The breakdown of costs between these categories is important. Where fixed costs are high a natural monopoly can be the only solution. For example fixed costs make up a significant proportion of the cost of railways. The operation of railways demonstrate significant economies of scale, the more trains that are run over the tracks the lower average total cost becomes.
The table below gives an example of economies of scale in lorries.
The sources of economies of scale in transport can be complicated. There are essentially two sources:
