idea of loading up a TEU container with iron ore is silly at the least, ridiculous at most. Iron ore is loaded upon a massive barge, known as bulk carriers. As far as size goes, most are considered capesize - the largest type of bulk carrier (93% of capesize boats are specialized to transport iron ore and coal). The use of such large ships is great for fuel and cost efficiency.

With such a large increase in loads of iron ore leaving Australia, we can expect that GDP should increase due to the increase in net exports.

The Shipping Container's Effect on the World

Marc Levinson explains that the shipping container has radically changed the world in his book "The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger." Chapter one sums up the effects:

How much the container matters to the world economy is impossible to quantify. In the ideal world, we would like to know how much it cost to send one thousand men's shirts from Bangkok to Geneva in 1955, and to track how that cost changed as containerization came into use. Such data do not exist, but it seems clear that the container brought sweeping reductions in the cost of moving freight. From a tiny tanker laden with a few dozen containers that would not fit on any other vessel, container shipping matured into a highly automated, highly standardized industry on a global scale. An enormous containership can be loaded with a minute fraction of the labor and time required to handle a small conventional ship half a century ago. A few crew members can manage an oceangoing vessel longer than three football fields. A trucker can deposit a trailer at a customer's loading dock, hook up another trailer, and drive on immediately, rather than watching his expensive rig stand idle while the contents are removed.

The idea is that while we don't have precise data on the matter - for example we cannot compare shipping costs of a particular material from 1950 to now - it is clear that the container has revolutionized the way we ship things. From a laborious process on small ships that took many men to load, unload, and crew, we now have an efficient and automated process that requires as few as 20 men on a ship to reach the other side of the earth. In addition, unloading is simply a matter of moving the containers off of the ship - a feat easily accomplished by massive cranes in ports.

The author uses this as a large part of his argument for how globalization has taken hold. With such efficiency, we can assume that transportation costs are nearly zero. Items can reach the other side of the earth in as little as two weeks at less than the cost of a round-trip airline ticket - and that's thousands of tons of goods! With buyers and sellers able to find the area with the cheapest production cost, global competition is fostered and trade is encouraged.

As far as gaining and losing, I feel that larger companies are more apt to gain in this situation - they are already large market-share holders and have massive economies of scale and scope to start, while small businesses aren't able to outsource their labor and get supplies outside of local markets as easily, and they then must raise their prices above those sold by larger firms.

Mining Pushing up Stocks, Decreasing Revenues

Two reports out of Australia: investors are happy and the government isn't.

With mining stocks rising, the ASX is up to 5,200 and the All Ordinaries Index was up 1%. Strong trade with China has facilitated the rise, and shows evidence of a truly strengthening economy - though some analysts are skeptical. Economist believe in the numbers though, saying that the Australian economy is on the rise.

On the other hand, others are upset because of the resource tax credit. In Australia, new tax laws have been written to affect mining companies - and the revenues that were expected from this tax were far lower than expected. The Australian Treasury forecast $2 billion in revenue, and has thus far collected less than $130 million, due to tax credits given to the companies.

In all, these news article both show the power of the mining industry in Australia. As mentioned in the trade post, Australia is a huge exporter of iron ore, and is a leading mining county overall. The industry is so large that it massively affects the market and also has the lobbying power to influence the government into writing new tax laws that don't even majorly affect the companies.

Getting from Place to Place

There are three ways to get around: land, sea and air! We'll be examining Australia's situation for all three categories:

Land: Australia has 823,217 km of roads, a majority of which are unpaved. Australia has a large and interconnected highway system. 

Australia also has a developed railway system, both for freight and passengers. The rail network is comprised of over 40,000km of rails, most of which is publicly owned. Most recently, a railway was completed in 2004, allowing for transit between Adelaide and Darwin. Freight is performed by private companies while public transit is a mixture of government and private operations.

An interesting note about the Australian railway is that colonies built independently of one another when first starting the project. London advised Australia to adopt a standard gauge for rails, in case of the event that they ever wanted to integrate between colonies, but the colonies didn't take the advice. Because of this, there are still some areas of track that are unused.

Sea (more generally, water): As far as internal waterways go, Australia doesn't have too much. With 2,000 km of waterways, (mainly used for recreation on Murray and Murray-Darling river systems) (2011) Australia is 43rd for water transportation within the country.

Of course, Australia has a lot of navigation in the ocean surrounding the country.  There are ports in
Brisbane, Cairns, Dampier, Darwin, Fremantle, Gladstone, Geelong, Hay Point, Hobart, Jervis Bay, Melbourne, Newcastle, Port Adelaide, Port Dalrymple, Port Hedland, Port Kembla, Port Lincoln, Port Walcott and Sydney, with most being bulk carrier and cargo.

Air: Australia is home to  467 airports, 333 of which have paved runways (I'm not sure I would ever want to land on an unpaved runway, but maybe it isn't so bad). Australia has four major airlines: JetStar, Tiger, Virgin Blue and Qantas. From what I've collected, the first two are generally the cheapest, though the last two are more comfortable. Australia also has one heliport.