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Liner shipping bilateral connectivity and its impact on South Africa’s bilateral trade flows

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Maritime Economics & Logistics Aims and scope

Abstract

Since shipping connectivity reduces trade costs, which in turn improves trade, this paper aims to analyse the short- and long-run impacts of the liner shipping bilateral connectivity on South Africa’s trade flows. In addition to connectivity, measured by five separate components, we also consider the effects on trade of sailing distances, the direct (air) distance and the gross domestic product (GDP) of 142 trading partners. We apply the quasi-maximum likelihood method to estimate the parameters of a dynamic panel data model. The results show that GDP, the number of common direct connections and the level of competition have a positive and significant effect on trade flows, while the number of transshipments and the direct and sailing distances have a negative and significant impact, both in the short and long run. The estimated long-run effects are stronger than the short-run effects, suggesting that shippers take time to adjust their demand to changes in connectivity. The variable maximum ship size does not seem to have a positive bearing on trade, suggesting that countries may not need to try to accommodate ever larger ships to maintain their foreign trade competitiveness.

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Notes

  1. Fugazza and Hoffmann (2017) explained the economic rationale for this component as follows: firstly, countries lying on the same coast (e.g., Chile, Peru, Ecuador) are served by the same services and, as a result, have far more connections (services that connect them) than they would have without their common services from/to, for example, Europe, North America or Asia. Empirical evidence also confirmed that countries located along the same coastline or surrounding the same sea basin tend to trade more with each other. Secondly, each common connection is one more option to trade via one transshipment.

  2. See http://www.transport.gov.za/web/department-of-transport/maritime accessed 1st June 2018.

  3. The difference between “network” and “connectivity” is that connectivity measures the strength of the network. We use the term “connectivity” to describe a country’s position within the liner shipping network. We do not analyse the network as such.

  4. The underlying data from which the LSBCI was generated has been made available by UNCTAD for the purposes of the present paper. Further descriptions and analysis of the global shipping network based on these components is presented in UNCTAD’s (2017) Review of Maritime Transport (UNCTAD 2017).

  5. See https://comtrade.un.org/data/ accessed in August 2018.

  6. See https://www.bowmanslaw.com/insights/ports-transport-logistics/durban-threat-rival-african-ports-competition-will-benefit-shippers/. Accessed 11th July 2018.

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Acknowledgements

The authors are grateful to two anonymous reviewers and Editor in Chief of MEL for constructive comments that led to improvements in this paper.

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Authors and Affiliations

  1. Division on Technology and Logistics, UNCTAD, Geneva, Switzerland

    Jan Hoffmann

  2. School of Business and Law, University of Agder, 4604, Kristiansand, Norway

    Naima Saeed & Sigbjørn Sødal

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  1. Jan Hoffmann
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Appendix

Appendix

See Table 8.

Table 8 Models’ specification test
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Hoffmann, J., Saeed, N. & Sødal, S. Liner shipping bilateral connectivity and its impact on South Africa’s bilateral trade flows. Marit Econ Logist 22, 473–499 (2020). https://doi.org/10.1057/s41278-019-00124-8

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