3 INTRODUCTION International trade implies moving goods: - 2-3 weeks for a container to go from Europe to US midwest- One day or less for air shipping but more expensiveWhat specific costs does shipping time impose on trade ? What is the magnitude of these costs ? What are the effects of time on patterns of trade and the international organization of production ?
4 Willingness to pay for time saving (fresh products, vertical specialization) Comforted by a relative decline of air shipping ratesCheck for the trade-off between fast but expensive air transportation and slow but inexpensive sea shipping
5 Estimation Strategy and Dataset We use an equation of total cost of the delivered goodAir shipping is chosen ifRearranging
12 Increasing shipment length reduces the probability of trade by 1% in average per day But the effect of distance is reversed and increasing in distance of 1000km increases the probability of exporting to the US by 0.02%
16 The estimated time cost for SITC 7 and 8 on average is equal to 0 The estimated time cost for SITC 7 and 8 on average is equal to 0.8% per day, so for a 20 day ocean journey the cost is equal to a 16% tariff on these goods
17 Conclusion This paper doesn’t take into account landlocked countries The results on transport mode choice and location will be affected by the opening of the northern sea routeHow the trade growth will be affected ?