Trade in International Maritime Services: How Much Does Policy Matter?

Abstract

Maritime transport costs significantly impede international trade. This article examines why these costs are so high in some countries and quantifies the importance of two explanations: restrictive trade policies and private anticompetitive practices. It finds that both matter, but the latter have a greater impact. Trade liberalization and the breakup of private carrier agreements would lead to an average of one-third lower liner transport prices and to cost savings of up to US$3 billion on goods carried to the United States alone. The policy implications are clear: there is a need not only for further liberalization of government policy but also for strengthened international disciplines on restrictive business practices. The authors propose an approach to developing such disciplines in the current round of services negotiations at the World Trade Organization.

The impact of trade facilitation factors on South Africa's exports to a selection of African countries

“…reduced transport costs (APEC, 1999;UNCTAD, 2001;Fink et al, 2002); . improved port facilities (Fink et al, 2002); . efficient and modern customs regimes (Hummels, 2001); .…”

Trade and International Transport Services: an Analytical Framework

“…Also the elimination of barriers to competition in the provision of port services in Chile and Mexico led to substantial reductions in shipping costs (by almost 50 percent). Fink et al (2001) estimate that the breakup of private carrier agreement cartels would cause a reduction in liner transport prices by one-third and to cost savings of up to $3 billion on goods carried to the U.S. alone. Although this paper does not address within country trade, it is useful to cite Francois et al (1996) who study the Jones Act (which prohibit foreign shipping firms from transporting goods between two U.S. locations) and estimate that a welfare gain of around $3 billion a year could be obtained by letting foreign shipping firms operate on domestic routes.…”

Applying Maritime Economics to Set Foundations for Port and Shipping Policies

“…A rich literature is evolving around this topic, although it appears that it is rather the main stream economists that are entering the field of maritime transport, rather than port and shipping specialists who would be moving into the broader field of international trade economics. An example is Fink et al (2000), from the World Bank's Development Research Group, who caused quite some polemic discussions among maritime economists with their recommendations about liner shipping cartels. International trade models used to take transport for granted, albeit costly, assuming that distance would be a good 'proxy' for these transport costs.…”