DP14193 Trade From Space: Shipping Networks and The Global Implications of Local Shocks

• Inga Heiland Andreas Moxnes Karen Helene Ulltveit-Moe Yuan Zi
12 Dec 2019

This paper examines the structure of the shipping network and its
implications on global trade and welfare. Using novel data on the movements
of container ships, we calculate optimal travel routes. We then
estimate the impact of a shock to the network on global trade by means
of a natural experiment: the 2016 Panama Canal expansion. Trade
between country pairs using the canal increased by 9-10% after the
expansion. While the building costs were borne by Panama alone, a
model-based quantification shows that the welfare gains were shared by
many countries, due to the network structure of shipping.