Average Cost per TEU by Containership Capacity and By Route, 1997

Average Cost per TEU by Containership Capacity and By Route 1997

Source: Data from Cullinane, K. and M. Khanna (2000) “Economies of Scale in Large Containerships”, Journal of Transport Economics and Policy, Vol. 33, pp. 185-207.

Economies of scale in container shipping are achieved by using larger containerships, which reduces unit transport costs. In the late 1990s, the cutting point was around 4,000 TEU for long distances. Even if the marginal benefits of using larger containerships appear relatively small after 4,000 TEU, the larger number of containers carried creates multiplying effects. It is thus not surprising that maritime shipping companies have introduced larger and larger containerships, particularly over long-distance routes. The key limitation is the capacity of port terminals to handle larger ships since this requires substantial investments in transshipment and port-side facilities.