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Maritime Connectivity and Trade Marco Fugazza UNCTAD G-NEXID Workshop, 28 March 2014, Geneva.

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Presentation on theme: "Maritime Connectivity and Trade Marco Fugazza UNCTAD G-NEXID Workshop, 28 March 2014, Geneva."— Presentation transcript:

1 Maritime Connectivity and Trade Marco Fugazza UNCTAD G-NEXID Workshop, 28 March 2014, Geneva

2 Motivation The Dataset Stylized Facts Some Empirical Results Implications Plan of the Presentation 14/11/2013Maritime Connectivity and Trade 2

3 Maritime transport is at the core of international trade in merchandises: almost 80% of volume of goods exchanged in the world are transported via sea Containerizable transport services, in particular, are key for trade in manufactured goods and global value chains Without access to regular liner shipping services that make use of standardized sea-containers, countries cannot competitively participate in globalized production Motivation 14/11/2013Maritime Connectivity and Trade 3

4 Motivation 14/11/2013Maritime Connectivity and Trade 4 And globalized production has played an important role in South-South trade expansion

5 Despite the importance of trade costs as drivers of the geographical pattern of economic activity, global value chains, and of exchanges of merchandise goods between countries, most contributions to their understanding remain piecemeal Some worldwide estimates of transport costs have been recently published by the WB (Trade Costs in the Developing World: 1995 – 2010) Motivation 14/11/2013Maritime Connectivity and Trade 5

6 Their estimates distinguish between trade in manufactured goods and trade in agricultural products In both cases, they find that the absolute levels of trade costs are significant in ad valorem equivalent terms: at least 100% in manufactured goods and in excess of 200% for agriculture Estimates are not based on any measure of bilateral maritime connectivity: e.g. no information about the existence of a direct connection Motivation 14/11/2013Maritime Connectivity and Trade 6

7 UNCTADs contribution: unique database reporting the shortest liner shipping routes between any pair of countries for a reference sample of 178 countries (33 landlocked) over the period The number of transhipments necessary to connect any country pair to allow for containerizable trade is retrieved The information on the existence or not of a direct connection is retrieved from the UNCTAD's Liner Shipping Connectivity Matrix (LSCM) Liner shipping connectivity index (LSCI) The Dataset 14/11/2013Maritime Connectivity and Trade 7

8 Over the whole period on average about 13 percent of country pairs are connected directly About 10 percent need one transhipment, About 49 percent two transhipments About 21 percent three transhipments About 72 percent of country pairs are connected with no more than two transhipments and more than 90 percent with no more than three transhipments Stylized Facts 14/11/2013Maritime Connectivity and Trade 8

9 Top 10MeanBottom 10Mean GBR0.73 TKM3.20 FRA0.79 NER3.20 BEL0.84 BLZ3.23 DEU0.87 SVK3.31 NLD0.88 HUN3.31 ITA0.92 BLR3.32 ESP0.93 NRU3.42 CHN, HKG SAR0.95 MLI3.53 CHN0.97 MDA3.62 USA0.98 ARM4.10 Stylized Facts 14/11/2013Maritime Connectivity and Trade 9 Top and Bottom Ten Countries: average number of Transhipments

10 GBR105GBR108GBR99GBR93 BEL98FRA99FRA96FRA92 FRA96BEL97BEL92USA91 DEU93DEU96HKG89NLD88 USA90ESP91CHN88BEL88 ESP89ITA90USA86CHN86 NLD89USA89NLD86HKG85 ITA84NLD87DEU85ESP83 HKG82CHN81ITA79MYS82 CHN77HKG81ESP79DEU81 Stylized Facts 14/11/2013Maritime Connectivity and Trade 10 Top ten connected countries (selected years): number of direct connections

11 NRU1 1ALB1 1 1IRQ2MMR2QAT2 MMR2QAT2IRQ3MMR2 BHR3PLW3QAT3IRQ3 4SOM3NRU3BRN3 QAT4BHR3MDV4NRU3 PLW4ALB3BGD5 4 BLZ4KWT4PLW5MDV4 BRN4SYC4SOM6PLW5 KWT4BGD4BRN6SOM6 Stylized Facts 14/11/2013Maritime Connectivity and Trade 11 Bottom ten connected countries (selected years): number of direct connections

12 Direct Connections (share in total) M SouthNorth X South46%21% North21%12% Stylized Fatcs 14/11/2013Maritime Connectivity and Trade 12 Direct Connections (share in group total) M SouthNorth X South67%33% North62%38% Average # of direct connections: North: 35 South: 20

13 Stylized Facts 14/11/2013Maritime Connectivity and Trade AUSAfricaAmericaAsiaCANCHNEUREuropeINDJPNNZLPacificUSA AUS Africa America Asia CAN CHN EUR Europe IND JPN NZL Pacific USA AVG Number of direct connection per country Direct Connections per destination (share in Country/Group total direct connections)

14 Stylized Facts 14/11/2013Maritime Connectivity and Trade 14 Distance may not precisely reflect trade costs

15 Empirical Investigation: Impact on Exports 14/11/2013Maritime Connectivity and Trade 15

16 Empirical Investigation: Impact on Exports 14/11/2013Maritime Connectivity and Trade 16

17 Econometric estimation (gravity model) Not being directly connected to the final destination is associated with exports values 45% to 55% lower on average Any additional transhipment is associated with exports values about 23% lower on average Empirical Investigation: Impact on Exports 14/11/2013Maritime Connectivity and Trade 17

18 More needs to be done: Bilateral index of maritime connectivity (UNCTADs work in progress) More precise estimates of bilateral trade costs Getting exporters connected is crucial: Beyond trade facilitation Broader approach to trade facilitation Connecting to a hub may be easier than working on bilateral direct connections Role for international cooperation? Preferential access to maritime hubs? How to attract shipping companies? Implications 14/11/2013Maritime Connectivity and Trade 18


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