Pandemic-induced increases in container freight rates: assessing their domestic effects in a globalised world

Jose Pulido

No 1132, BIS Working Papers from Bank for International Settlements

Abstract: The Covid-19 pandemic severely disrupted the sea transportation industry, leading container freight rates to reach record highs from late 2020 and into 2021. This study examines the welfare effects of this disruption on a specific country, Colombia. For this, I use a quantitative model of international trade with out-of-steady-state transitional dynamics and a rich structure for the organization of production, plus an instrumental variable approach to estimate a trade elasticity to freight. I quantify both the direct effects of freight increases on goods transported to and from Colombia, as well as the indirect impact of heightened rates on routes across the rest of the world. The resulting welfare loss of 1.4% is solely attributable to the direct effects, as the indirect impact simultaneously improves Colombia's relative trade openness, thereby compensating for the effects of the increased shipping costs worldwide.

Keywords: container freight; transportation costs; international trade; Covid-19 (search for similar items in EconPapers)
JEL-codes: F16 F17 F62 (search for similar items in EconPapers)
Date: 2023-10
New Economics Papers: this item is included in nep-int and nep-tre
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Related works:
Working Paper: Domestic Effects of the Pandemic-Induced Container Freight Disruption in a Globalized World (2024)
Working Paper: Pandemic-induced increases in container freight rates: Assessing their domestic effects in a globalized world* (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:1132

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