A practitioner's guide to estimate overland transportation costs

Abstract

Poor infrastructure and high domestic shipping costs are often cited as important impediments to economic activity in developing countries. Domestic shipping being mostly overland, understanding the level and structure of costs in road freight transportation could thus help formulate policies that aim to lower them. This review provides a summary of overland transport cost estimates with a focus on trucking, the dominant mode of domestic freight. By describing conceptual issues, highlighting sources of data and alternative methodologies with their key findings, it is intended to help practitioners and researchers navigate the literature.

Keywords:

• Freight costs
• road transportation
• gravity regression

JEL Classifications:

• L9
• F1
• R4

Acknowledgments

This note draws from Coşar (2022), a background paper prepared for the World Bank's Global Transport Practice Flagship Report titled ‘Shrinking Economic Distance.’ I thank Matias Herrera Dappe, Aiga Stokenberga, and Mathilde Lebrand for helpful comments and feedback. For their insightful discussions of an early draft, I thank Roman Zarate and Théophile Bougna.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 With the exception of India, railroads typically have a small share in the transport system of developing countries since their infrastructure investments occurred mostly during the second half of 20th century after the motorized transportation revolution. Gwilliam (2011) reports the dominance of roads in Africa which carry 80–90% of passenger and freight traffic.

2 See Head and Mayer (2014) for an overview of the gravity literature.