Transport costs are subject to a variety of factors:
- Geography. Attributes related to distance are fundamental as distance is a function of energy and effort. This is impacted by the physiography, such as the landscape and the hydrography requiring detours and mitigation (e.g. bridges and tunnels). This conveys a level of accessibility to the transport market (supply and demand), implying differences in transport costs according to the location and position within the transport system.
- Type of product. The characteristics of what being transported impacts costs. For passengers, amenities have to be provided, such as waiting areas and levels of comfort at terminals and inside conveyances. Product differentiation takes the form of classes, such as economy and business, related to pricing levels as a function of comfort and amenities. For freight, product differentiation is substantial as different goods require different forms of storage and stowage during transport. This is particularly the case with fragile and perishable goods, which result in higher transportation costs.
- Economies of scale. Shipment size can result in different costs as the larger the shipment, the less cost per unit transported. Regional services by narrow-body planes have a higher cost structure per passenger-km than long-distance services by wide-body planes. Economies of scale are particularly prevalent in maritime shipping, resulting in substantial cost reductions when deploying larger ships. For movements such as commuting, this cost commonly takes the form of longer travel times in one direction.
- Imbalances. Traffic flows are commonly imbalanced, implying that costs in one direction are higher than in the other. In a commercial system, full transportation costs must be assumed for return (backhaul) trips, so higher flows in one direction subsidize the lower flows in the other.
- Infrastructure. Each transport infrastructure conveys a capacity and operational conditions, which are related to its cost structure. More extensive infrastructure (e.g. wider roads, pavement) can be more expensive to build but result in lower transportation costs when prone to less congestion and higher operating speeds. A similar trend applies to terminals.
- Mode. Each transportation mode has a distinct capacity and operating conditions, which involve a specific cost structure. While trucking offers flexibility and accessibility, it comes with a higher cost structure than rail. The same applies to traveling individually (e.g. by car) compared to traveling collectively (e.g. by public transit). Wages, fuel, and insurance, which are the main cost components, vary by type of vehicle.
- Regulations. Specific operational conditions (e.g. speed limits, workforce certification, permits) and safety considerations (construction, operations) are associated with a transportation cost structure. Regulations may also relate to barriers to entry and competitive behavior (e.g. anti-trust regulations not allowing a merger or an acquisition to proceed).