Sunday, July 12, 2009

The impact of exports delay on trade

On average, each additional day that a product is delayed prior to being shipped reduces trade by at least 1 percent. Put differently, each day is equivalent to a country distancing itself from its trade partners by 85 km on average. Delays have an even greater impact on developing country exports and exports of time sensitive goods, such as perishable agricultural products. In particular, a day’s delay reduces a country’s relative exports of time-sensitive to time-insensitive agricultural goods by 7 percent.

More here. Due to road obstruction and closure (bandhs), the Nepalese export-based manufacturing firms have been unable to supply pre-ordered goods in time. It led to cancellation of contract from companies in the West. This is having a severe impact on the whole exports industry, leading to closure of several firms. Between January and June 2009 alone, there were over 500 road obstructions and closures in different parts of the country. This has been a cancer affecting the whole industrial sector in Nepal.