Abstract For developing countries, such as China, transportation may promote or constrain the development of local economies to a large extent. In this study we explore the impact of transportation and iceberg costs on industrial structure in China. Using panel data to construct theoretical models of iceberg costs and industrial transfer, environment-oriented quantitative analysis is used to identify the influence of developing transportation on different industries. The results show that the development of transportation services exerts the most positive impacts on promoting primary industry, then tertiary industry and the least for secondary industry, though impacts are all in the stage of increasing returns to scale.