Have International Transportation Costs Declined

TLDR

There is little systematic evidence of declining transport costs, and this paper provides a detailed time‑series accounting of shipping cost patterns. The study investigates how transport costs have evolved, particularly contrasting ocean and air freight rates. Using an eclectic mix of data, the authors demonstrate that ocean freight rates have risen while air freight rates have fallen rapidly. Indirect evidence indicates that overland transport costs have fallen relative to ocean transport, freight costs for all modes have declined with distance, and trade composition data support these relative price changes. July 1999.

Abstract

July 1999 While the precise causes of post-war trade growth are not well understood, declines in transport costs top the lists of usual suspects. However, there is remarkably little systematic evidence documenting the decline. This paper provides a detailed accounting of the time-series pattern of shipping costs. Direct evidence from an eclectic mix of data shows that ocean freight rates have increased while air freight rates have declined rapidly. Indirect evidence suggests that the cost of overland transport has declined relative to ocean transport. For all modes, the freight costs associated with increased distance have declined. Data on the changing composition of trade are broadly consistent with these changes in relative prices.