Source: World Bank, Doing Business project.
Note: Cost measures the fees levied on an imported 20-foot container in U.S. dollars (USD). They include costs for documents, administrative fees for customs clearance and technical control, customs broker fees, terminal handling charges and inland transport. The cost measure does not include tariffs or trade taxes as well as maritime shipping costs.
In its ‘Doing Business’ framework, the World Bank has developed and collected a series of indicators concerning the regulatory and economic framework for commercial activities, particularly as they relate to trade. These include 11 indicator sets covering 190 economies aligned around issues such as the ease of starting a business, registering property, paying taxes, trading across borders, enforcing contracts, and labor market regulations. In particular, the trading indicators time and cost to export the product of comparative advantage and import auto parts in a container.
Ideally, transportation costs should experience a convergence as containerized transport systems become extensive and ubiquitous. Since the container has become the most common transport unit in international trade, the costs of handling them across jurisdictions are representative of the ease of trade. Thus, lowering import and export costs per TEU can be reflective of trade facilitation. There are substantial variations across nations in the cost of importing the same load unit. The main factors behind these differences are:
- Geography. Basic geographical factors are at play. Countries having a long coastline and a large share of their population living close to the coast tend to have lower containerized import costs (e.g. Chile). In such as case, the average inland transport distance tends to be low. The same rationale applies to archipelago and island countries (Indonesia, Philippines, Caribbean). Large countries having a good share of their populations living inland also tend to have higher import costs (e.g. Russia, United States, Canada, Mexico). Landlocked countries have systematically higher import costs because of the additional costs and complexity of importing containers through a third party gateway. Interestingly, Latin American landlocked countries (Bolivia and Paraguay) are the exception to this rule indicating notable efforts to maintain effective gateways to global trade.
- Efficiency of inland transportation. Countries having a high capacity rail system and/or a fluvial system are associated with lower transport costs. Many landlocked countries, in addition to their isolation, are usually not well connected to the gateways through which they have access to global markets. This is particularly the case for sub-Saharan African and Central Asian countries where the highest import costs for containerized cargo are observed.
- Policy and regulations. Some countries purposely impose high transaction costs as a source of revenue. Countries that have implemented trade facilitation strategies, particularly major infrastructure investments are prone to have lower costs. Inversely, situations of political instability and insecurity substantially add to transport costs. Corruption and rent seeking behavior are commonly linked with political instability.
- Trade imbalances. Trade imbalances are linked with container flow imbalances, which impose surcharges for imports if they are substantially higher than exports or surcharges for exports if they are higher than imports. These surcharges cover the costs of repositioning containers from areas where there is a surplus to areas where there is a deficit. For instance, due to imbalances it is common that container shipping rates from Asia to North America to be twice as high for the inbound trip.
It is, however, difficult to separate the contribution of each factor to import costs. On average, import costs per TEU are higher than export costs since most countries implicitly favor exports over imports since they support national industries. OECD countries have import costs 38% less than the global average, while this figure is 51% less for East Asian countries, which is the region having the world’s lowest import costs. Inversely, landlocked countries have import costs 85% higher than the global average.