Dynamic Analysis of Product Lifecycle and Sea/Air Modal Choice: Evidence of Export from Japan1

Here, we test the hypothesis that commodities at their peak valuation are transported by air, while those at their inception and maturity are shipped by sea, as well as the theory that shippers choose air to transport high-valued commodities. We empirically investigated how the product lifecycle of commodities is reflected by shippers’ choices of air over seaborne transportation. We also assumed that commodities that achieved substantial innovation in their lifecycles would be moved by air transportation so that these commodities could reach targeted markets as quickly as possible to avoid the opportunity costs that might be generated by missed business chances. We constructed two sets of unbalanced panel data of 14 commodities for 24 years drawn from Japan's customs, demographic, and international statistics. By estimating structural equation systems that consisted of commodity-specific export and export air ratio functions, we found that the product lifecycle of cargo outgoing from Japan exactly matched the upward and downward movement of the air ratio.