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 impediment to trade and economic growth. Prices for road freight transport -- a key mode of transport comprising a significant share of total transport cos...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://hdl.handle.net/10986/18325 |
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okr-10986-183252017-12-14T08:52:37Z 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 BERTRAND COMPETITION BITUMEN BORDER CROSSING BORDER CROSSINGS BOTTLENECKS CARGO COMPETITIVE MARKETS COMPETITIVE PRICES CONGESTION COSTS CONSTRUCTION CONSUMERS CORRIDOR CORRIDOR TRANSPORT COST ANALYSIS COST OF TRANSPORTATION DEREGULATION DEVELOPMENT POLICY 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 FUEL-EFFICIENCY FUELS GDP GRAVEL HIGH TRANSPORT IMPERFECT COMPETITION INCOME INFLATION INPUT PRICES INTEREST RATE INTERNATIONAL PORTS INTERNATIONAL STANDARDS INTERNATIONAL TRADE INVENTORIES LENGTH OF ROUTE 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 OLIGOPOLY OPPORTUNITY COST OPPORTUNITY COSTS PETROLEUM PRICES POLICE PREDATORY PRICING PRICE SETTING PRODUCTIVITY GROWTH PROFIT MARGINS PURCHASE PRICE RANGE REDUCTIONS IN TRAFFIC REDUCTIONS IN TRAFFIC CONGESTION ROAD ROAD CABOTAGE ROAD CONDITIONS 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 INDUSTRY TRANSPORT MODE TRANSPORT OF GOODS TRANSPORT SECTOR TRANSPORT STRATEGIES TRANSPORT TARIFFS TRANSPORTATION TRANSPORTATION SERVICES TRAVEL DISTANCES TRAVEL SPEED TRAVEL SPEEDS TRIPS TRUCKING TRUCKS TRUE VARIABLE COSTS VARIABLE INPUTS VEHICLE VEHICLE EMISSIONS VEHICLE FLEET VEHICLE OPERATING VEHICLE OPERATING COST VEHICLE OPERATING COSTS VEHICLE UTILIZATION VEHICLES VOLUME OF TRAFFIC WAGES WAREHOUSES In Central America, like many other developing regions, high transport costs are cited as an 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 intra- and extra-regional trade, are particularly high. Averaging 17 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. This paper uses data from a survey of trucking companies operating on the region's main trade corridors to analyze the determinants of firms' costs of providing service, as well as the effect of market structure and competition on prices. The analysis finds 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 -- would reduce prices by significantly more. Although there are many trucking companies, including small and somewhat informal operators, the degree of competition varies by route because of domestic restraints on competition and the prohibition on international competition on national routes. The paper shows empirically that imperfect competition accounts for at least 35 percent of mean prices on national routes. In addition, a lack of competition is likely to explain the persistence of an inefficient market structure, as well as a lack of innovation to reduce costs and enhance the quality of service. 2014-05-14T21:05:29Z 2014-05-14T21:05:29Z 2014-04 http://hdl.handle.net/10986/18325 English en_US Policy Research Working Paper;No. 6844 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Central Africa |
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Digital Repository |
| institution_category |
Foreign Institution |
| institution |
World Bank |
| building |
World Bank Open Knowledge Repository |
| collection |
Online Access |
| 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 BERTRAND COMPETITION BITUMEN BORDER CROSSING BORDER CROSSINGS BOTTLENECKS CARGO COMPETITIVE MARKETS COMPETITIVE PRICES CONGESTION COSTS CONSTRUCTION CONSUMERS CORRIDOR CORRIDOR TRANSPORT COST ANALYSIS COST OF TRANSPORTATION DEREGULATION DEVELOPMENT POLICY 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 FUEL-EFFICIENCY FUELS GDP GRAVEL HIGH TRANSPORT IMPERFECT COMPETITION INCOME INFLATION INPUT PRICES INTEREST RATE INTERNATIONAL PORTS INTERNATIONAL STANDARDS INTERNATIONAL TRADE INVENTORIES LENGTH OF ROUTE 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 OLIGOPOLY OPPORTUNITY COST OPPORTUNITY COSTS PETROLEUM PRICES POLICE PREDATORY PRICING PRICE SETTING PRODUCTIVITY GROWTH PROFIT MARGINS PURCHASE PRICE RANGE REDUCTIONS IN TRAFFIC REDUCTIONS IN TRAFFIC CONGESTION ROAD ROAD CABOTAGE ROAD CONDITIONS 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 INDUSTRY TRANSPORT MODE TRANSPORT OF GOODS TRANSPORT SECTOR TRANSPORT STRATEGIES TRANSPORT TARIFFS TRANSPORTATION TRANSPORTATION SERVICES TRAVEL DISTANCES TRAVEL SPEED TRAVEL SPEEDS TRIPS TRUCKING TRUCKS TRUE VARIABLE COSTS VARIABLE INPUTS VEHICLE VEHICLE EMISSIONS VEHICLE FLEET VEHICLE OPERATING VEHICLE OPERATING COST VEHICLE OPERATING COSTS 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 BERTRAND COMPETITION BITUMEN BORDER CROSSING BORDER CROSSINGS BOTTLENECKS CARGO COMPETITIVE MARKETS COMPETITIVE PRICES CONGESTION COSTS CONSTRUCTION CONSUMERS CORRIDOR CORRIDOR TRANSPORT COST ANALYSIS COST OF TRANSPORTATION DEREGULATION DEVELOPMENT POLICY 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 FUEL-EFFICIENCY FUELS GDP GRAVEL HIGH TRANSPORT IMPERFECT COMPETITION INCOME INFLATION INPUT PRICES INTEREST RATE INTERNATIONAL PORTS INTERNATIONAL STANDARDS INTERNATIONAL TRADE INVENTORIES LENGTH OF ROUTE 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 OLIGOPOLY OPPORTUNITY COST OPPORTUNITY COSTS PETROLEUM PRICES POLICE PREDATORY PRICING PRICE SETTING PRODUCTIVITY GROWTH PROFIT MARGINS PURCHASE PRICE RANGE REDUCTIONS IN TRAFFIC REDUCTIONS IN TRAFFIC CONGESTION ROAD ROAD CABOTAGE ROAD CONDITIONS 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 INDUSTRY TRANSPORT MODE TRANSPORT OF GOODS TRANSPORT SECTOR TRANSPORT STRATEGIES TRANSPORT TARIFFS TRANSPORTATION TRANSPORTATION SERVICES TRAVEL DISTANCES TRAVEL SPEED TRAVEL SPEEDS TRIPS TRUCKING TRUCKS TRUE VARIABLE COSTS VARIABLE INPUTS VEHICLE VEHICLE EMISSIONS VEHICLE FLEET VEHICLE OPERATING VEHICLE OPERATING COST VEHICLE OPERATING COSTS 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 Africa |
| relation |
Policy Research Working Paper;No. 6844 |
| description |
In Central America, like many other
developing regions, high transport costs are cited as an
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 intra- and
extra-regional trade, are particularly high. Averaging 17
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. This paper uses data
from a survey of trucking companies operating on the
region's main trade corridors to analyze the
determinants of firms' costs of providing service, as
well as the effect of market structure and competition on
prices. The analysis finds 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 -- would
reduce prices by significantly more. Although there are many
trucking companies, including small and somewhat informal
operators, the degree of competition varies by route because
of domestic restraints on competition and the prohibition on
international competition on national routes. The paper
shows empirically that imperfect competition accounts for at
least 35 percent of mean prices on national routes. In
addition, a lack of competition is likely to explain the
persistence of an inefficient market structure, as well as a
lack of innovation to reduce costs and enhance the quality
of service. |
| format |
Publications & Research :: Policy Research Working Paper |
| 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://hdl.handle.net/10986/18325 |
| _version_ |
1610778396223078400 |