Abstract
AbstractIn recent years trade with highly perishable agricultural products like fresh fish, berries, and cut flowers has increased substantially. The perishability of these products appears to challenge conventional wisdom when it comes to food trade, which emphasizes the importance of large shipments to reduce transportation costs. In this paper, gravity models and several margins of trade are estimated for the trade with fresh salmon, a highly perishable product. The results indicate that increased geographical distance have a larger negative effect than what is generally reported in the literature. Most interestingly, the number of exporters and the shipment frequency increase while there is little impact on shipment size when trade increase. Hence, freshness and possibly avoidance of losses by not selling products by the expiration date seem to be emphasized rather than economies of scale in transportation. [EconLit Citations: F14, Q22].
Highlights
During the last decades trade liberalization, income growth as well as better and cheaper means of transport and logistics have facilitated a global expansion of trade in food and agricultural commodities
With improved transportation technology and logistics the conventional wisdom that shipping costs are most disruptive for perishable products and that increased scale obtained with larger shipments is the main tool to address the increasing cost due to longer distances appears to be challenged (Berthelon & Freund, 2008)
Several recent studies suggest that the structure of the shipping cost can be important, as there are different types of fixed and variable cost associated with trade that can be important for margins of trade (Hornok & Koren, 2015; Lawless, 2010a; Melitz, 2003)
Summary
During the last decades trade liberalization, income growth as well as better and cheaper means of transport and logistics have facilitated a global expansion of trade in food and agricultural commodities This trade includes highly perishable and often seasonal fresh products like fresh fish, berries, and cut flowers. Better transportation technologies and logistics reduce delivery time, and secure delivery of high‐quality products to the end user (Behar & Venables, 2011; Coyle et al, 2001). This development has made more distant producers competitive for perishable goods, such as fresh seafood. In this paper we will show that this is the case for one of the world's most traded seafood products—fresh salmon
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