Impact of Transport Costs on International Trade: The Case of Spanish Ceramic Exports

Abstract

This paper aims to investigate the determinants of maritime and overland transport costs and the role they play in deterring trade across countries. We estimate a transport cost function using data on maritime and overland transport of the ceramic sector (tiles) obtained from interviews held with Spanish logistics operators. We also study the relationship between transport costs and trade and estimate an import demand model for ceramic products. Additionally, we present a discussion on the sensitivity of trade flows and transportation costs to the existence of back-hauling, special conditions for transport and number of reloads.1 The study of modal transport (overland versus maritime) and its differential characteristics are of relevant interest for maritime economists and should be taken into account in economic policy-making. Furthermore, the proven impact of infrastructure on transport costs and trade points towards the importance of investing in new port infrastructures as a way of fostering trade and income. Our results from the transport cost estimation show that higher distance and poor partner infrastructure lead to a notable increase in transport costs. Inclusion of infrastructure measures improves the fit of the regression, thus corroborating the importance of infrastructure in determining transport costs. The distance coefficient remains significant and with similar magnitude when we add infrastructure variables. Our results from the trade equation estimation show that importer income, as expected, has a positive influence in bilateral trade flows. Higher transport costs significantly deter trade, and distance does not appear to be a good proxy for transport costs in the ceramics sector. Maritime Economics & Logistics (2003) 5, 179–198. doi:10.1057/palgrave.mel.9100069

Relationship between logistics infrastructure and trade: Evidence from Spanish regional exports

“…Most existing studies only consider the effect of individual aspects of the logistics chain on international trade. In this regard, studies such as Limão and Venables (2001), Martínez-Zarzoso et al (2003), Sánchez et al (2003), Clark et al (2004), Micco and Serebrisky (2004), Wilson et al (2005), Coca-Castaño et al (2005) and Márquez-Ramos et al (2011) specifically focus on transport infrastructure indicators. Limão and Venables (2001) focus on the impact of a country's infrastructure and transport costs on bilateral trade.…”

“…The results of the specific analysis of trade flows in Africa indicate that the relatively low level of trade is due to a lack of appropriate infrastructure. A limited number of studies have analysed the impact of infrastructure on trade in specific branches of activity, as is the case with Martínez-Zarzoso et al (2003), who analyse the ceramic tile industry in Spain. These authors study the effect of transport costs on Spanish ceramic exports.…”

“…At this point, it is worth highlighting two clearly separate strands of research in the logistics-trade literature. On the one hand, a considerable number of studies have focused on the effect that different logistics-related factors have on international trade, using the empirical framework of a gravity equation (for example, Martínez-Zarzoso et al, 2003;Wilson et al, 2005;Márquez-Ramos et al, 2011). On the other hand, some studies have attempted to measure the level of logistics performance achieved by different countries or regions (for example, Solakivi et al, 2009).…”

Determinants of maritime transport costs – a panel data analysis for Latin American trade

“…They show the reducing effect of maritime services supply on transport costs and how the structure of the deployed fleet for directly connected regions contributes to the level of transport costs. From a sectoral perspective, Martínez-Zarzoso et al (2003) study the explanatory factors of both maritime and road transport costs for Spanish exports of ceramic tiles. In their paper, transport costs are found to increase with longer distances and poor infrastructure.…”

Do transport costs have a differential effect on trade at the sectoral level?

“…The authors pointed out that it is not clear how the experience of Baltimore generalized. Martínez-Zarzoso et al (2003) used data on transportation costs obtained from interviews with logistic operators in the Spanish ceramic sector. They found import elasticities with respect to transport costs similar in magnitude to those found by Limao and Venables (2001).…”