ANALYSIS OF OCEAN TRANSPORTATION COST AND TARIFF BARRIERS IN INTERNATIONAL COTTON TRADE (OPTIMAL FLOW, LINEAR PROGRAM)

The direction of the future world cotton market is a vital consideration for the cotton industries of both producing and consuming countries. Numerous studies have analyzed the international cotton trade. However, there was no published research that attempted to examine the effects of transportation costs and tariffs on international cotton trade.;The study showed that ocean transportation costs were very significant and did influence international trade. Moreover, these costs could be one of the important factors in determining the competitive positions of the countries in the world market. Consequently, ocean transportation costs may pose barriers for some countries in entering the export markets.;The analysis indicated that tariffs added substantial dollar and social costs to the world cotton economy. Even though tariffs were often imposed to raise revenues for governments, they also had a cost and influenced the competitive positions of the nations in the world cotton market. In addition, the model results indicated the inefficiencies in the flows of cotton shipments. More specifically, the comparison of the existing and optimal flows revealed that additional net social gain could have been realized with the optimal flows.;Finally, the effects of transportation costs on the market shares of exporting countries were examined. The study showed that parametric programming could be utilized to determine the effective levels of transportation cost adjustments necessary for exporting countries to maintain their competitive positions in the targeted markets while minimizing the total cost of adjustments.;The major objective of the study was to analyze the effects of ocean transportation costs and tariff barriers on the flows of international cotton shipments. A transportation model, within a linear programming framework, was employed to obtain the optimal flows in international cotton trade. A comparison of the existing and optimal flows was made to determine if additional net social gain could be realized with the optimal flow of cotton trade.