Maritime Shipping: Disadvantages of Scale



Dr Jean-Paul Rodrigue, HOFSTRA University, New York, USA


Maritime shipping, more than any other form of transportation, benefits from the application of economies of scale since they have a direct impact on operating costs. The larger the ship, the more cargo it can carry, and as such the lower the transport cost per unit of cargo. There has thus been a push to deploy larger ships, particularly in container shipping, which were put on high volume trade routes, such as between Asia and Europe and across the Pacific.

The port of Los Angeles (and North America) received its first 18,000 TEU ship in December, 2015. Many large infrastructure projects around the world such as the Panama Canal expansion, the recently completed Suez Canal expansion and numerous port infrastructure investments are in whole or in part justified through the rationale of accommodating larger ships. Economies of scale appear however to be an asymmetric force in which maritime shipping companies are internalising benefits since…

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