Determinants of Container Ports Throughput Convergence: A Business Cycle Synchronicity Analysis

Abstract

This article explores how major macroeconomic variables, such as GDP, industrial production, bilateral trade, and financial openness, and shipping variables, such as fleet development and transportation costs, affect container ports. The authors set their discussion after the economic recession of 2009, describing how the container shipping sector is integrally involved with the global economy. They start by explaining the theory of business cycle synchronicity, including the macroeconomic co-movements of the contemporary globalized economic environment. The authors then conduct a panel data analysis and use dynamic Generalized Methods of Moments (GMM) techniques to support their analysis. The study covers 1995-2010 and includes 36 ports from 25 countries. The authors found that industrial production is a very powerful variable for the interpretation of container ports throughput convergence in all the tested cases. GDP convergence exercises a positive effect on ports synchronization. The authors recommend using both variables in order to generate better results. They conclude by reminding readers to also keep in mind shipping-specific variables in any study of container ports convergence.