Trade Facilitation
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Trade Facilitation

Defining, Measuring, Explaining and Reducing the Cost of International Trade

Patricia Sourdin and Richard Pomfret

This up-to-date and informative book provides a comprehensive treatment of the costs of trading across borders and of trade facilitation policies. While traditional tariff and non-tariff barriers to trade have been reduced, international trade continues to involve higher costs in money and time than domestic trade. These include not only transport costs, that are determined by distance and commodity characteristics, but also at-the-border and behind-the-border costs which can be reduced by appropriate policies. Research on trade costs has flourished since the turn of the century, and this book by Patricia Sourdin and Richard Pomfret, takes stock of our increased knowledge of the nature and magnitude of trade costs, analysing why they are high and how they can be reduced to increase the gains from trade.
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Chapter 4: Logistics and Trade Costs

Patricia Sourdin and Richard Pomfret


International maritime and air carriers moved more than eight million tons of freight globally in 2008. Quality logistics services play an important role in facilitating the transportation of international trade in goods: inefficient logistics services impede trade by imposing an extra cost in terms of time as well as in monetary terms. As developed nations shift from traditional manufacturing and agriculture and are increasingly engaging in international vertical specialization, the need for efficient logistics services becomes ever more important. High-quality logistics services improve the competitiveness of a country’s exports by reducing the cost involved in transporting goods – especially for countries that are disadvantaged by being far from major markets. Julia Devlin and Peter Yee (2005) highlight the disadvantage faced by certain countries in the Middle East where high logistics costs negatively influence a country’s international competitiveness. This chapter investigates the role that trade logistics play in the volume and value of international trade and the extent to which poor-quality logistics constitute a barrier to trade.1 We define trade logistics to include the range of services and processes that are involved in moving goods from one country to another. It includes customs and administrative procedures, organization and management of international shipment operations, tracking and tracing, and the quality of transport and information technology infrastructure, i.e. breaking down the analysis in the previous chapter to focus on more specific aspects of trade costs. Since logistics services impact trade monetarily and in terms of time, both of these aspects will be examined. The...

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