Transportation Bottlenecks and Aggregate Shocks

Do transportation disruptions affect aggregate outcomes? We develop a tractable model of the transportation sector to study its impact on prices and international trade. By casting maritime transportation as a queueing network, the model identifies where the transportation bottlenecks lie and delivers a simple and easy-to compute measure of transportation capacity over time. We calibrate the model using shipping and trade data and use it to evaluate the resilience of the shipping sector during the last 20 years. During the Great Supply Chain Disruption, port bottlenecks raised commodity prices and caused shortages, but a contemporaneous contraction in commodity supply reduced shipping demand and thereby dampened these effects. By contrast, insufficient shipping capacity was a key driver of price increases during the 2000s Commodity Supercycle.