Abstract

Freight forwarders play a key role in moving goods across international borders. They arrange transport, oversee customs clearance on behalf of their clients, and more generally troubleshoot issues that arise while goods are in transit. This paper reports the results from a survey of 153 freight forwarding firms in Serbia. Respondents report on firm characteristics, operational choices, and conditions at the border posts and terminals where imported goods are cleared for release. One key purpose of the study is to investigate operational trade-offs between time and cost that arise when import shipments are in transit. In three of four hypotheticals, respondents suggest that money savings dominate time savings. Responses regarding real operational decisions such as route choices reinforce this finding. Respondents also reported penalty rates for late delivery of import shipments as well as the value of a typical import shipment. From these responses, it is estimated that the contracted value of one additional (unexpected) day of delivery time in Serbia appears to be approximately 1 percent of the value of the underlying shipment. Document type: Book

Abstract

Firms normally keep certain inventories, including raw materials, work-in-progress, and finished goods, to operate seamlessly and not to miss possible business opportunities. But inventory is costly, and the optimal firm inventory differs depending on various economic conditions, including trade and transport costs. The paper examines firm inventory behavior in East Africa, in which transport connectivity, especially to the ports, is considered as one of the major business constraints. Using firm-level data from Burundi, Kenya, Rwanda, Tanzania, and Uganda, it is shown that transport connectivity significantly affects firm inventory behavior. In particular, road density and transport costs to the port are important to determine the optimal inventory level. With more roads in a city and/or cheaper access to the port, firms would hold smaller inventories. Document type: Book

Abstract

Regulatory frameworks on logistics regulations are often opaque, especially in developing countries, because of the complex nature of logistics services. World Bank client countries have faced difficulty finding the issues that hinder them from improving logistics competence. Therefore, it is beneficial to understand how the logistics service industry is regulated and what should be addressed in building the regulatory framework to improve logistics competence. This note proposes questions to be addressed for beneficial regulations by reviewing existing logistics service regulations in 14 countries, particularly regulations for the freight forwarding industry. These questions will help in assessing a regulatory framework and identifying regulatory weaknesses. This note suggests that the regulatory framework should take into consideration national recognition of freight forwarding business, an institutional arrangement with clear division of responsibility among stakeholders, and streamlined but flexible regulations adapted to the country context. Document type: Book

Abstract

This paper estimates the volume of informal trade between Algeria and Mali and analyzes its determinants and mechanisms, using a multi-pronged methodology. First, the authors discuss how subsidy policies and the legal framework create incentives for informal trade across the Sahara. Second, the authors provide evidence of the importance of informal trade, drawing on satellite images and surveys with informal traders in Mali and Algeria. The authors estimate that the weekly turnover of informal trade fell from approximately United States (U.S.) 2 million dollars in 2011 to U.S. 0.74 million dollars in 2014, but continues to play a crucial role in the economies of northern Mali and southern Algeria. Profit margins of 20-30 percent on informal trade contribute to explaining the relative prosperity of northern Mali. The authors also show that official trade statistics are meaningless in this context, as they capture less than 3 percent of total trade. Finally, the authors provide qualitative evidence on informal trade actors and mechanisms for the most frequently traded products.