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Liner shipping bilateral connectivity and its impact on South Africa’s bilateral trade flows

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  • Jan Hoffmann

    (UNCTAD)

  • Naima Saeed

    (University of Agder)

  • Sigbjørn Sødal

    (University of Agder)

Abstract

Since shipping connectivity reduces trade costs, which in turn improves trade, this paper aims to analyse the short- and long-run impacts of the liner shipping bilateral connectivity on South Africa’s trade flows. In addition to connectivity, measured by five separate components, we also consider the effects on trade of sailing distances, the direct (air) distance and the gross domestic product (GDP) of 142 trading partners. We apply the quasi-maximum likelihood method to estimate the parameters of a dynamic panel data model. The results show that GDP, the number of common direct connections and the level of competition have a positive and significant effect on trade flows, while the number of transshipments and the direct and sailing distances have a negative and significant impact, both in the short and long run. The estimated long-run effects are stronger than the short-run effects, suggesting that shippers take time to adjust their demand to changes in connectivity. The variable maximum ship size does not seem to have a positive bearing on trade, suggesting that countries may not need to try to accommodate ever larger ships to maintain their foreign trade competitiveness.

Suggested Citation

  • Jan Hoffmann & Naima Saeed & Sigbjørn Sødal, 2020. "Liner shipping bilateral connectivity and its impact on South Africa’s bilateral trade flows," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 22(3), pages 473-499, September.
    • Handle: RePEc:pal:marecl:v:22:y:2020:i:3:d:10.1057_s41278-019-00124-8
    DOI: 10.1057/s41278-019-00124-8
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