Certified in Logistics, Transportation and Distribution (CLTD) 2025 – 400 Free Practice Questions to Pass the Exam

Water carriers are characterized by significant investments in infrastructure, including vessels, docks, and maintenance facilities. This leads to relatively low fixed costs when compared to their operational expenses. Since the vessels can accommodate large quantities of freight, they achieve economies of scale, which contribute to the low fixed cost nature of this mode of transport.

In contrast, water carriers typically incur high variable costs that are directly associated with the operational aspects of transporting goods. These variable costs can include fuel, crew wages, maintenance on the vessels, and port fees, which can fluctuate depending on the volume of goods being transported and operational conditions. The relationship between these costs helps define the economic structure of water transportation and influences decision-making for logistics and supply chain management.

Thus, water carriers indeed have relatively low fixed costs and relatively high variable costs, making this combination the most accurate description of their cost structure.