Ad Hoc Expert Meeting on
Addressing the Transport and Trade Logistics Challenges of the
Small Island Developing States (SIDS): Samoa Conference and Beyond
11 July 2014
Liner shipping connectivity and transport costs in SIDS
Presentation by
Mr. Jan Hoffmann Chief, Trade Facilitation Section, Trade Logistics Branch
Division on Technology and Logistics, UNCTAD
This expert paper is reproduced by the UNCTAD secretariat in the form and language in which it has been received.
The views expressed are those of the author and do not necessarily reflect the views of the UNCTAD.
1
[email protected], Geneva, July 2014
Liner shipping connectivity and
transport costs in SIDS
Transport
costs
Trade
Connectivity
2
Lower transport costs
-> More trade
-> Economies of scale
-> Lower transport costs
More income to finance trade and transport facilitation
-> Better trade facilitation
-> More Trade
-> More income to finance trade and transport facilitation
3
Better services
-> More trade
-> More competition
-> Better services
The challenge for SIDS:
• 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
4
Transport
costs
Trade
Connectivity
Freight costs % of import value
Source: UNCTAD estimates. Data: 10 year moving average
5
Freight costs % of import value
Source: UNCTAD estimates. Data: 10 year moving average. Note: unweighted average for SIDS groupings
Differences in maritime freights depend on…
6
Differences in maritime freights depend on…
1) Distances
2) Economies of scale
3) Imbalances
4) Type & value of goods
5) Competition
6) Port characteristics
Differences in maritime freights depend on…
1) Distances
2) Economies of scale
3) Imbalances
4) Type & value of goods
5) Competition
6) Port characteristics
7
y = 0.6206x + 1019.9
R2 = 0.2058
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0 500 1,000 1,500 2,000 2,500
Distance
Fre
igh
t ra
teFreight rates and Distance in the Caribbean
UNCTAD Transport Newsletter, 1st Quarter 2007
Differences in maritime freights depend on…
1) Distances
2) Economies of scale
3) Imbalances
4) Type & value of goods
5) Competition
6) Port characteristics
8
Sample costs 1100
TEU
4250
TEU
8750
TEU
13000
TEU
Construction costs
million USD
28 77 135 167
Construction costs
USD per TEU
25 000 18 117 15 430 12 850
Crew 15 to 17 15 to 17 15 to 17 15 to 17
Source: Dynamar, 2008
Differences in maritime freights depend on…
1) Distances
2) Economies of scale
3) Imbalances
4) Type & value of goods
5) Competition
6) Port characteristics
9
Cargo imbalances Merchandise Imports and Exports as % GDP
Region/Country Imports Exports Region/Country Imports Exports
Caribbean Pacific
Antigua and Barbuda 45.8 5.7 Fiji 62.7 24.1
Bahamas 42.3 12.3 Kiribati 57.1 5.7
Barbados 41.9 13.5 Marshall Islands 76.8 19.2
Dominica 41.7 7.3 Micronesia (Federated States of) 64.4 10.7
Grenada 43.7 4.6 Nauru na na
Jamaica 45.4 10.8 Palau 61.3 3.1
Saint Kitts and Nevis 30.0 5.9 Papua New Guinea 35.1 41.5
Saint Lucia 56.5 15.3 Samoa 50.5 11.1
Saint Vincent and the Grenadines 49.1 6.2 Solomon Islands 49.6 46.6
Trinidad and Tobago 40.3 56.2 Timor-Leste 28.6 0.9
Tonga 44.5 3.4
Indian Ocean Tuvalu 62.7 0.8
Comoros 50.3 4.2 Vanuatu 37.5 7
Maldives 69.9 14.1 West Africa
Mauritius 49.6 25.3 Cape Verde 41.9 2.9
Seychelles 70.9 44.0 Sao Tome and Principe 53.2 4.2
Source: World Bank, World Development Indicators
Cargo imbalances
10
Differences in maritime freights depend on…
1) Distances
2) Economies of scale
3) Imbalances
4) Type & value of goods
5) Competition
6) Port characteristics
Merchandize type and value
High value, perishable goods…
11
Differences in maritime freights depend on…
1) Distances
2) Economies of scale
3) Imbalances
4) Type & value of goods
5) Competition
6) Port characteristics
y = 1814.9e-0.0671x
R2 = 0.4348
0
500
1'000
1'500
2'000
2'500
3'000
3'500
0 2 4 6 8 10 12 14 16 18 20
Number of Carriers providing direct services
Fre
igh
t ra
te
Competition between carriers
Case study Caribbean
UNCTAD Transport Newsletter, 1st Quarter 2007
12
Differences in maritime freights depend on…
1) Distances
2) Economies of scale
3) Imbalances
4) Type & value of goods
5) Competition
6) Port characteristics
Dependent variable:
maritime transport costs per tonne of containerizable cargo
Better port infrastructure
reduces maritime transport costs
Port reformPort reform
13
Dependent variable:
maritime transport costs per tonne of containerizable cargo
Port reformPort reform
Better (perceived) port efficiency
reduces maritime transport costs
Dependent variable:
maritime transport costs per tonne of containerizable cargo
Port privatization in the EXPORTING country
reduces maritime transport costs
Port reformPort reform
14
Dependent variable:
maritime transport costs per tonne of containerizable cargo
Trade facilitation in the IMPORTING country
reduces maritime transport costs
Port reformPort reform
Dependent variable:
maritime transport costs per tonne of containerizable cargo
Better connectivity between ports/
more competition among carriers
reduces maritime transport costs
Port reformPort reform
15
Transport
costs
Trade
Connectivity
Introducing containerization
leads to more trade
(Bernhofen et al, 2013)
16
Containerization of trade, and
access to containerized transport
services are important determinants
of SIDS’s trade competitiveness
How can we measure this?
“Maritime connectivity”
UNCTAD’s “Liner Shipping Connectivity Index” (LSCI):
An indicator for access to liner shipping services
Components:
• Ships
• TEU capacity
• Shipping companies
• Services
• Maximum ship sizes
17
Higher Liner Shipping Connectivity
leads to lower trade costs
(Arvis et al, 2013)
UNCTAD’s LSCI
available on-line
18
19
20
A global trend towards concentration
A global trend towards concentration
21
Determinants of maritime connectivity
• Geography
• Trade volumes
• Port characteristics
Transport
costs
Trade
Connectivity
Top Related