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Clarifying Trade Costs: Maritime Transport and its Effect on Agricultural Trade

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  • Jane Korinek
  • Patricia Sourdin

Abstract

Maritime transport costs have a significant impact on the trade in agricultural goods. Maritime transport costs represent a high proportion of the imported value of agricultural products -- 10% on average, which is a similar level of magnitude as agricultural tariffs. This study shows that a doubling in the cost of shipping is associated with a 42% drop in trade on average in agricultural goods overall. The tendency to source imports from countries with low transport costs is therefore strong. Trade in some products is particularly affected by changes in maritime transport costs, in particular cereals and oilseeds, which are shipped in bulk. Time spent in transit also has a strong effect on trade: an extra day spent at sea on an the average sea voyage of 20 days implies a 4.5% drop in trade between a given pair of trading partners. Not only cost but also efficiency in getting agricultural goods to market are therefore important factors in explaining trade flows.

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File URL: http://dx.doi.org/10.1787/220157847513
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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Trade Policy Papers with number 92.

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Date of creation: 28 Sep 2009
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Handle: RePEc:oec:traaab:92-en

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Cited by:
  1. Zhigang Li & Xiaohua Yu & Yinchu Zeng & Rainer Holst, 2012. "Estimating transport costs and trade barriers in China: Direct evidence from Chinese agricultural traders," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 112, Courant Research Centre PEG.
  2. Christophe Gouel & Sébastien Jean, 2012. "Optimal Food Price Stabilization in a Small Open Developing Country," Working Papers 2012-01, CEPII research center.
  3. Marcias, Manuel & Chevassus-Lozza, Emmanuelle & Latouche, Karine, 2011. "Trade and Transport Modes, A Differentiated Impact of Distance," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114370, European Association of Agricultural Economists.
  4. Richard Pomfret & Patricia Sourdin, 2010. "Why do trade costs vary?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 146(4), pages 709-730, December.
  5. Biewald, Anne & Rolinski, Susanne & Lotze-Campen, Hermann & Schmitz, Christoph, 2011. "Implementing Bilateral Trade in a Global Landuse Model," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114251, European Association of Agricultural Economists.
  6. Inmaculada Martínez-Zarzoso & Sami Bensassi, 2011. "The price of modern maritime piracy," Ibero America Institute for Econ. Research (IAI) Discussion Papers 213, Ibero-America Institute for Economic Research.

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