Exchange rate and transport cost sensitivities of bilateral freight flows between the US and China |
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| Institution: | 1. Anhui University of Finance & Economics, Anhui, Bengbu 233030, China;2. School of Economics, NanKai University, Tianjin, China;3. University of South Wales, South Wales Business School, Pontypridd Campus, Pontypridd, Mid Glamorgan CF37 1DL, United Kingdom;1. Athens University of Economics and Business, Department of Informatics, Patission 76, Athens 10434, Greece;2. Technical University of Denmark, Department of Transport, Bygningstorvet 1, 2800 Kgs. Lyngby, Denmark;1. State Key Laboratory of Ocean Engineering, Shanghai Jiao Tong University, Shanghai 200240, China;2. Department of Transportation, Shipping and Logistics, Shanghai Jiao Tong University, Shanghai 200240, China;3. School of Electronic, Electrical and Systems Engineering, University of Birmingham, Edgbaston, Birmingham B15 2TT, UK;1. Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia, Malaysia;2. Montpellier Business School, Montpellier, France;3. COMSATS University Islamabad, Lahore Campus, Pakistan;4. HHL Leipzig Graduate School of Management, Jahnallee 59, 04109 Leipzig, Germany;1. Copenhagen Business School, Denmark;2. Cass Business School, City University of London, United Kingdom |
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| Abstract: | This paper explores the long-run impacts of gross domestic product, exchange rate, and transport costs on bilateral air and ocean freight flows between the US and China. The study employs a cointegration framework by using export and import data over the period of 2003:Q1-2014:Q2. Results show that gross domestic product is the key determinant of bilateral freight flows, indicating that real income of a trading partner is a driving force of the bilateral freight flows between the US and China. In examining the sensitivities of the bilateral trade flows, air freight flows are found to be more responsive to a real income change than ocean freight flows. The bilateral exchange rate is a significant factor affecting the freight flows from China to the US, suggesting that a US dollar appreciation against the Chinese yuan increases the inflows of Chinese commodities to the US. The impacts of the bilateral exchange rate and transport cost are found to vary at industry and commodity levels. These findings support the importance of employing disaggregate data in the bilateral freight flow analysis. |
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| Keywords: | Cointegration analysis Exchange rate Transport costs US–China bilateral freight flows |
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