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Lecture 02 Maritime Transportation and Logistics As A Trade Facilitator

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Lecture 02: Maritime

Transportation and
Logistics as a trade
facilitator

By: Mr. Sokmeng Soeun

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Outlines
 Introduction
 Ports and shipping as facilitators of trade
 The practice of international shipping
 International trade research and non-tariff
barriers
 Summary and conclusion

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Introduction
 International trade agreement and regional
trade integration initiatives have
significantly reduced the tariff-based
barriers to trade.
 Non-tariff barrier
 Ocean transportation – period of the great
explorations of the world

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Introduction
 Mid-19th century – steam engine – ocean
shipping
 Briefly introduce the trade facilitation
school of thought in shipping and port
management.

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Ports and shipping as
facilitators of trade
 Koopmans (1939): seaborne trade is
inelastic to prices in shipping.
 Tinbergen (1959) proposed the idea that
demands for shipping could be measured
by the actual tonnage carried by ships.
 Their perspective was mainly to find
sources for cyclicality in shipping.

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Ports and shipping as
facilitators of trade
 The classic approach to model global
bilateral trade patterns is a gravity model.
𝒍𝒏 𝑻𝒓𝒂𝒅𝒆𝒊𝒋 = 𝜷𝟎 + 𝜷𝟏 𝒍𝒏 𝑮𝑫𝑷 𝒊+ 𝜷𝟐 𝒍𝒏 𝑮𝑫𝑷 𝒋 +𝜷 𝟑 𝒍𝒏 𝑫𝒊𝒔𝒕𝒂𝒏𝒄𝒆 𝒊𝒋 +𝜺 𝒊𝒋

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Ports and shipping as
facilitators of trade
 Clark et al (2004) estimate a maritime
transport function that includes
determinants for distance, product specific
requirements (including value), directional
imbalance, total trade volume on a route
(to represent increasing returns to scale),
technological innovation, anti-competitive
practices, and the quality of port and cargo
handling infrastructure.
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Ports and shipping as
facilitators of trade
 They find that seaport efficiency is an
important determinant for transport costs.
From their analysis, they also conclude
that transport costs are potentially a
barrier to trade, and need to be considered
by policy makers.

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Ports and shipping as
facilitators of trade
 Wilson et al (2003) put port efficiency in a
broader framework of four indicators for
trade facilitation:
 port efficiency;
 customs environment;
 regulatory environment;
 service sector infrastructure.

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Ports and shipping as
facilitators of trade
 Hummels et al (2009) investigates the
trade diminishing effect of the market
power of shipping companies.
 Efficiencies between developing countries
and developed countries route

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The practice of international
shipping
 Contract
 Incoterms
 Bill of Lading (B/L)
 Sea Waybill / Surrender B/L / Telex
Release
 Freight Prepaid / Freight Collect
 Demurrage / Detention / Storage Charge

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International trade research and
non-tariff barriers

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International trade research and
non-tariff barriers
 World Bank: Logistics Performance Index;
 World Bank and International Finance
Corporation: Global Doing Business
Report;
 World Economic Forum: Enabling Trade
Report.

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Summary and conclusion
 Shipping and ports facilitate trade
 Transport and trade costs are an important
factor

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Summary and conclusion
 Some of operational bottlenecks
 demurrage and detention;
 pre-shipment declarations to customs;
 operations and formalities related to the
container;
 structural delay of container ships;
 complicated tariff structure of container
transport;
 low quality of data on shipping documents.

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