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Reconfiguring maritime networks due to the Belt and Road Initiative: impact on bilateral trade flows

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Abstract

This paper aims to analyse the potential effects on bilateral trade movements of the reconfiguration of maritime networks brought about by the Belt and Road Initiative (BRI). The gravity model of international trade is applied to examine the hypothesized impact of maritime network reconfiguration on the bilateral trade between nine exporting countries (Egypt, Saudi Arabia, Israel, Panama, Colombia, Costa Rica, Singapore, Malaysia and Indonesia) and their 128 trading partners. The panel data on the five components of the Liner Shipping Bilateral Connectivity Index, the export value, the gross domestic product (GDP) of the nine exporting countries, the GDP of their trading partners and the maritime distance linking them to these 128 trading partners for each of the years from 2008 to 2016 are used in the analysis. The results show that the estimated coefficient for the number of transhipments is negative, revealing an inverse relationship between transhipments and bilateral exports, reconfirming that a redesign of the maritime supply chain network in response to the BRI could significantly improve bilateral export values. Furthermore, a reduction in the number of required transhipments, because of a reconfiguration of maritime networks with BRI trading partners, will improve the maritime network structure between countries located along the three strategic chokepoints: the Suez Canal, the Panama Canal, and the Strait of Malacca. In general terms, the BRI-driven reconfiguration of maritime supply networks is linked to an improvement in the productivity of nine exporting countries. An innovative gravity-based econometric model, estimated on a large set of panel data, is introduced below, aiming at the modelling of the effect of BRI on supply chain network reconfiguration.

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Notes

  1. UNCTAD, based on data provided by Clarksons Intelligence Network.

  2. The values reported here are those from the UNCTAD Liner Shipping Connectivity Index (LSCI) published during the years covered by the study. UNCTAD has recently updated the methodology of the calculation (See Box 3.1 here https://unctad.org/webflyer/review-maritime-transport-2019) and the LSCI values published today for those years are slightly different (see https://unctadstat.unctad.org/wds/TableViewer/tableView.aspx?ReportId=92). However, the order of magnitude and differences between the countries reported here has not changed. For our paper, we report on the LSCI and LSBCI that correspond to the components used and assessed in our model.

  3. Although China has signed an MoU, before December 2017, with 64 countries along the BRI (see Chen et al., 2021), only those 28 countries that have ports located along and are part of the BRI are included (see OECD 2018).

  4. See https://comtrade.un.org/data/ accessed 6th November, 2020.

  5. See https://data.worldbank.org/indicator/NY.GDP.MKTP.KD Accessed 6th November.

  6. Results can be provided upon request.

  7. See https://unctadstat.unctad.org/wds/TableViewer/tableView.aspx Accessed 24th November 2020.

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Acknowledgements

The authors are grateful to the Editor in Chief, Professor Dr. Hercules Haralambides, Dr. Jan Hoffmann at UNCTAD, and two anonymous reviewers for constructive feedback on an earlier draft of the paper. Naima Saeed acknowledges financial support from the European Union project “OpenInnoTrain” for a research stay at RMIT, Melbourne, Australia.

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Authors and Affiliations

  1. Department of Working Life and Innovation, School of Business and Law, University of Agder, Grimstad, Norway

    Naima Saeed

  2. Department of Business Administration, School of Business, Economics and Law, University of Gothenburg, Gothenburg, PO BOX 610, Gothenburg, Sweden

    Kevin Cullinane

  3. School of Accounting, Information Systems, and Supply Chain, RMIT University, Melbourne, Australia

    Victor Gekara & Prem Chhetri

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Saeed, N., Cullinane, K., Gekara, V. et al. Reconfiguring maritime networks due to the Belt and Road Initiative: impact on bilateral trade flows. Marit Econ Logist 23, 381–400 (2021). https://doi.org/10.1057/s41278-021-00192-9

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