Tuesday, April 12, 2016

Export logistics: the culprit of sluggish trade growth

Years back, a friend of mine at Stanford was making headlines for months by claiming that trade agreements were a bad thing for international trade. 

At the same time, I was claiming that it was the abysmal state of logistics in large countries such as India and China that was holding back container penetration and thus international trade growth. 

The World Bank seems to agree to this. In addition to the usual culprits of trade destruction, such as product standards in importing countries and other non-tariff barriers to trade, the WB now finds that, since the 2009 economic meltdown, the size of exporting firms in developing countries has gone down. 

Apparently, as I had been claiming, the smaller the size of producers, and the larger the size of the country, the more difficult it is to organize export logistics in a system based on containerization and hub-and-spoke consolidation and distribution.  HH