Transaction costs in the transportation sector and infrastructure in North America: exploring harmonization of standards

Abstract

Since the implementation in 1994 of the North American Free Trade Agreement, trade between the three North American countries has almost tripled. However there are substantial impediments for the efficient freight movements between the three countries. Major obstacles derived from transaction costs which reduce and sometimes eliminate the benefits gained from the removal of tariffs resulting from NAFTA. The paper analyzes North American truck, rail and maritime trade and transportation characteristics and operations that serve as the foundation to identify and quantify transaction costs caused by the lack of harmonized transportation regulations and infrastructure disparities. The research describes opportunities to reduce or eliminate costs along with a strategy to implement actions to reduce transaction costs in the transportation sector. An implementation plan for these actions is recommended with some examples of good practices that have taken place in Mexico.