Determinants of Maritime Transport Costs

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The views and interpretations in this document are those of the authors and should not be attributed to the Inter-American Development Bank, or to any individual acting on its behalf. Terms of use: Documents in M129--------dc21The Research Department (RES) publishes the Latin American Economic Policies Newsletter, as well as working papers and books, on diverse economic issues.To obtain a complete list of RES publications, and read or download them please visit our web site at: http://www.iadb.org/res 3 Abstract * Recent literature has emphasized the importance of transport costs and infrastructure in explaining trade, access to markets, and increases in per capita income. For most Latin American countries, transport costs are a greater barrier to U.S. markets than import tariffs. We investigate the determinants of shipping costs to the U.S. with a large database of more than 300,000 observations per year on shipments of products at the six-digit HS level from different ports around the world. Distance and containerization matter. In addition, we find that efficiency of ports is an important determinant of shipping costs. Improving port efficiency from the 25th to the 75th percentile reduces shipping costs by 12 percent. (Bad ports are equivalent to being 60 percent farther away from markets for the average country.) Inefficient ports also increase handling costs, which are one of the components of shipping costs. We try to explain variations in port efficiency and find that they are linked to excessive regulation, the prevalence of organized crime, and the general condition of the country's infrastructure. Finally, we present a number of success stories in Latin America to show that private involvement in port management leads to efficiency and lower costs whenever it is accompanied by labor reform, and when monopoly power is reduced through either regulation or competition.JEL number: [F1, L41, L92]

Melting ice Caps and the Economic Impact of Opening the Northern Sea Route

“… A series of papers find that the elasticity of shipping costs to distance is around 0.2 (Radelet and Sachs, ; Fink et al ., ; Limão and Venables, ; Micco and Pérez, ; Clark et al ., ). However, the OECD () study uses the most comprehensive shipping costs dataset, and therefore our relatively high elasticity can be reconciled with the existing literature, because distance seems to matter more for shipping costs between East Asia and Europe. …”

Container freight rates and the role of surcharges

“…When base rates are correlated with distance an inverse and statistically insignificant coefficient of À0.321is obtained. This goes against the findings of much recent research, where several authors using quantitative analysis (Wilmsmieir and Hoffman, 2008;Micco and Perez, 2002;Limao and Venables, 2001), conclude that distance is a determinant of freight rates since it is a surrogate for time at sea and thus influences variable costs such as labor and fuel. Our result supports the finding of a recent report (OECD, 2008) that criticized physical distance as a good determinant of trade and that relative distance might be more appropriate, especially time.…”

Measuring the Total Logistics Costs at the Macro Level: A Study of Indonesia

“…Therefore, distance was closely related to increased costs. Márquez-Ramos et al [47], Micco and Perez [48], and Wilmsmeier et al [49] revealed that a 1% increase in the distance per trip (the unit in kilometer) would result in a 0.25% increase in the freight costs. Although the tariff of the transportation services is mainly determined by supply and demand situations and conditions, a geographical distance undoubtedly affects the transportation costs.…”