Terms & Glossaries of Shipping and Trading

Fixed Costs

Fixed costs are costs that do not vary with the level of activity. Some fixed costs continue even if no cargo is carried; for example, terminal leases, rent, and property taxes.

What is Fixed Costs?

The term fixed cost refers to a cost that does not change with an increase or decrease in the number of goods or services produced or sold. Fixed costs are expenses that have to be paid by a company, independent of any specific business activities. This means fixed costs are generally indirect, in that they don't apply to a company's production of any goods or services. Companies can generally have two types of costs—fixed or variable costs—which together result in their total costs. Shutdown points tend to be applied to reduce fixed costs.