Certified Supply Chain Professional (CSCP) Practice Exam

What happens when there is higher volume in a shipping lane?

1. The cost of transportation increases

2. The cost of transportation decreases

3. The volume of goods transported decreases

4. The demand for shipping lanes increases

The correct answer is: The cost of transportation decreases

When there is higher volume in a shipping lane, it typically leads to a decrease in the cost of transportation. This phenomenon is largely attributable to economies of scale. As more goods are moved through a particular shipping lane, carriers can optimize their operations. For instance, they can load larger amounts of cargo onto a single vessel, which reduces the cost per unit of transportation. In addition, higher volume can influence competition among transport providers. When there is an increase in demand for shipping services, competition may drive carriers to offer lower rates to attract more business, thus further contributing to reduced costs. It's important to note that while the demand for shipping services may increase in response to higher shipping volumes, the relationship primarily focuses on the cost of transportation, which generally decreases with increased volume due to these efficiencies and competitive dynamics.