The Impact of Port Characteristics on International Maritime Transport Costs

The chapter provides empirical evidence that indicators for different port characteristics have a statistically significant and strong impact on international maritime transport costs. It reports on empirical work on trade among 16 Latin-American countries. The database incorporates 75,928 observations, which comprise practically all maritime trade transactions in containerizable goods on most intra-Latin-American trade routes for the year 2002. The regressions incorporate the main classical explanatory variables of maritime transport costs, such as unit cargo value, volume per transaction, geographical distance, bilateral trade volume, and trade balances. It further looks at six indicators for different port characteristics as possible additional determinants of international transport costs. It is found that indicators for port efficiency, port infrastructure, private sector participation, and inter-port connectivity have significant impacts on international maritime transport costs. The estimated elasticity for port efficiency is the highest of all port-related variables; doubling port efficiency in a pair of ports has the same impact on international transport costs as halving the distance between them would have.