Shipping Inside the Box: Containerization and Trade

39 Pages Posted: 9 Jan 2017

See all articles by Kerem Cosar

Kerem Cosar

University of Virginia - Department of Economics

Banu Demir

Bilkent University

Multiple version iconThere are 2 versions of this paper

Date Written: January 2017

Abstract

We quantify the effect of container technology on transport costs and trade by estimating the modal choice between containerization and breakbulk shipping using micro-level trade data. The model is motivated by novel facts that relate container usage to shipment, destination and firm characteristics. We find container transport to have a higher first-mile cost and a lower distance elasticity, making it cost effective in longer distances. At the median distance across all country pairs, the box decreases variable shipping costs between 16 to 22 percent. The box explains a significant amount of the global trade increase since its inception: a quantitative exercise suggests that Turkish and U.S. maritime exports would have been about two-thirds of what they are today in the absence of containers.

Keywords: Containerization, Globalization, International Trade, Transportation

JEL Classification: F10, F14

Suggested Citation

Cosar, Kerem and Demir, Banu, Shipping Inside the Box: Containerization and Trade (January 2017). CEPR Discussion Paper No. DP11750. Available at SSRN: https://ssrn.com/abstract=2896040

Kerem Cosar (Contact Author)

University of Virginia - Department of Economics ( email )

237 Monroe Hall
P.O. Box 400182
Charlottesville, VA 22904-418
United States

Banu Demir

Bilkent University

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