A central idea in the economic history of trade can be traced back to the famous British economist David Ricardo, who developed the principle of comparative advantage achievable through trade. Ricardo argued that countries can benefit from specialising their production. His famous example referred to wool from England and port wine from Portugal. He explained that England could produce wool more efficiently and Portugal was better at producing port wine; therefore, each country should focus on its strengths and import the other commodity.

This theory has had a profound influence on the foundations of international trade and illustrates the economic benefits of specialisation and exchange.

• Accordingly, a key argument in favour of the globalisation of trade flows is the expectation that increased trade and a greater division of labour can lead to gains in prosperity. However, an economy based on the division of labour and the – sometimes very short-term – cost optimisation of processes do not only have advantages.

• There are also negative aspects to globalisation, such as the relocation of entire industries or supplier firms caused by the optimisation of supply chains, and the associated job losses. Similarly, increased transport volumes are likely to have negative environmental effects.

For consumers, globalisation means that it is now virtually impossible to determine the true origin of goods manufactured through multiple production stages. Globalisation and the optimisation of production processes give rise to phenomena such as the outsourcing of production stages or the entire manufacturing process, and an increasing lack of transparency in production. Suppliers at various levels noticeably increase the complexity of procurement.

In addition to such examples of supply chain management that is now virtually uncontrollable, the outsourcing of production processes also leads to further risks. This is because companies’ decision to rely increasingly on outsourcing and to reduce their own manufacturing is based on the assumption of the free movement of goods. Trade restrictions caused, for example, by environmental disasters – as was the case 15 years ago during the 2010 eruption of the Eyjafjallajökull volcano in Iceland – highlight the system’s potential vulnerability.

The environmental aspect

Alongside the economic aspects, the environmental perspective of global trade is also coming increasingly into focus. The transport of goods over long distances results in significant CO₂ emissions, which contribute to climate change.

The search for sustainable modes of transport and the promotion of locally produced goods is becoming increasingly important issues in international trade. Approaches aimed at reducing trade’s environmental footprint are gaining in importance as a means of shaping a more sustainable and environmentally friendly economy.

In contrast to international trade, local sourcing can be a solution to the excessive complexity of supply chains. Depending on the sector in question, “local sourcing” can help to reduce various risks, even if it may initially involve higher costs.

Means of transport and routes

A key aspect of trade is the diversity of transport modes:

• Maritime shipping is the most widely used method, as it can transport large volumes of goods over long distances at low cost. Container ships have significantly increased efficiency, as they rely on standardised containers that can be easily loaded and transported.

• Air freight is ideal for shipping high-value, small or time-sensitive products. Although it is more expensive, it offers speed, which is attractive for certain industries and goods.

• Road transport offers flexibility for inland and short-haul transport, enables direct delivery to end consumers and is ideal for the “last mile”, whilst rail transport provides a more environmentally friendly alternative for bulk transport over land, particularly in areas with well-developed railway networks.

Equally crucial are the historical and strategic trade routes:

• The Silk Road was one of the first major trade routes to link Asia and Europe and foster cultural exchange.

• The Suez Canal, an artificial waterway, connects the Mediterranean Sea with the Red Sea and is vital for trade between Europe and Asia, as it significantly reduces journey times and eliminates the need to sail round Africa.

• The Panama Canal, which connects the Atlantic Ocean with the Pacific Ocean, plays a central role in maritime trade between East and West, as it eliminates the need for the long and dangerous route around South America.

• The Strait of Hormuz is one of the world’s most important straits, particularly for global oil and gas transport. It connects the Persian Gulf with the Gulf of Oman and, consequently, with the Arabian Sea. This strait provides access to the oil-producing states of the Persian Gulf, including Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq. A large proportion of the world’s oil and liquefied natural gas (LNG) is transported through this strait, making it of immense strategic importance. It is estimated that one-fifth of the world’s traded crude oil is transported through the Strait of Hormuz.

• The Northwest Passage in the Arctic is gaining in importance as the ice caps melt, as it could further reduce journey times and costs between Europe and Asia. After all, the transatlantic and transpacific routes are crucial for trade links between the Americas, Europe and Asia, which account for the majority of international trade.