Current Economy
Gas prices, the number of dockworkers or employees at factories, the cost of raw materials, and basic supply & demand all contribute to how much couriers charge for shipping.
Why is Shipping So Expensive? Everything You Should Know as Customer or Small Business
As of 2021, there were more than 2 billion people who shopped online. If you belong in that group, you know how expensive shipping can be. The costs really sneak up on you, and sometimes you just can't click out of that browser fast enough!
Whether you're shipping through UPS, USPS, or FedEx, domestic or international, there are many factors that impact delivery costs. Let's dive into each one and figure out ways you can save in the future.
Shipping Costs for Customers
Why is My Shipping Cost So Expensive?
A number of factors contribute to the total cost of delivering your online order. UPS, FedEx, USPS, and other couriers calculate the final price based on all of the following:
- Box Weight
- Box Dimensions
- Shipping Method
- Transit Distance
Box Weight
How Much Does it Cost Per Weight to Ship?
Every courier has a different cost based on weight, but you can expect to pay between $0.50 to $3.00 per pound when shipping an item.
For this reason, you should weigh a package at home before you take it to the post office or a shipping center. You can even buy a small scale that's specifically used for packages.
Box Dimensions
Does Package Size Affect Shipping Cost?
Yes, the package size will affect how much you pay for shipping. Couriers will increase or decrease costs based on the box or envelope's width, height, length, and dimensional weight (how much space it takes up).
To avoid paying extra, be sure to first measure the item you're shipping, and then buy packaging that fits it as snuggly as possible. The less square inches, the less money out of your wallet.
Shipping Method
How Do Packages Travel?
A majority of packages delivered in the U.S. travel via truck or airplane. Boats and trains are used for larger goods like construction equipment, fancy Lamborghinis, or even live animals!
Packages can travel via:
Ground Shipping
Amazon has their own delivery trucks, but most other ecommerce companies ship with couriers. The drivers have specific routes they take, which include anywhere from 500 to 700 different delivery points every single day.
Air Mail
Did you order a cute plush toy from Hong Kong? Your fuzzy friend will need to board a passenger plane to make it to your door. Bigger or heavier items, on the other hand, may travel on a cargo plane.
Maritime Transport
Livestock, foreign cars, machinery, chemicals, and dry minerals are all shipped via cargo ships. Some of these items are too big or dangerous to put on an airplane, so if they're getting shipped from another country, the water may be the only way to travel.
Rail Freight Transport
Some items are simply too risky to put 30,000 feet into the sky. For this reason, domestic container shipments with hazardous goods will be transported by cargo trains. This includes such items as: cleaning products, batteries, paint, shampoo, hand sanitizer, and electronics.
Transit Distance
Does Package Size Affect Shipping Cost?
The farther a package has to travel, the more shipping will cost. The hardworking people who deliver your mail need to be compensated for their time. The fuel and miles of wear and tear on the vehicle are also reasons why distance affects rates.
What Causes Shipping Delays?
Nobody likes to wait for a package, but sometimes delivery is out of a business's control. Shipping delays may be the result of:
- Global supply chain issues
- National disasters
- Unforeseeable accidents
- Complications at customs
- Traffic & congestion
- Faulty equipment/packaging
- Political concerns
- Lost packages
- Illegible shipping labels
Global Supply Chain Issues
The COVID-19 pandemic is a prime example of how the supply chain can be interrupted. Countries around the world went into lockdown, and as a result, the flow of raw materials, the ability to operate factories, and the delivery of goods were all drastically affected. Shipping has been so slow, because quite simply, it's difficult to catch back up.
National Disasters
Hurricanes, earthquakes, tornados, blizzards, and floods can all impact shipping. It's not safe for trucks, planes, ships, and trains to make deliveries in severe weather.
Unforeseeable Accidents
Life is unpredictable and accidents happen every day. Just look at the Suez Canal obstruction that occurred in March 2021. The major waterway was blocked for six days due to a stuck container ship. This halted all trade and maritime deliveries that were made using the Suez Canal.
Complications at Customs
International shipments can get tricky since authorities want to make sure that no illegal substances are getting smuggled into another country. Shipments may be held at customs if they look suspicious or if the cargo carrier doesn't have the required documents.
Traffic & Congestion
The airport may have delays and delivery trucks get caught in traffic all the time, but lately it's congested ports that are really hurting shipping times. Fortune Magazine reports that 77% of the world's ports are dealing with longer turnaround times than normal.
Faulty Equipment/Packaging
A mishap could be as small as a damaged box or something even bigger. For example, forty heavy shipping containers fell off a cargo ship near Vancouver Island in 2021. This led to not only damaged goods but also a fire onboard the ship.
Political Concerns
Wars, conflicts, strikes, and other political or governmental concerns may have a direct effect on shipping. Ultimately, ships or planes aren't going to travel through a battle zone so you can get that new blender you ordered.
Lost Packages
Unfortunately, an estimated 10% of packages get lost, stolen, or damaged every single year in the United States. You may end up getting your delivery later than anticipated, but the best retailers have some kind of strategy so don't have to pay extra when this happens.
Illegible Shipping Labels
Teachers wanted us to have neat handwriting for a reason! If a label is too difficult to read, it might end up being returned to the sender. The delivery address has to get fixed before the mail can be resent.
Other Factors That Affect Shipping Costs
You may have noticed that shipping rates are constantly fluctuating. This may be the result of any of the following:
Hazardous or Bulky Items
Oversized packages or those that contain hazardous materials may be subject to additional shipping fees. This is also true for temperature controlled deliveries such as the ones received by restaurants or grocery stores.
Taxes & Tariffs
The taxes and fees for shipping vary from country to country. Each territory may also impose tariffs on certain imported or exported goods, which ultimately alter the cost of delivery.
Packaging Materials
Bubble wrap, tape, stickers, and even those little Styrofoam peanuts all cost money. Ecommerce businesses need to factor in those costs when figuring out how much to charge you for shipping.
Insurance on Packages
Are you shipping a fragile item like a crystal award or a diamond ring? It may be worth paying for insurance on that package. You'll be reimbursed if the item ends up damaged or lost in transit.
Season
Snow or ice could affect the cost of shipping. It's risky for trucks and planes to travel in inclement weather, and as a result, couriers may raise the delivery costs.
Day of the Week
It may seem crazy, but some couriers charge more to ship on Friday, Saturday, or Sunday. A weekend delivery surcharge may apply to your online order, so definitely ask ahead of time!
Rush or Overnight Shipping
Are you in a hurry? Overnight, same day, or expedited shipping will raise the costs of delivery for your online order.
As you can see, there are many variables in calculating shipping costs. Businesses need to adjust accordingly so they can not only keep the lights on, but continue to make a profit in the long run.
How to Calculate Shipping Costs
Shipping costs are calculated based on a box's weight and dimensions. The delivery method and distance the package has to travel also impact the total cost.
USPS, UPS, FedEx, and DHL have different delivery rates. Use their shipping cost calculators to figure out how much you'll be charged.
Shipping Costs for Small Businesses
What is Freight Shipping?
Freight shipping is the process of transporting large containers by truck, train, plane, or most commonly, cargo ships. It makes sense to load up as much as possible before transit, which is why freight shipments may contain over 15,000 pounds worth of goods.
Are you a small business? It might be a smart idea to use freight delivery instead of UPS, FedEx, USPS, or DHL, especially if you ship internationally. It comes down to who you work with, your profit margins, and what's most cost-effective for your budget.
How Much Should I Charge for Shipping?
Do you manage an online business? You need to offer delivery rates that don't blindside your customers, but also don't affect your profits.
Small businesses have 3 types of shipping they can offer:
- Calculated Shipping
- Flat-Rate Shipping
- Free Shipping
Calculated Shipping
The shipping is calculated based only on weight and dimensions of the package. This has to be figured separately for every product that you offer.
Flat-Rate Shipping
Your business charges a specific price regardless of a package's size or weight. Customers can buy as much as they want and pay a flat rate for shipping.
Free Shipping
Everyone loves free shipping, but it's not always easy to offer. To do so, you need to either up the cost of the products to make up for the loss in shipping, or eat the costs of shipping so as to make your customers happy.
Once you budget everything, you'll get a better idea of how to calculate shipping rates. Reliable, fast, and affordable shipping can make your business a success, so it's definitely worth coming up with a game plan.
How Has COVID Affected Shipping?
The impact of COVID-19 is far-reaching. Since 2020, there have been less supplies, more demand, delays in major ports, a global shipping container shortage, and an overall increase in shipping costs. It's all pretty overwhelming to customers and small businesses alike.
How Much Does a Shipping Container Cost?
Shipping costs have only increased since the COVID-19 pandemic. According to Time Magazine, a single 40-foot steel container shipped 5,547 miles costs $10,522. This is a staggering 547% higher than the average from the last five years.
How to Reduce Shipping Costs for Your Business
You can't control the economy, but you should still do everything you can as a business to reduce your shipping costs. It can make all the difference between you closing your doors and being able to stay afloat.
Reduce shipping costs for your ecommerce business by doing all of the following:
- Compare courier costs
- Offer pickup at your location
- Reduce the amount of packaging
- Order shipping supplies in bulk
- Recruit a third party for tracking delivery
- Switch from boxes to poly mailers
Compare Courier Costs
Reevaluate shipping rates every year so you're always getting the best deal. Just because one courier is the cheapest now, doesn't mean they'll always be the best option. And while you're at it, don't be shy about negotiating!
Offer Pickup
Pizza places offer pickup or delivery, but you don't have to serve delicious pepperoni slices to do the same for your business. If you work with a lot of local customers, think about offering a discounted rate if they come into the store to get their items.
Reduce the Amount of Packaging
Do it like IKEA! The Swedish furniture store ships their goods unassembled as a way to decrease the number of boxes they're sending out. It may be a pain to build their Bestâ storage unit or Poäng armchair, but their flat-packing has helped the store save big time on delivery costs.
Order Bulk Supplies
At the beginning of the year, you should order boxes, bubble wrap, and anything else you need for shipping in bulk. Some promotional products distributors (like Quality Logo Products®) offer wholesale packaging and labels.
Recruit a Third Party
Software like Shipbob and ShipStation can help you keep track of shipped orders, returns, and even have pre-negotiated discounts with couriers on labels. Consider using one of these services if you need a little extra help.
Switch to Poly Mailers
A poly mailer is a sturdy bag that's made from polyethylene plastic. These envelopes weigh less and have smaller dimensions, so they take up less room during freight transport. Poly mailers are best for lightweight, small, or flat items.
Stats for Success
64.3% of U.S. consumers care more about shipping costs than they do about speed.
About 20% of customers who shop on Amazon do so because of the convenience of shipping with Prime.
Following the COVID-19 pandemic, shipping costs increased by 10% for customers.
Container shipping for businesses has gone up by 350% in the past year.
The Bottom Line
Think of this guide to shipping costs as a crash course in Economics 101. Whether you're a customer or a business, delivery can really hurt your wallet. It's all about staying informed and doing whatever you can to skim costs!
Quality Logo Products are experts on all things printed and promotional. Let our team of awesome, incredibly good looking, and fun promo nerds help you select awesome promotional swag today!
Alyssa Mertes
Alyssa is the Lead Copywriter at Quality Logo Products. As a promo expert, she's uncovered the world's first custom tote bag, interviewed the guy behind rock band ACDC's logo, and had a piece published by the Advertising Specialty Institute, a leader in the promotional products industry.
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