Fixed Costs per Shipment

Andreas Kropf and Philip Ulrich Sauré

Issue
2012-13

Pages
49

JEL classification
F10

Keywords
Trade costs, shipment, firm trade

Year
2012

Exporting firms do not only decide how much of their products they ship abroad but also at which frequency. Doing so, they face a trade-off between saving on fixed costs per shipments (by shipping large amounts infrequently) and saving on storage costs (by delivering just in time with small and frequent shipments). The firm's optimal choice defines a mapping from size and frequency of shipments to fixed costs per shipment. We use a unique dataset of Swiss cross-border trade on the transaction level to analyze the size and shape of the underlying fixed costs. The data suggest that for the average Swiss exporter the fixed costs per shipment are economically important: about one percent of the value of export or at a net present value of 7790 CHF. We document that the imputed fixed costs per shipment correlate negatively with language commonalities, trade agreements and geographic proximity.