Freight Flows,Logistics Costs, and Efficiency : Optimal Path Analysis
In Central America, cargo is transported almost entirely by road. The movement of imports and exports to and from international seaports is done by truck. Rail service is almost nonexistent and air transport serves less than one percent of the carg...
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| Language: | English en_US |
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Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/439631468230959321/Freight-flows-logistics-costs-and-efficiency-optimal-path-analysis-background-paper http://hdl.handle.net/10986/27230 |
| Summary: | In Central America, cargo is transported
almost entirely by road. The movement of imports and exports
to and from international seaports is done by truck. Rail
service is almost nonexistent and air transport serves less
than one percent of the cargo generated within the Central
American Common Market (SIECA, 2004). Intra-regional trade
is much more important in Central America than it might seem
at first glance. The second largest trading partner of
Central America is the region itself. In 2010, one quarter
of the exports from Central America were destined for final
consumption within the region. Half of the exports of
Central America (54 percent in 2010) correspond to
agricultural products and a large proportion of them supply
markets inside the region. Nearly 40 percent of
intra-regional exports consist of food, beverages, animals
and plants (SIECA, 2011). Perishable food products are
transported on trucks, and spatially restricted by the
geography and the road infrastructure. In this context,
inefficiencies in the supply chain and delays in freight
flows lead to economic losses and amplify the negative
impact of the distance to the markets on trade. A gravity
model of trade showed that the negative effect of distance1
on total intra-regional exports is 77 percent higher in
Central America than in the European Union (World Bank,
2010). More precisely, an increase in distance by 1 percent
is expected to reduce intra-regional bilateral exports in
Central America by 1.65 percent. In terms of volume, the
negative effect of distance within the region exceeds the
effect in Europe by 50 percent in grains and up to 550
percent in processed food. In the latter case, an increase
in distance by 1 percent is expected to reduce
intra-regional bilateral exports of processed food in
Central America by 2.88 percent. |
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