Shipment Size and Inland Transport Costs

Shipment Size and Inland Transport Costs

Source: P.O. Roberts (1999) “Logistics and Freight Transportation: Review of Concepts Affecting Bulk Transportation”, World Bank.

The principle of economies of scale in transportation particularly applies to freight distribution as costs tend to be inversely proportional to shipment size. Freight shipped in 10 pounds parcels would cost about $1,000 per ton for 1,000 miles while freight shipped on a 2 million pounds barge load would cost $2 per ton for 1,000 miles. This favors a specialization of shipments according to the value of what is being transported. Different transport options are not necessarily competing but servicing specific markets and supply chains.