Source: Airfare data from various web sources (full economy
storage data from
John C. McCallum. Sea freight rates data from The Eddington
Transport Study (2006) and from UNCTAD (after 1980). Telephone
call data from various sources.
Transport and Communications Costs Indexes, 1920-2015
Transport and communications costs have considerably declined during
the 20th century, notably with technological improvements and through
the application of economies of scale. By 1960, maritime transport costs
were a third of their 1920 level. With containerization, maritime
transportation costs further declined.
Air transportation costs have followed
a similar trend, but over a much shorter time frame. Air transportation
boomed after the WWII with the application of significant technological
improvements (such as the jet engine) and the design a better aircrafts.
The 1970s were particularly relevant with the introduction of long
distance fuel efficient planes such as the Boeing 747. However, by
2000 airfares were leveling off on many routes and were slightly
going up due to higher operating costs.
Telecommunications are a sector where costs have decreased
significantly as well. In 2000, an international phone call was about 1% of its 1940
cost. For instance, while a three minutes phone call between New York
and London was $293 in 1931 (1993 dollars), the same call was $1 in
2001 and about 25 cents in 2005. With fiber optic cables and decreased
costs for satellite use, telecommunications are accessible throughout
the world, particularly through the Internet, which has made long
distance communication close to free. The current mass diffusion
of cell phones has decreased costs further.
Another significant wave
of innovation involves information technologies, as indicated by the
excessively rapid decrease of computer storage costs since their initial introduction
(mainframes) in the 1960s. By the 1990s low storage costs enabled
the massive diffusion of personal computers, with each new generation of computers faster
and cheaper than the previous. Globalization and its related high
mobility levels could not have occurred without low transport and