The Heterogeneous Cost of Port-of-Entry Delays

Apr 2014
Time delays in international transactions impose trade costs. We examine transaction level Peruvian import data to show that firms are subject to significant costs of port-of-entry delays. At the airport an additional day of delay raises costs by about 1.6 percent for all firms. At the seaport, an additional day of delay raises costs for small firms by about 0.7 percent and by 0.9 percent for large firms. The higher costs at the airport are partially offset by a clearance time that is on average about 5 days faster than at the seaport. These estimates inform policy where limited public resources realize the highest bang for the buck to mitigate trade costs. We also find that median delays are heterogeneous across importers and importer-exporter relationships. Therefore, firm specific trade facilitation that improves shipment and document handling to reduce delays is an alternative to policyaction that reduces average delays.