Optimal Vehicle Size, Haulage Length, and the Structure of Transport Costs

This paper deals with two interrelated questions, namely the optimum size of a shipment, (including the question of the size of a haulage vehicle or vessel), and the structure of transport costs. The relationship between these two questions has not been coherently dealt with previously in the literature, and the heuristic attempts at doing so, have lead to both theoretical and empirical anomalies. This paper adopts an inventory approach in order to show that both of these questions can be treated in a unified manner and this allows us to show, first, that under very general conditions the optimum size of a vehicle or vessel increases with respect to the haulage distance and haulage weight, and second, that the observed structure of transport costs with respect to the haulage distance and quantity is itself a result of this optimisation problem.