Maritime Transport Costs and Trade

Why? As tariffs and excess costs in production have fallen, other costs such as transport have become relatively more important As tariffs and excess costs in production have fallen, other costs such as transport have become relatively more important Gravity model : “workhorse” of trade flow models, uses distance as a proxy for trade costs. Gravity model : “workhorse” of trade flow models, uses distance as a proxy for trade costs.

New dataset on maritime transport costs Most comprehensive dataset on maritime transport costs known today Most comprehensive dataset on maritime transport costs known today Different data sources for different segments of maritime transport markets (containers, bulk industrial raw materials, bulk agricultural raw materials) Different data sources for different segments of maritime transport markets (containers, bulk industrial raw materials, bulk agricultural raw materials) Permits calculation of Permits calculation of –transport cost per tonne of merchandise –ad valorem equivalent

Why not more? Customs data have to be collected by mode of transport and by CIF and FOB Customs data have to be collected by mode of transport and by CIF and FOB For some countries, these data are not collected For some countries, these data are not collected For others, we have not had access to them For others, we have not had access to them In other cases, we have incomplete information about the availability of these data In other cases, we have incomplete information about the availability of these data

Shipping to and from developing countries is more expensive than OECD

Maritime transport costs for grains in some NFIDCs

Impact of MTC on trade in agriculture A doubling of transport costs ($/T) is associated with a % decline in agricultural trade overall A doubling of transport costs ($/T) is associated with a % decline in agricultural trade overall Distance is still significant Distance is still significant The impact of transport costs on trade is increasing over time – by 1.5 percentage points per year The impact of transport costs on trade is increasing over time – by 1.5 percentage points per year

Context: Project on Trade Costs Future work to measure and analyse impact of other trade costs: Inland transport Inland transport Logistics and port-side services Logistics and port-side services Exchange rate volatility Exchange rate volatility Importer/exporter margins Importer/exporter margins Distribution issues Distribution issues