Maritime shipping, more than any other form of transportation, benefits from economies of scale since they have a direct impact on its operational costs. There has thus been a tendency to deploy larger ships, particularly in container shipping, to service high volume trade routes such as between Asia and Europe. A common issue with the application of economies of scale is that the maritime shipping company is internalizing its benefits since they have a positive impact on its operations, while externalizing many of the costs to other actors along the maritime transport chain. These actors, particularly terminal operators, trucking companies, railways and distributors, are then facing the challenge to mitigate these externalities, often with capital investment projects.
Diseconomies of scale are a common economic concept stating that after a specific level of output the input costs per unit of output are starting to rise. There is thus no incentives to increase the output of the particular unit beyond a threshold. A fundamental issue is that although the concept of diseconomies of scale applies to maritime shipping, port operations and hinterland distribution, it does not involve the same threshold for each. In this hierarchy of scale economies, maritime shipping has the highest potential, followed by terminal operations and then hinterland distribution. Each transport segment cannot be massified to the same extent because of technical, regulatory or operational consideration. As such, the term disadvantages of scale is used mainly because that although the benefits of economies of scale still apply in the maritime segment of the transport chain, these benefits are not well shared with other actors. Some actors may even be negatively impacted. Therefore, the concept of the disadvantages of scale in maritime shipping covers three dimensions: