The Impact of Logistics Performance on Trade

Abstract

This paper studies the impact of logistics performance on global bilateral trade. Taking a supply chain perspective, logistics performance refers to cost, time, and complexity in accomplishing import and export activities. We draw on a data set compiled by the World Bank containing specific quantitative metrics of logistics performance in terms of time, cost, and variability in time. Numerous researchers have shown that logistics performance is statistically significantly related to the volume of bilateral trade. Our research calibrates the impact of specific improvements in logistics performance (time, cost, and reliability) on increased trade. Our findings can spur public and private agencies that have direct or indirect influence over logistics performance to focus attention on altering the most relevant aspects of logistics performance to improve their country's ability to compete in today's global economy. Moreover, as our logistics metrics are directly related to operational performance, countries can use these metrics to target actions to improve logistics and monitor their progress.

The impacts of port infrastructure and logistics performance on economic growth: the mediating role of seaborne trade

“…However, quality of port infrastructure significantly affects the logistics performance of a country. Similar to Hausman et al (2013), we also found that logistics performance affects the seaborne trade of a country. Most of the studies that foresaw diminishing impact of seaports on economy emphasised employment generation within ports (Gripaios and Gripaios, 1995;Kinsey, 1981;Jung, 2011).…”

“…Also, better accessibility of freight increases logistics employment (van den Heuvel et al, 2014). Overall, firms in countries with better logistics performance have higher probability of exporting to international markets and attracting foreign direct investments (Hausman et al, 2013). Thus, logistics development has a positive impact on regional economic growth (Chu, 2012;Lean et al, 2014;Li et al, 2017;Lun et al, 2016).…”

Export Diversification Effects of the WTO Trade Facilitation Agreement

“…Each additional day that a product is delayed prior to being shipped reduces trade by at least 1 per cent, as found by Djankov et al (2010). A result which combines the effects of time and costs is obtained by Hausman et al (2013). In their study, a 1% reduction in processing costs/time leads to 0.49%-0.37% of increased bilateral trade.…”

Drivers of Logistics Performance

“…Hausman et al (2013) estimate that a 1% reduction in the 'distance' measure, which can be interpreted as shipping costs, increases trade by 1.4%. Similarly, a 1% reduction in the total trade-related processing cost would be associated with a 0.5% increase in bilateral trade (Hausman, et al, 2013).…”