Modelling the Demand for Sea Transport on the Baltic Sea



Modelling the Demand for Sea Transport on the Baltic Sea

Authors

C M Berglund, Swedish National Road and Transport Research Institute (VTI); J O Jansson, Linkòping University, SE

Description

Abstract

The purpose of this paper is to develop a model where the demand for international goods transport is derived from the demand for international trade, and to estimate the effects of transport cost changes. These effects can be summarised by two elasticity measures. The first is an own-elasticity of demand for import transport, from i to j, with respect to a general transport cost change in all relations. The second is a cross-elasticity of import transport demand from alternative import sources, 1, 2,..., h to j, with respect to transport cost changes on the relation i to j.

The cross-section models, found in the literature, do not provide any results on simultaneously estimated elasticity measures of the mentioned types. Theoretically it may seem that time-series data is required for this task. However, sufficiently long time-series of transport and trade data are seldom available and without long series, estimation usually suffers from statistical problems. The model of this paper is reformulated so that it can be estimated on cross-section as well as panel data.

The model is set out for empirical tests on an extended Baltic Sea Region. Sea transport is the dominantmode of transport for international trade in this region. The reason for the extension is to also study the extent of competition between sea and land transports.

Preliminary estimation results show that it is doubtful whether a general transport cost change affect total import levels. However, a transport cost change in one particular relation clearly affects the distribution of countries used as import sources. The results also show that per capita income is to a varying extent positively correlated to the demand for import transport and the elasticity is dependent on the commodity group. Other factors affecting the transport demand are also included in the modelling.

Publisher

Association for European Transport