Economies and Diseconomies of Scale in Container Shipping

Like many types of transportation, container shipping benefits from economies of scale in maritime shipping, transshipment and inland transportation. The rationale of maritime container shipping companies to have larger ships becomes obvious when the benefits, in terms of lower costs per TEU, increase with the capacity of ships. There is thus a powerful trend to increase the size of ships, but this may lead to diseconomies to other components of container shipping. This is particularly the case for transshipment, notably at port terminals. The growth in capacity comes with increasing problems to cope with large amounts of containers to be transshipped. Larger cranes and larger quantities of land for container operations, namely temporary warehousing, may become prohibitive, triggering diseconomies of scale to be assumed by port authorities. The same principle applies to inland transportation where congestion leads to diseconomies.