Clarifying Trade Costs: Maritime Transport and its Effect on Agricultural Trade
AbstractMaritime 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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Bibliographic InfoPaper provided by OECD Publishing in its series OECD Trade Policy Papers with number 92.
Date of creation: 28 Sep 2009
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- Jane Korinek & Patricia Sourdin, 2010. "Clarifying Trade Costs: Maritime Transport and Its Effect on Agricultural Trade," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 32(3), pages 417-435.
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