Thursday, 12 April 2012

Greek Seaports: too expensive to export from ?

A short post today since we are getting closer and closer to Easter here in Greece and things will slow down for a few days. The other day I was taking a look at the cost to export (USD per container) for Euro Area countries as reported by World Bank. 

Greece ranks in the middle of the relevant table. To tell you the truth that surprised me a bit. But then I took a closer look at how World Bank calculates the cost to export per container and everything became clearer.

source: World Bank

Here is the definition of Cost to Export (USD per container) taken from World Bank’s website:

“Cost measures the fees levied on a 20-foot container in U.S. dollars. All the fees associated with completing the procedures to export or import the goods are included. These include costs for documents, administrative fees for customs clearance and technical control, customs broker fees, terminal handling charges and inland transport. The cost measure does not include tariffs or trade taxes. Only official costs are recorded. Several assumptions are made for the business surveyed: Has 60 or more employees; Is located in the country's most populous city; Is a private, limited liability company. It does not operate within an export processing zone or an industrial estate with special export or import privileges; Is domestically owned with no foreign ownership; Exports more than 10% of its sales. Assumptions about the traded goods: The traded product travels in a dry-cargo, 20-foot, full container load. The product: Is not hazardous nor does it include military items; Does not require refrigeration or any other special environment; Does not require any special phytosanitary or environmental safety standards other than accepted international standards.

The definition mentions “inland transport”. This particular bit puzzles me since a lot of countries are landlocked and if we exclude air transport, land transport (either by railcar or road traffic) should be the main way to export.

Now let’s take a look at the countries that top the relevant table. A good question is how many of them are landlocked. Slovak Republic, Luxembourg and Austria are. Hence firms intending to use maritime transport probably have to shoulder higher inland transport costs to get their goods at a maritime container terminal (or maybe instead of trucks or railroad they use inland waterways to do that if this is possible).

Another question (and the main one at that) is, in how many of the countries that top the table, the most populous cities haven’t got seaports and as a result, maritime container terminals. Bratislava (Slovak Republic), Brussels (Belgium), City of Luxembourg, Rome (Italy), Madrid (Spain), Paris (France) have not.

For the reasons cited above I cannot compare export costs for countries whose most populous cities are landlocked. What I can do is compare export costs for countries whose most populous cities have maritime container terminals attached, namely Greece, Portugal, Estonia, Ireland, Netherlands and Finland. In these cases for a lot of exporters, maritime transport could be their preferred mode of transportation.

As the chart makes it obvious, Greece tops that list with a slight lead over Ireland. If I haven’t got this terribly wrong exporting from Piraeus seaport is a bit on the expensive side. The country more similar to Greece, as far as the above list is concerned, is Portugal. According to this particular indicator exporting from Greece is 1.68 times more costly than it is in Portugal.

What makes this even more problematic is that the vast majority of Greek exports are of relatively low added value, a fact that makes higher export costs an even larger burden to shoulder…

P.S. I forgot to mention that data on the chart refer to 2011.

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