Major Determinants of Ocean Freight Rates for Grains: An Econometric Analysis

James K. Binkley and Bruce Harrer

American Journal of Agricultural Economics, 1981, vol. 63, issue 1, 47-57

Abstract: Econometric analysis of ocean grain rates suggests that ship size and trade volume are of approximately equal importance with distance in determining rates. Use of large ships reduces at-sea costs and hence the role of distance; but larger ships appear to incur higher port costs, which suggests that efficient port facilities are required for scale economies to be realized. Policies to improve shipping technology and increase trade volume can lead to lower rates, reduce geographic differences among exporters, and thus lead to more competitive markets. This implies that the role of transportation in trade analysis should not be ignored.

Date: 1981
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