Why Shipping is Cheaper than Railway Transport for Large Volumes of Cargo

When it comes to transporting large volumes of cargo, shipping on ocean vessels is often significantly cheaper than using rail transport. This is due to several factors, including capacity, fuel efficiency, infrastructure costs, and labor costs. Let's explore these factors in more detail.

Capacity: The Comparative Advantage of Shipping

One of the most significant advantages of shipping over rail transport is the ship's capacity. A typical cargo ship can carry thousands of containers or tons of bulk cargo in a single journey. For example, a bulk cargo ship can transport the equivalent of several shipments of iron ore from the Pilbara in Australia. Meanwhile, a large container ship can carry nearly a dozen double-stack intermodal container trains in the USA.

Even if we compare the largest trains to small container ships, there is a significant difference. A 200-car train, one of the largest, can typically carry around 400 to 500 TEUs (Twenty-foot Equivalent Units), whereas a small container ship can carry over 8,000 TEUs. The differences become even more pronounced when comparing to larger container ships, which can carry over 20,000 TEUs. To transport the same volume of goods, it would require approximately 50 of the biggest trains, each requiring about 100 crew members rotating every 8 hours, totaling over 150 crew members per day. In contrast, a ship with a crew of 35 can operate continuously (24/7).

Fuel Efficiency: Why Ships Use Less Fuel

Ships are also more fuel-efficient than trains. The amount of friction is significantly less in water compared to the thousands of wheels on a train. Additionally, shipping allows for economies of scale, resulting in lower fuel costs per ton-mile. This efficiency makes it economical to transport massive quantities of cargo across long distances without the need for continuous refueling stops.

Infrastructure Costs: The Advantage of Publicly Owning Ports

Infrastructure costs are another factor to consider. Ships rely on existing waterways and publicly owned ports, which are maintained by public funds. In contrast, rail transport requires dedicated tracks, terminals, and rail networks that need continuous investment and maintenance. The public ownership of ports reduces the overall cost of transport, making shipping more economical.

Labor Costs: Smaller Crew, Lower Costs

One of the most significant labor cost savings of shipping over rail transport is the smaller crew required for operation. A ship's crew typically numbers around 35, able to operate continuously without the need for frequent crew changes. A single train, on the other hand, requires approximately 100 crew members, with shifts rotated every 8 hours, totaling over 150 crew members per day for 50 trains. This difference in crew requirements can significantly impact labor costs, making shipping a more cost-effective solution for large volumes of cargo.

Global Reach: The Wide Reach of Shipping

The ability of ships to transport goods across oceans and reach ports worldwide is another critical advantage. Ships can facilitate international trade, making markets more accessible for businesses. In contrast, trains are limited by land, operating only within specific regions or countries. The global reach of shipping can open up numerous opportunities for trade and business expansion, making it a more beneficial choice economically.

However, the choice between shipping and rail transport is not always straightforward. Factors such as distance, time sensitivity, the nature of the cargo, and specific logistical requirements must be considered. Each mode of transport has its advantages and disadvantages, and the best choice depends on the specific needs of the shipment.