The demand and supply of international transport services: The relationships between trade, transpor

1
The demand and supply of international transport
services The relationships between trade,
transport costs and effective access to global
markets
Jan.Hoffmann_at_UNCTAD.org Geneva, October 2009
2
TradeVolumes
Transport Services
Transportcosts

3

• More income to finance trade facilitation
• -gt Better trade facilitation
• -gt More Trade
• -gt More income to finance trade facilitation

4

• Lower Transport Costs
• -gt More trade
• -gt Economies of scale
• -gt Lower Transport Costs

5

• Better services
• -gt More trade
• -gt More income to finance infrastructure
• -gt Better services

6

• More trade
• -gt More shipping supply
• -gt More competition
• -gt lower freights
• -gt More trade

7
The challenge

• Avoid a vicious circle, where high transport
  costs and low service levels discourage trade,
  which will further endear transport and reduce
  connectivity
• Instead Initiate a virtuous circle

8
Transport Costs (precio)Connectivity
(oferta)Trade (demanda)
9
Transport Costs Connectivity Trade
10
?
TradeVolumes
Transport Services
Transportcosts

11
(No Transcript)
12
Case study Caribbean

• Most Latin American and Caribbean countries trade
  very little with each other.
• Examples
• less than 0.001 per cent of Guatemalas exports
  in manufactured goods are destined for Surinam,
• 0.24 per cent for Jamaica,
• 1 per cent for the Dominican Republic, and
• around 8 per cent for Costa Rica.
• What are the main explanations for such
  differences?

13
Case study CaribbeanGravity model

• Participation of country B in global imports is
  the basic determinant of the share of country As
  exports that are destined for country B.
• Neighbouring countries can be expected to trade
  more with each other than those that are not
  neighbours.

14
Case study CaribbeanGravity model what about
distance?

• Distance / trade negative correlation (as
  expected)
• But the parameter for distance is not
  statistically significant if other variables are
  incorporated that capture the supply of shipping
  services and transport costs.
• Instead of distance
• number of liner shipping companies that provide
  direct services between a pair of countries.
• Existence of direct liner shipping services.
• Increase of the freight rate per TEU (twenty foot
  equivalent unit) by 1000 USD Reduction of the
  share of country As exports to country B of
  almost half a percentage point.

15
TradeVolumes ?
Transport Services
Transportcosts

16
Transport Costs ConnectivityTrade
17

• Trade grows faster than GDP
• Containerized trade grows even faster than trade
  in general
• Containerized port traffic grows even faster
  than containerized trade

18
Containerization of trade, and access to
containerized transport services are important
determinants of countries trade competitiveness

• How can we measure this?

19
Maritime connectivity

• An indicator for the supply of liner shipping
  services (containerized trade)
• Ships
• Capacity to transport containers (TEU)
• Shipping companies
• Services
• Maximum ship sizes

20
Benefits of a high connectivity

• For the user (importers and exporters) lower
  transport costs, more choice, higher speed and
  frequencies
• Direct income for the port (private operator,
  port authority)
• Indirect income if value added services can be
  sold

21
Freight rate per containerin the Caribbean (July
2006)
22
The UNCTAD LSCI
23
The UNCTAD LSCI components
24
We have reached a peak

• Until very recently
• In spite of the (global) process of
  concentration, the number of companies providing
  (local) services increased due to the expansion
  of global players into (so far) new markets

25
We have reached a peak

• Today
• As global players are (now) covering all regions
  of the world, mergers among them (start to) lead
  to a reduction of competition on individual
  routes.

26
Case study Caribbean

• 189 routes
• About half served by direct liner shipping
  services
• Examples
• Costa Rica Colombia 14 companies, 50 container
  ships, total capacity 61000 TEU largest vessel
  2500 TEU
• Costa Rica Jamaica 5 companies/ 16 ships/
  17,400 TEU/ 2105 TEU maximum size
• Costa Rica Guyana no direct services

UNCTAD Transport Newsletter, Third Quarter, 2006
27
TradeVolumes
?
Transport Services
Transportcosts

28
Case study CaribbeanDeterminants of connectivity

• Distance (-)
• Trade volumes ()
• GDP per capita in exporting country ()
• Port infrastructure ()

29
TradeVolumes ?
Transport Services ?
Transportcosts

30
Transport CostsConnectivityTrade
31
Freight costs for countries

Source UNCTAD
32
Freight as of commodities value
UNCTAD, Review of Maritime Transport
33
TradeVolumes
Transport Services
?
Transportcosts

34
Transport Costs (more)ConnectivityTrade