The Cost of Being Landlocked

Page 81

The Impact of Market Structure and Business Practices

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Table 5.1 Comparison of Transport Costs from Central Asia to Antwerp, Belgium, and Rotterdam, the Netherlands, for Large and Small Exporters Freight tariffs (US$/ton, including unofficial payments) Origin Dushanbe (TAJ) Khujand (TAJ) Tashkent (UZB) Almaty (KAZ) Ashgabat (TKM) Baku (AZB) Tbilisi (GEO) Yerevan (ARM) Chisinau (MOL)

Full unit

One-ton parcels

230 220 175 180 200 163 150 170 100

500 480 300 300 400 280 300 420 280

Source: Ojala et al. (2005). Note: Prices are as of spring 2004. Large exporters use full 40-foot containers. ARM = Armenia, AZB = Azerbaijan, GEO = Georgia, KAZ = Kazakhstan, MOL = Moldova, TAJ = Tajikistan, TKM = Turkmenistan, UZB = Uzbekistan.

Although supply chains may be optimized for large and routine shipments (for example, imported consumer goods or exported commodities), it appears that small or exceptional shipments face additional constraints in terms of cost and delays because of the current practice of logistics.2 Advanced logistics services for small shipments face serious trade facilitation constraints.3 Furthermore, given a lack of modern supply chain management culture (and sometimes other, less honest reasons), shippers may prefer to organize consolidation of shipment themselves and use traditional transport means rather than pay for professional services. This translates to an almost generalized offloading of containers in many ports in west and central Africa, followed by overloading of traditional trucks. Some routine trade processes, such as placing international orders or arranging finance (for example, letter of credit), might be more difficult and expensive in landlocked countries, with their smaller economies and less developed trade-supporting services. Though transit overheads amount to just a small percentage of transportation fees and reflect the proliferation of procedures and rent-seeking activities, administrative costs will be impacted in these cases and will reflect the diseconomies of scale, imposing a high penalty on smaller shipments in small and distant markets. Another level of asymmetry between export and import flows concerns trade volumes. Differences typically exist in volumes, routes, and modes. On most trade corridors exports are bulk commodities, whereas imports are a combination of liquid (refined oil products), bulk (cement, grain), and general cargo, containerized or not.


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