Certified Supply Chain Professional (CSCP) Practice Exam

How do water transport costs compare to other methods for high-bulk low-value goods?

1. They are the highest

2. They are the lowest

3. They vary significantly

4. They are comparable to rail transport

The correct answer is: They are the lowest

Water transport costs are generally the lowest for high-bulk, low-value goods due to several key factors. The economies of scale associated with transporting large volumes of cargo make shipping by water exceptionally cost-effective. Ships can carry vastly larger quantities of goods at once compared to other transport modes, which helps distribute fixed costs over a larger cargo load, thereby reducing the per-unit cost. This mode of transport is particularly advantageous for bulk commodities such as grains, coal, or minerals, where the low cost of transport can significantly influence overall logistics costs. The lower fuel efficiency required for marine shipping compared to other modes, such as trucking or air freight, also contributes to the reduced costs. Additionally, while water transport may have longer transit times, for many low-value goods, the cost advantage is a critical deciding factor. In contrast, other transport methods tend to incur higher costs due to faster turnaround times and additional handling required to get goods to market. This makes water transport an attractive option for shipping large quantities of low-value items over longer distances, effectively supporting supply chain efficiency.