The land-locked position of a developing country may seriously inhibit the expansion of its trade and economic development. Land-locked countries have to incur high export and import expenses for transport and communications; there are related costs that result from the maintenance of higher levels of inventories and thus of greater storage facilities owing to the unpredictability of transit traffic flows, as well as from the development and maintenance of alternative transit routes.
The lack of territorial access to the sea means that the seaborne trade of a land-locked country depends unavoidably on transit through another country. However, because of the unreliability or unavailability of transport facilities between the port and the final destination, the land-locked countries face a particular problem. There is a need for adequate storage space and facilities for goods in transit. In order to avoid congestion such facilities should, wherever possible, be removed from the port area. Storage arrangements are not adequate in most ports used by land-locked countries, and the problem of poor facilities in such ports is compounded by the fact that the transit countries - most of them developing countries - have themselves serious resource constraints and a grave shortage of trained manpower at all levels.
Coastal states in their function as transit states, that is in providing transport services, facilities, or at least port-access, to land-locked countries, are in the position of a monopolistic enterprise. Tariffs for road or rail use, and to a lesser extent for utilization of inland waterways and air fields, and also for use of cargo and port storage, handling and other facilities, are often arbitrary, variable and at excessive levels. On the other hand, many coastal states are themselves only now developing, and inefficient or inadequate infrastructures raise the costs for sea access without there being any possibility of subsidizing their neighbours. Hence the excessive costs of transit are, in fact, regional problems. Rather different difficulties occur when the immediate neighbour of a land-locked country is a developed country (as in the case of Lesotho, Botswana, and Swaziland).
The position of land-locked states hampers countries their in their efforts to take advantage of the international measures in favour of developing countries. An UNCTAD survey revealed wide variations in the relative transit costs for different commodities, with the comparatively low-value high-bulk commodities showing the largest percentage mark-ups of transit costs. The result is reduced incomes for the producers of commodity exports and raised import costs, thus hitting hardest at the broader, poorer section of the population. The land-locked state may be obliged to compete with its neighbouring transit state, often itself a developing country, for internal and external resources and for export markets, with the former always at the mercy of unilateral measures imposed by the latter to maintain its own trading advantage. This situation raises, in principle, the possibility of some degree of monopolistic exploitation, irrespective of whether deliberately practised (in the pricing of transport facilities and their use or in the limitation of access to routes, facilities, or ports) or whether it is done inadvertently by giving less attention to services to the land-locked country than to national traders or authorities.
Many land-locked developing countries import and export low value-to-weight products, thus paying a disproportionate amount of their costs for freight. The restructuring of the pattern of production with the deliberate intention of reducing sensitivity to transport costs by promoting import substitution industries producing high-bulk low-value products, and developing high-value low-bulk products for export, is hindered by the unavailability of such domestic high-bulk low-value commodities as fertilizers and construction materials, and by the incapacity to produce at reasonable cost through limiting the import content of local production. The dependency of many land-locked developing countries on external sources of supply for such basics as food and energy makes a rapid rate of development unattainable. Exports with a high value-to-weight ratio, such as high-value minerals, have so far played a very minor role in most of the land-locked developing countries. These countries have inadequate mineral exploitation programmes and have not succeed in the processing of some of the mineral and food currently exported manufacturing of products for export. In some cases the developed countries have made their markets difficult to access for semi-processed, processed and manufactured goods from the land-locked countries, and regional cooperation arrangements in the area of trade are not far advanced.
Some 20% of the nations of the world, most of them developing, are land-locked. The land-locked developing countries are among the very poorest of the developing countries. Of the 21 land-locked countries, 15 are also classified by the United Nations as least developed. Additional obstacles resulting from their geographical situation render their economies particularly vulnerable and reduce their overall ability to cope with the mounting challenge of extreme under-development which all least developed countries currently face. The land-locked country closest to the sea is Swaziland with a transit route of 220 kilometres to the port of Maputo in Mozambique, followed by Bolivia with a route of 450 kilometres to the port of Arica in Chile, and the Lao People's Democratic Republic with a 670-kilometre route to the port of Bangkok in Thailand. The most remote are Afghanistan, Chad and Rwanda, all of which have a minimum transit distance of nearly 2000 kilometres.