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Major Determinants of Ocean Freight Rates for Grains: An Econometric Analysis
Author(s) -
Binkley James K.,
Harrer Bruce
Publication year - 1981
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1239810
Subject(s) - port (circuit theory) , econometric analysis , economies of scale , economics , econometric model , volume (thermodynamics) , trade volume , scale (ratio) , econometrics , international economics , international trade , microeconomics , geography , engineering , physics , quantum mechanics , electrical engineering , cartography
Abstract Econometric analysis of ocean grain rates suggests that ship size and trade volume are of approximately equal importance with distance in determining rates. Use of large ships reduces at‐sea costs and hence the role of distance; but larger ships appear to incur higher port costs, which suggests that efficient port facilities are required for scale economies to be realized. Policies to improve shipping technology and increase trade volume can lead to lower rates, reduce geographic differences among exporters, and thus lead to more competitive markets. This implies that the role of transportation in trade analysis should not be ignored.