Special Study on Impact of Transport and Logistics on Trade

The reduction in rules-based tariff and non-tariff barriers of trade has increased the importance of non-rules based drivers of trade competitiveness in developing countries. One such key determinant of trade competitiveness is the provision of trade support services and the extent to these services ensure that goods are shipped from a factory, warehouse or port in the country of origin to destination markets throughout the world in a timely and cost-effective manner.

While always an essential component of competitiveness, the increasingly complex demands of the international economy have dramatically increased the importance of trade support services. Particularly, these demands stem from integrated global manufacturing and production networks, an increasing need for just-in-time logistics, growing usage of intermodal transport involving one or more modes of transportation (road, air, maritime or rail) and new security considerations. As the demands of the international economy become more complex, so do the processes required to complete trade transactions; involving multiple steps, a myriad of players and a range of legal and regulatory frameworks. With costs added at each step of the process, the quality, cost and efficiency of trade support services will affect the final value of a good at its final destination and its ability to be competitive in global markets

Weaknesses in many developing countries’ trade support services sectors contribute to high transaction costs and a limited ability to meet the transport and logistical demands of an increasing complex global economy, undermining the competitiveness of their goods and thus the ability take advantage of emerging global market opportunities. In general, goods shipped from developing countries face comparatively high transaction costs that can be as much as two to three times the transaction costs in developed countries and account for as much as three times the average tariff rate applied to industrial country imports since the Post-Uruguay Round.

It is imperative that developing countries, international donors and international trade organizations alike implement initiatives that facilitate the provision of lower cost, more efficient and reliable trade support services in developing country trade. With reductions in tariff and non-tariff barriers opening access to key industrial markets, countries that are unable to reduce their transaction costs will find it more difficult to reap the benefits of expanded exports, foreign investment and economic growth.

The ongoing special study on Trade Support Services involves three phases:

Phase 1: The Role of Transportation & Logistics in International Trade - The Developing Country Context (STATUS: Completed)
A comprehensive survey addressing provision of trade supports services from the perspective of developing countries. Identifies many common constraints within developing country transport and logistics system and presents a roadmap/analytical framework for country specific transport and logistics assessments and formulating a national strategy to enhance the provision of trade support services. [Read more]

Phase 2: Country Specific Transport and Logistics Assessments – Nicaragua, Indonesia and Mali (with related activity in Bulgaria) (STATUS: Completed)
Based on the analytical framework discussed in Phase I, these country specific assessments analyze the impact of transport and logistics systems on a particular country’s trade competitiveness and provide guidance on ways to address factors that lead to bottlenecks, inefficiencies, and higher time and financial costs in the movement of traded goods. [Read more]

Phase 3: Final Report, Improving Transport and Logistics for Trade (STATUS: Completed)
Upon the completion of Phase II analyses, the TESS Team completed a summary report incorporating the findings and conclusions from the Phase I &II activities, and the Bulgaria Transport and Logistics Study. The final report focused on (1) the global economy’s demands on transport and logistics systems; (2) opportunities to improve trade competitiveness through Transport and Logistics at the both the value chain and systematic levels, using examples from the TESS country studies; and (3) recommendations toward launching development programs aimed at improving Transport and Logistics. Click here for the Final Report.