What Drives the High Price of Road Freight Transport in Central America?
In Central America, like many other developing regions, high transport costs are cited as an important impediment to trade and economic growth. Prices for road freight transport, a key mode of transport comprising a significant share of total trans...
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| Format: | Other Infrastructure Study |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2013/12/19203345/drives-high-price-road-freight-transport-central-america http://hdl.handle.net/10986/17845 |
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okr-10986-17845 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
AIR AIR FREIGHT AIRPORT AIRPORTS AVERAGE COSTS AVERAGE PRICE AVERAGE PRICES AVERAGE SPEED AVERAGE SPEEDS AVERAGE TRAVEL SPEEDS BANK LOANS BARRIERS TO ENTRY BITUMEN BORDER CROSSING BORDER CROSSINGS BOTTLENECKS CARGO COMPETITIVE MARKETS COMPETITIVE PRICES CONGESTION COSTS CONSTRUCTION CONSUMERS CORRIDOR CORRIDOR TRANSPORT COST ANALYSIS COST OF TRANSPORTATION DEREGULATION DOMESTIC MARKETS DOMESTIC ROUTES DRIVER BEHAVIOR DRIVERS DUTY ECONOMETRIC ANALYSIS ECONOMIC INTEGRATION ECONOMIC THEORY ECONOMIES OF SCALE EFFICIENT MARKET ELASTICITIES ELASTICITY EMISSION ENDOGENOUS VARIABLES EQUATIONS EXPENDITURES EXPORT FACTOR PRICES FARES FINANCIAL INCENTIVES FIXED COSTS FLEET SIZE FLEETS FOREIGN COMPETITION FREIGHT FREIGHT COSTS FREIGHT DELIVERY FREIGHT FLOWS FREIGHT SECTOR FREIGHT TRANSPORT FREIGHT TRANSPORT PRICES FUEL FUEL COST FUEL COSTS FUEL EFFICIENCY FUEL PRICES FUEL SAVINGS FUELS GDP GRAVEL HIGH TRANSPORT IMPERFECT COMPETITION INCOME INFLATION INPUT PRICES INTEREST RATE INTERNATIONAL PORTS INTERNATIONAL STANDARDS INTERNATIONAL TRADE INVENTORIES LENGTH OF ROUTE LOADING LOCAL AUTHORITIES MAIN ROAD MARKET ACCESS MARKET BEHAVIOR MARKET CONCENTRATION MARKET SEGMENT MARKET SEGMENTATION MARKET SEGMENTS MARKET STRUCTURE MERCHANDISE MERCHANDISE EXPORTS MERCHANDISE TRADE MIDDLE INCOME COUNTRIES MILEAGE MODE OF TRANSPORT MOTOR CARRIER MOTOR CARRIERS MOTORISTS NORMAL PROFITS OIL PRICES OPPORTUNITY COST OPPORTUNITY COSTS PETROLEUM PRICES POLICE PREDATORY PRICING PROFIT MARGINS PURCHASE PRICE RANGE REDUCTIONS IN TRAFFIC REDUCTIONS IN TRAFFIC CONGESTION ROAD ROAD DAMAGE ROAD QUALITY ROAD TRANSPORT ROAD TRANSPORT PRICES ROAD TRANSPORT SERVICES ROADS ROUTE ROUTES SALES SERVICES MARKET STRUCTURES TARIFF BARRIERS TAX TIRE PRESSURE TIRES TON KILOMETER TOTAL COSTS TOTAL OUTPUT TRACTORS TRADE BARRIERS TRAFFIC TRAFFIC CONGESTION TRANSPORT COSTS TRANSPORT MODE TRANSPORT OF GOODS TRANSPORT SECTOR TRANSPORT STRATEGIES TRANSPORT TARIFFS TRAVEL DISTANCES TRAVEL SPEED TRIPS TRUCKING TRUCKS TRUE VARIABLE COSTS VARIABLE INPUTS VEHICLE VEHICLE EMISSIONS VEHICLE FLEET VEHICLE OPERATING VEHICLE OPERATING COST VEHICLE OPERATING COSTS VEHICLE SIZE VEHICLE UTILIZATION VEHICLES VOLUME OF TRAFFIC WAGES WAREHOUSES |
| spellingShingle |
AIR AIR FREIGHT AIRPORT AIRPORTS AVERAGE COSTS AVERAGE PRICE AVERAGE PRICES AVERAGE SPEED AVERAGE SPEEDS AVERAGE TRAVEL SPEEDS BANK LOANS BARRIERS TO ENTRY BITUMEN BORDER CROSSING BORDER CROSSINGS BOTTLENECKS CARGO COMPETITIVE MARKETS COMPETITIVE PRICES CONGESTION COSTS CONSTRUCTION CONSUMERS CORRIDOR CORRIDOR TRANSPORT COST ANALYSIS COST OF TRANSPORTATION DEREGULATION DOMESTIC MARKETS DOMESTIC ROUTES DRIVER BEHAVIOR DRIVERS DUTY ECONOMETRIC ANALYSIS ECONOMIC INTEGRATION ECONOMIC THEORY ECONOMIES OF SCALE EFFICIENT MARKET ELASTICITIES ELASTICITY EMISSION ENDOGENOUS VARIABLES EQUATIONS EXPENDITURES EXPORT FACTOR PRICES FARES FINANCIAL INCENTIVES FIXED COSTS FLEET SIZE FLEETS FOREIGN COMPETITION FREIGHT FREIGHT COSTS FREIGHT DELIVERY FREIGHT FLOWS FREIGHT SECTOR FREIGHT TRANSPORT FREIGHT TRANSPORT PRICES FUEL FUEL COST FUEL COSTS FUEL EFFICIENCY FUEL PRICES FUEL SAVINGS FUELS GDP GRAVEL HIGH TRANSPORT IMPERFECT COMPETITION INCOME INFLATION INPUT PRICES INTEREST RATE INTERNATIONAL PORTS INTERNATIONAL STANDARDS INTERNATIONAL TRADE INVENTORIES LENGTH OF ROUTE LOADING LOCAL AUTHORITIES MAIN ROAD MARKET ACCESS MARKET BEHAVIOR MARKET CONCENTRATION MARKET SEGMENT MARKET SEGMENTATION MARKET SEGMENTS MARKET STRUCTURE MERCHANDISE MERCHANDISE EXPORTS MERCHANDISE TRADE MIDDLE INCOME COUNTRIES MILEAGE MODE OF TRANSPORT MOTOR CARRIER MOTOR CARRIERS MOTORISTS NORMAL PROFITS OIL PRICES OPPORTUNITY COST OPPORTUNITY COSTS PETROLEUM PRICES POLICE PREDATORY PRICING PROFIT MARGINS PURCHASE PRICE RANGE REDUCTIONS IN TRAFFIC REDUCTIONS IN TRAFFIC CONGESTION ROAD ROAD DAMAGE ROAD QUALITY ROAD TRANSPORT ROAD TRANSPORT PRICES ROAD TRANSPORT SERVICES ROADS ROUTE ROUTES SALES SERVICES MARKET STRUCTURES TARIFF BARRIERS TAX TIRE PRESSURE TIRES TON KILOMETER TOTAL COSTS TOTAL OUTPUT TRACTORS TRADE BARRIERS TRAFFIC TRAFFIC CONGESTION TRANSPORT COSTS TRANSPORT MODE TRANSPORT OF GOODS TRANSPORT SECTOR TRANSPORT STRATEGIES TRANSPORT TARIFFS TRAVEL DISTANCES TRAVEL SPEED TRIPS TRUCKING TRUCKS TRUE VARIABLE COSTS VARIABLE INPUTS VEHICLE VEHICLE EMISSIONS VEHICLE FLEET VEHICLE OPERATING VEHICLE OPERATING COST VEHICLE OPERATING COSTS VEHICLE SIZE VEHICLE UTILIZATION VEHICLES VOLUME OF TRAFFIC WAGES WAREHOUSES Osborne, Theresa Pachon, Maria Claudia Araya, Gonzalo Enrique What Drives the High Price of Road Freight Transport in Central America? |
| geographic_facet |
Latin America & Caribbean Central America |
| description |
In Central America, like many other
developing regions, high transport costs are cited as an
important impediment to trade and economic growth. Prices
for road freight transport, a key mode of transport
comprising a significant share of total transport costs for
both intra, and extra, regional trade, are particularly
high. Averaging 17 US cents per ton-kilometer on main
trading routes, these rates stand out even relative to other
inefficient developing country markets (e.g., central and
west Africa). However, the policy and other factors
associated with increased prices have not been well
understood. Using data from a survey of trucking companies
operating on the region's main trade corridors, this
paper analyzes the primary drivers affecting firms'
cost of providing service, as well as the effect of market
structure and competition on markups and prices. We find
that whereas improved cost efficiencies could reduce prices
by 3 cents per ton?kilometer, increased competition on
national routes, those entirely within a nation's
borders, will reduce prices by significantly more. Although
there are many trucking companies, including small and
somewhat informal operators, the degree of competition
varies by route due to domestic restraints on competition
and the prohibition on international competition on national
routes. Our empirical result shows that the effect of
barriers to entry and imperfect competition on markups
accounts for at least 35 percent of mean prices on national
routes. Moreover, a lack of competition is likely to explain
the persistence of an inefficient market structure and scale
of operation, as well as a lack of innovation to reduce
costs and enhance the quality of service. |
| format |
Economic & Sector Work :: Other Infrastructure Study |
| author |
Osborne, Theresa Pachon, Maria Claudia Araya, Gonzalo Enrique |
| author_facet |
Osborne, Theresa Pachon, Maria Claudia Araya, Gonzalo Enrique |
| author_sort |
Osborne, Theresa |
| title |
What Drives the High Price of Road Freight Transport in Central America? |
| title_short |
What Drives the High Price of Road Freight Transport in Central America? |
| title_full |
What Drives the High Price of Road Freight Transport in Central America? |
| title_fullStr |
What Drives the High Price of Road Freight Transport in Central America? |
| title_full_unstemmed |
What Drives the High Price of Road Freight Transport in Central America? |
| title_sort |
what drives the high price of road freight transport in central america? |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2013/12/19203345/drives-high-price-road-freight-transport-central-america http://hdl.handle.net/10986/17845 |
| _version_ |
1764438410035986432 |
| spelling |
okr-10986-178452021-04-23T14:03:40Z What Drives the High Price of Road Freight Transport in Central America? Osborne, Theresa Pachon, Maria Claudia Araya, Gonzalo Enrique AIR AIR FREIGHT AIRPORT AIRPORTS AVERAGE COSTS AVERAGE PRICE AVERAGE PRICES AVERAGE SPEED AVERAGE SPEEDS AVERAGE TRAVEL SPEEDS BANK LOANS BARRIERS TO ENTRY BITUMEN BORDER CROSSING BORDER CROSSINGS BOTTLENECKS CARGO COMPETITIVE MARKETS COMPETITIVE PRICES CONGESTION COSTS CONSTRUCTION CONSUMERS CORRIDOR CORRIDOR TRANSPORT COST ANALYSIS COST OF TRANSPORTATION DEREGULATION DOMESTIC MARKETS DOMESTIC ROUTES DRIVER BEHAVIOR DRIVERS DUTY ECONOMETRIC ANALYSIS ECONOMIC INTEGRATION ECONOMIC THEORY ECONOMIES OF SCALE EFFICIENT MARKET ELASTICITIES ELASTICITY EMISSION ENDOGENOUS VARIABLES EQUATIONS EXPENDITURES EXPORT FACTOR PRICES FARES FINANCIAL INCENTIVES FIXED COSTS FLEET SIZE FLEETS FOREIGN COMPETITION FREIGHT FREIGHT COSTS FREIGHT DELIVERY FREIGHT FLOWS FREIGHT SECTOR FREIGHT TRANSPORT FREIGHT TRANSPORT PRICES FUEL FUEL COST FUEL COSTS FUEL EFFICIENCY FUEL PRICES FUEL SAVINGS FUELS GDP GRAVEL HIGH TRANSPORT IMPERFECT COMPETITION INCOME INFLATION INPUT PRICES INTEREST RATE INTERNATIONAL PORTS INTERNATIONAL STANDARDS INTERNATIONAL TRADE INVENTORIES LENGTH OF ROUTE LOADING LOCAL AUTHORITIES MAIN ROAD MARKET ACCESS MARKET BEHAVIOR MARKET CONCENTRATION MARKET SEGMENT MARKET SEGMENTATION MARKET SEGMENTS MARKET STRUCTURE MERCHANDISE MERCHANDISE EXPORTS MERCHANDISE TRADE MIDDLE INCOME COUNTRIES MILEAGE MODE OF TRANSPORT MOTOR CARRIER MOTOR CARRIERS MOTORISTS NORMAL PROFITS OIL PRICES OPPORTUNITY COST OPPORTUNITY COSTS PETROLEUM PRICES POLICE PREDATORY PRICING PROFIT MARGINS PURCHASE PRICE RANGE REDUCTIONS IN TRAFFIC REDUCTIONS IN TRAFFIC CONGESTION ROAD ROAD DAMAGE ROAD QUALITY ROAD TRANSPORT ROAD TRANSPORT PRICES ROAD TRANSPORT SERVICES ROADS ROUTE ROUTES SALES SERVICES MARKET STRUCTURES TARIFF BARRIERS TAX TIRE PRESSURE TIRES TON KILOMETER TOTAL COSTS TOTAL OUTPUT TRACTORS TRADE BARRIERS TRAFFIC TRAFFIC CONGESTION TRANSPORT COSTS TRANSPORT MODE TRANSPORT OF GOODS TRANSPORT SECTOR TRANSPORT STRATEGIES TRANSPORT TARIFFS TRAVEL DISTANCES TRAVEL SPEED TRIPS TRUCKING TRUCKS TRUE VARIABLE COSTS VARIABLE INPUTS VEHICLE VEHICLE EMISSIONS VEHICLE FLEET VEHICLE OPERATING VEHICLE OPERATING COST VEHICLE OPERATING COSTS VEHICLE SIZE VEHICLE UTILIZATION VEHICLES VOLUME OF TRAFFIC WAGES WAREHOUSES In Central America, like many other developing regions, high transport costs are cited as an important impediment to trade and economic growth. Prices for road freight transport, a key mode of transport comprising a significant share of total transport costs for both intra, and extra, regional trade, are particularly high. Averaging 17 US cents per ton-kilometer on main trading routes, these rates stand out even relative to other inefficient developing country markets (e.g., central and west Africa). However, the policy and other factors associated with increased prices have not been well understood. Using data from a survey of trucking companies operating on the region's main trade corridors, this paper analyzes the primary drivers affecting firms' cost of providing service, as well as the effect of market structure and competition on markups and prices. We find that whereas improved cost efficiencies could reduce prices by 3 cents per ton?kilometer, increased competition on national routes, those entirely within a nation's borders, will reduce prices by significantly more. Although there are many trucking companies, including small and somewhat informal operators, the degree of competition varies by route due to domestic restraints on competition and the prohibition on international competition on national routes. Our empirical result shows that the effect of barriers to entry and imperfect competition on markups accounts for at least 35 percent of mean prices on national routes. Moreover, a lack of competition is likely to explain the persistence of an inefficient market structure and scale of operation, as well as a lack of innovation to reduce costs and enhance the quality of service. 2014-04-16T16:47:37Z 2014-04-16T16:47:37Z 2013-12 http://documents.worldbank.org/curated/en/2013/12/19203345/drives-high-price-road-freight-transport-central-america http://hdl.handle.net/10986/17845 English en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Economic & Sector Work :: Other Infrastructure Study Latin America & Caribbean Central America |