Interaction Between Transportation Cost and Commodity Pricing in International Trade. Dry-Commodity Export Shippers’ Perspective in Malawi. The Trade Reducing Factor

While transportation is considered as a trade facilitator in international trade, high transportation costs can adversely impact on commodity pricing and its competiveness on the market. Studies have shown that raising transportation costs by 10 percent reduces trade volume by more than 20 percent. The purpose of this study was therefore, to understand the impact that transportation cost has on pricing of goods from Malawi in international trade. The study sought to establish transportation costs affordability perception from export commodity shippers and assess how transportation cost affects commodity pricing on the international market. The study employed quantitative research approach and descriptive research design in which a closed-ended questionnaire was used to collect data from a sample of 104 shippers in dry-commodity export shipping community. Simple random sampling method was used to determine the sample size. The study found that shippers do not find transportation costs affordable and that the high transportation costs affect negatively the pricing of the goods on the market. The study therefore recommends that government, through the Ministry of Transport and Public Works, to develop logistics cost estimation model and invest in logistics management systems that will enable the industry to collect data, identify bottlenecks and improve the transport system to reduce transportation cost.