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Shipping inside the Box: Containerization and Trade

Author

Listed:
  • Cosar, Kerem
  • Pakel, Banu Demir

Abstract

We quantify the effect of container technology on transport costs and trade by estimating the modal choice between containerization and breakbulk shipping using micro-level trade data. The model is motivated by novel facts that relate container usage to shipment, destination and firm characteristics. We find container transport to have a higher first-mile cost and a lower distance elasticity, making it cost effective in longer distances. At the median distance across all country pairs, the box decreases variable shipping costs between 16 to 22 percent. The box explains a significant amount of the global trade increase since its inception: a quantitative exercise suggests that Turkish and U.S. maritime exports would have been about two-thirds of what they are today in the absence of containers.

Suggested Citation

  • Cosar, Kerem & Pakel, Banu Demir, 2017. "Shipping inside the Box: Containerization and Trade," CEPR Discussion Papers 11750, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:11750
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    References listed on IDEAS

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    1. Coşar, A. Kerem & Demir, Banu, 2016. "Domestic road infrastructure and international trade: Evidence from Turkey," Journal of Development Economics, Elsevier, vol. 118(C), pages 232-244.
    2. Luigi Pascali, 2017. "The Wind of Change: Maritime Technology, Trade, and Economic Development," American Economic Review, American Economic Association, vol. 107(9), pages 2821-2854, September.
    3. Bernhofen, Daniel M. & El-Sahli, Zouheir & Kneller, Richard, 2016. "Estimating the effects of the container revolution on world trade," Journal of International Economics, Elsevier, vol. 98(C), pages 36-50.
    4. Bergstrand, Jeffrey H. & Larch, Mario & Yotov, Yoto V., 2015. "Economic integration agreements, border effects, and distance elasticities in the gravity equation," European Economic Review, Elsevier, vol. 78(C), pages 307-327.
    5. Alfonso Irarrazabal & Andreas Moxnes & Luca David Opromolla, 2015. "The Tip of the Iceberg: A Quantitative Framework for Estimating Trade Costs," The Review of Economics and Statistics, MIT Press, vol. 97(4), pages 777-792, October.
    6. Micco, Alejandro & Serebrisky, Tomas, 2006. "Competition regimes and air transport costs: The effects of open skies agreements," Journal of International Economics, Elsevier, vol. 70(1), pages 25-51, September.
    7. Harrigan, James, 2010. "Airplanes and comparative advantage," Journal of International Economics, Elsevier, vol. 82(2), pages 181-194, November.
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    Cited by:

    1. Leah Brooks & Nicolas Gendron-Carrier & Gisela Rua, 2018. "The Local Impact of Containerization," Finance and Economics Discussion Series 2018-045, Board of Governors of the Federal Reserve System (US).
    2. Thomas J. Holmes & Ethan Singer, 2018. "Indivisibilities in Distribution," NBER Working Papers 24525, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Containerization; Globalization; International Trade; Transportation;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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