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Costs calendar    Jan 25, 2022

5 top factors that affect shipping costs (and how to reduce them)

Check what factors affect the costs of a shipment - and the ways in which they can be reduced.

When we want to optimize the costs of running e-commerce, it is impossible to ignore such a significant area as transport and shipping costs. Unfortunately, this cost element causes many problems, because it cannot be skipped, it cannot be replaced with anything, and transport companies increase their prices year by year. 

From the size of your shipment to the distance, it must travel – there are several different factors that determine the shipping price. By understanding these and additional charges you may be able to optimize your choices and pick the right services. 

List of the main factors that affect the shipping price 

When it comes to defining shipping costs there are several factors at play. Listed below are the most popular ones and how it affects the price you pay. 

Size and weight 

The actual weight of the package, dimensional weight, and cubic size are defining the price category in which the parcel will fall. Billable weight is the weight used to calculate the rate. For domestic and international services, it will be greater the dimensional weight compared to the actual weight. Dimensional (DIM) weight is another factor that may affect the shipping price. It refers to the amount of space it occupies compared to its actual weight. The DIM weight of your package becomes the billable weight when it exceeds the actual weight. Some shipments may contain non-typical items – that will also cost us more if the carrier company needs to handle such an order. 

Shipping distance 

This is one of the main factors, and costs will depend on the type of parcel, whether it is local or international. If we are speaking about countries that are distanced by the ocean or are located in a very difficult location, shipping charges may be very high. This is the problem that is faced very often by ecommerce that sells globally, having just one, local warehouse. 

Delivery time 

There are local standards for delivery times may vary, depending on the distance the package is traveling, but if we don’t agree with the shipping option that requires, for example, a week to deliver to a destination, we can spend more money on a special service like express delivery or an overnight one. 

Tax and duties 

International shipments will be affected by various taxes and duties, which also will require providing information to the offices, documents, and will also take additional time. The length of stay of the goods at the customs agency depends on many conditions, that you may not be able to predict. 

Surcharges 

This is something that can raise your shipping cost by 2-3 or even more times, as this factor includes many things, such as additional payment for the unpredicted rise of fuel prices, required space or time, surcharges for untypical, dangerous, or difficult to transport goods, other operational and administrative surcharges. 

Infographic with 5 factors influencing shipping costs: tax and duties, surcharges, size and weight, delivery time and shipping distance.How to reduce shipping charges? 

As you can see, some factors are adding up for a final cost of a shipped package. Is it possible to reduce them? How to calculate shipping costs correctly? We have prepared for you some general tips that will help you consider the best shipping options. 

The size of the package. Try to reduce the size of the parcel, so you can ship it with the lowest category possible. Too big boxes, or not an appropriate package may result in higher costs. If you sell goods, that are nontypical, and there is nothing to do with that, try choosing a flat rate shipping – it does not depend on the size or weight of your parcel and may be more convenient for your business. 

Distance. If possible, find the warehouse, that allows your packages to be close to their destination. 

Discounts. Search for special rates, such as volume discounts, or special packages that include offers combined of services of various parties: carriers, warehouses, etc. Remember to read all the details, to not be surprised with terms and conditions. 

Pick the right company. Not always the biggest is the best. With the well-known, international companies, such as UPS, DPD, that serve the biggest business all over the world, you may not be able to negotiate good prices. The maybe smaller carrier will be more suitable for you – if you offer small items that fit into the post box, maybe the solution is to collaborate with the post office? 

3PLs and fulfillment services. For many reasons, this may be the best solution to make savings in many areas, with just one decision. If you start shipping to your customers with a carrier that offers fulfillment, you will have many benefits. Read about them below, analyze, visit the sites. 

How businesses can reduce shipping costs with a 3PL and fulfillment? 

Outsourcing delivery to a 3PL or a fulfillment company can help ecommerce businesses get discount shipping that will be unavailable when shipping just on your own. Let us show you the potential benefits. 

Sell globally, ship locally 

You may be selling to remote areas, but thanks to the fulfillment network, your goods will be always as close to the final destination, as possible. Your stocks will be managed in a way, to ensure their optimal levels in warehouses around the world. 

Big player prices available for small businesses 

Thanks to global contracts, and volumes that sum up, you can ship your stuff with the best price levels. 

Time is crucial 

Local shipment means faster delivery, very often with local companies, that have better prices than international shipment from your country. 

Reduced risk 

If your shipping is done well, and parcels are delivered without mistakes, you will save on complaints, send the order once again to the customer, and avoid not the best opinions on the market. 

Linker Cloud is a business solution designed for eCommerce parties to meet customers’ needs and grow their business without breaking the bank. You can get access to the fulfillment network with just one agreement, in less than 14 days. No minimum order quantity is required. You can ship your products faster, cheaper, and in a smarter way. 

The process of establishing cooperation with Linker Cloud: pricing and agreement, set up, stock up, starting an international selling.

Business Development Manager at Linker Cloud. Experienced in logistics, passionate about supply chain and new technologies.

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