Elsevier

World Development

Volume 39, Issue 10, October 2011, Pages 1749-1759
World Development

Land Transport for Export: The Effects of Cost, Time, and Uncertainty in Sub-Saharan Africa

https://doi.org/10.1016/j.worlddev.2011.04.028Get rights and content

Summary

In Sub-Saharan Africa (SSA), inland export transport costs and time delays are much higher for landlocked countries, vary substantially between different geographic corridors, and exhibit substantial uncertainty. Unit costs and costs of time for land transport of exports are high for many agricultural products relative to metals and other high-value products. We illustrate systemic uncertainty in land and maritime transport for exporting by use of simulation. Relationships among uncertainty, infrastructure quality, and other features of logistics systems are highly non-linear, and can be potentially used to identify priorities for trade facilitation.

Section snippets

INTRODUCTION

This paper is designed to examine several underexplored themes in the economics of trading costs. First, high transaction costs in trade are not simply analogous to high tariffs, which arise from a single policy instrument and can be reduced by a single action. High transaction costs are associated with interactions among multiple layers of transport, infrastructure, policy, and geography, often involving several countries. This means that trade facilitation efforts targeted at a single point

COST, TIME, AND UNCERTAINTY4

In general, inland transport in SSA is characterized by high costs, long times, and high levels of uncertainty. Although geographic features, such as low road density, contribute to costs, time, and uncertainty, other factors include regulation, market structure, administrative barriers, and corruption. Below are some summaries and illustrative examples that detail the particular problems experienced by SSA exporters. These anecdotes complement and provide “real-world” support for the stylized

EFFECTS AT COUNTRY AND PRODUCT LEVEL

Ideally, we would like to compare the cost increases associated with moving from the farm or factory to the port with the revenues actually obtained by the exporter, and to know how much is added to the ex-farm or ex-factory price not only by the truck movement, but by paperwork costs and ship loading costs. Such information would enable us to decompose the f.o.b. price of exports into its various components, which would allow us in turn to assess the potential gains to export producers

UNCERTAINTY: A SIMULATION EXERCISE

In order to focus on the implications for exporters of uncertainty in transport systems, we employ a simulation model. The model represents a situation in which there is uncertainty both in road transport and in ship transport. The exporter moves goods along a road to a port. The travel time on the road is uncertain. The arrival time of the ship is uncertain also, due to logistical problems and incomplete information about shipping. This means that the truck can be either early or late arriving

CONCLUSION

The costs associated with movement to port in developing exporting countries are non-trivial. These costs have three dimensions: financial costs of land transport, opportunity costs of time in slow processes, and uncertainty associated with unpredictable arrival times and incomplete information. For the case of landlocked countries in SSA, we have shown that these costs arise from complex interactions among multiple physical and policy features of the trading partners, and from interactions

Acknowledgments

We are indebted to Chuma Onwuka for invaluable research assistance, Gaël Raballand for useful discussions, David Hummels for access to data, and to four anonymous referees for helpful comments. Any errors are the responsibility of the authors.

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