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Jan.Hoffmann@UNCTAD Geneva, May 2010

The demand and supply of international transport services: The relationships between trade, transport costs and effective access to global markets. Jan.Hoffmann@UNCTAD.org Geneva, May 2010. Trade. Transport Services. Transport costs. More income to finance trade facilitation

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Jan.Hoffmann@UNCTAD Geneva, May 2010

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  1. The demand and supply of international transport services: The relationships between trade, transport costs and effective access to global markets Jan.Hoffmann@UNCTAD.org Geneva, May 2010

  2. Trade Transport Services Transportcosts

  3. More income to finance trade facilitation -> Better trade facilitation -> More Trade -> More income to finance trade facilitation Angola

  4. Lower Transport Costs -> More trade -> Economies of scale -> Lower Transport Costs

  5. Better services -> More trade -> More income to finance infrastructure -> Better services Suez Canal

  6. More trade -> More shipping supply -> More competition -> lower freights -> 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 CostsConnectivityTrade Geneva, May 2010 Jan.Hoffmann@UNCTAD.org

  9. Transport CostsConnectivityTrade Geneva, May 2010 Jan.Hoffmann@UNCTAD.org

  10. Freight rates in May 2010 40’ container from Dalian to • DUBAI 1200 • COLOMBO 1300 • B.ABBAS 1300 • CALCUTTA 1700 • BAHRAIN 1800 • UM QUASER 3000 • PORT SUDAN 3300 • ROTTERDAM 3500 • TEMA 4600 • SANTOS 4800 • VALPARAISO 5200

  11. Freight costs for countries Source: UNCTAD

  12. Freight as % of commodities value UNCTAD, Review of Maritime Transport

  13. TradeVolumes Transport Services ? Transportcosts

  14. Distances Economies of scale Imbalances Differences in maritime freights depend on… • Type & value of goods • Competition • Port characteristics

  15. Distances Economies of scale Imbalances Differences in maritime freights depend on… • Type & value of goods • Competition • Port characteristics

  16. Freight rates and Distance in the Caribbean UNCTAD Transport Newsletter, 1st Quarter 2007

  17. Distances Economies of scale Imbalances Differences in maritime freights depend on… • Type & value of goods • Competition • Port characteristics

  18. Source: Dynamar, 2008, via Antonio Zuidwijk

  19. Economies of Scale CRS, 25 April 2010

  20. Container ship sizes • 27.- US$ saving/ container/ tripusing “post panamax” versus “panamax” (Drewry)

  21. Mergers of shipping companies • Savings thanks to larger volumes(Roland & Berger)

  22. Port operations • 12 US$ per move savings with global operatorsDrewry

  23. Distances Economies of scale Imbalances Differences in maritime freights depend on… • Type & value of goods • Competition • Port characteristics

  24. Imbalances CI-Online 10 May 2010

  25. Distances Economies of scale Imbalances Differences in maritime freights depend on… • Type & value of goods • Competition • Port characteristics

  26. Increase the value by 1% implies an increase of transport and insurance costs by around 0.3 – 0.4%  Merchandize type and value

  27. Distances Economies of scale Imbalances Differences in maritime freights depend on… • Type & value of goods • Competition • Port characteristics

  28. If countries are neighbours, with paved roads, maritimetransport costs are around 10% lower  Competition with land transport Fotos: Jan Hoffmann

  29. Receiving 20 instead of 5 companies freights go down by around 12%  Competition between carriers

  30. Competition between carriersCase study Caribbean • If the company itself has no direct service (i.e. it only has a service with transshipment): This company’s freight rate + $650 • If other, competing, companies do provide a direct service: This companies freight rate - $425

  31. Competition between carriersCase study Caribbean Source: Hoffmann, Wilmsmeier, IAME 2007

  32. Distances Economies of scale Imbalances Differences in maritime freights depend on… • Type & value of goods • Competition • Port characteristics

  33. Difference between “best” and “worst” case in Latin America: 25% of worst case  Port reform

  34. Dependent variable: maritime transport costs per tonne of containerizable cargo Wilmsmeier, Hoffmann, Sanchez, in: Porteconomics, 2006

  35. Dependent variable: maritime transport costs per tonne of containerizable cargo Better port infrastructurereduces maritime transport costs

  36. Dependent variable: maritime transport costs per tonne of containerizable cargo Better (perceived)port efficiencyreduces maritime transport costs

  37. Dependent variable: maritime transport costs per tonne of containerizable cargo Better general transport infrastructure does NOT reduce maritime transport costs

  38. Dependent variable: maritime transport costs per tonne of containerizable cargo Port privatization in the EXPORTING country reduces maritime transport costs

  39. Dependent variable: maritime transport costs per tonne of containerizable cargo Trade facilitation in the IMPORTING country reduces maritime transport costs

  40. Dependent variable: maritime transport costs per tonne of containerizable cargo Better connectivity between ports/ more competition among carriersreduces maritime transport costs

  41. Distances Type & value of goods Imbalances To sum up: Differences in maritime freights depend on… • Competition • Economies of scale • Port characteristics

  42. TradeVolumes ? Transport Services Transportcosts

  43. Transport Costs ConnectivityTrade Geneva, May 2010 Jan.Hoffmann@UNCTAD.org

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

  45. Containerized port throughput UNCTAD RMT, based on data from Drewry

  46. Containerization of trade, and access to containerized transport services are important determinants of countries’ trade competitiveness How can we measure this?

  47. “Connectivity” • Per country – in a “point” • Per route – between pairs of countries

  48. “Connectivity” • Per country – in a “point” (162) • Per route – between pairs of countries

  49. “Connectivity” • Per country – in a “point” (162) • Per route – between countries (13041)

  50. “Maritime connectivity” UNCTAD’s “Liner Shipping Connectivity Index” (LSCI): An indicator for the supply of liner shipping services Components: • Ships • TEU capacity • Shipping companies • Services • Maximum ship sizes

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