Shipping Rates an overview

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Anupama Nair

25 July 2022

Whenever I have visited a courier agency, I have heard this question what is the shipping rate within India and abroad. So, I thought of doing some research. When I ordered a dress from they charged me an International shipping fee in dollars and that is when I was more curious to learn about it. With the convenience of online shopping, not many people think about the number of actual ‘shipping touch points’ that are required to get a package to their home from anywhere across the globe. What are these touch points? They are pieces of the overall shipping and handling process. When you ask “how much does shipping cost to send from New York City to Auckland” you need to know that “shipping and handling refer to more than just delivery costs”.

The term ‘shipping rate’ in layman’s terms means “all costs of shipping, handling, duties, taxes, and other similar costs and expenses incurred in connection with the transportation of products from one place to another”. However, trying to calculate how much to charge customers for shipping and handling can be very challenging and difficult task. “Shipping and handling is the process of preparing and packing an order and then sending it to a customer anywhere in the world”. When you order a product from Amazon you must have seen shipping and handling fees incurred on the product. It covers logistics costs like labor, packing supplies,  transportation, and delivery.

While many people think of shipping and handling as one and the same, some may wonder what the handling part is. “Shipping is the cost of postage and related transportation to get the package from the shipping carrier to the you the consumer. This fee includes surcharges, fuel charges, and other costs related to the distance traveled and delivery timeline chosen. However, “handling merely means the labor costs that are associated with the labor of collecting inventory for an order, packing products into a box with the appropriate packaging materials, creating a shipping label with your address, loading the shipment onto a truck, and any other movement that happens in the warehouse”.

The customers expect affordable, and fast deliveries whenever they shop online. The question is, is offering inexpensive, or even free shipping options eating the company profits? Every company wants to offer the best e-commerce shipping options to the customers, but you need to check if it is profitable to your company. Shipping costs differ depending on many factors, like package measurements, shipment type, weight, location, and many more. Once a company calculates using these factors, they will put a price on your shipment.

The variables that can affect the cost of shipping are:

Package dimensions and weight

All major carriers in the world use a pricing technique called dimensional weight (DIM) to calculate the shipping rates and also takes into account the size of a package to determine the shipping cost. Many shipping companies calculate shipping charges based on whichever is greater — the actual weight of the package or its DIM weight, and you the customer gets charged the higher one. The heavier and larger the package is, the more expensive it will be to ship from one location to another.

Shipping destination

Most carriers use ‘shipping zones’ to calculate shipping rates. What is a shipping zone? It measures the distance between the city of origin of your package and its destination city. The higher the shipping zone, the more expensive a package will be to ship.

Value of contents shipped

The cost of shipping also depends on how valuable your package is. If you’re shipping very expensive product it is better to insure your product. Many international and domestic carriers offer shipping insurance that offers reimbursement to senders whose parcels are lost, stolen, or damaged in transit. However, shipping insurance is very expensive.

The three major US carriers that offer shipping services are the USPS, FedEx, and UPS. USPS is cheapest of the three carriers, as they deliver only within the US. They run local routes every day. FedEx mostly uses dimensional weight to calculate shipping prices across the world. They offer a variety of delivery speeds, from ground to overnight and same-day delivery. FedEx is famous for their international shipping expertise.

If I am sending a packet weighing 50 lbs. from New York City to Auckland (New Zealand), it will cost me $ 1595 using FedEx Priority mail, and $ 1404 by FedEx economy.

UPS also calculates shipping fees based on dimensional weight. A small package of 1 lb. will cost me $376 if I send it through UPS for the same destination.

It is really an information we need to know. It will help us know whether we are charged fairly. A visit to a courier agency can help you. No wonder it is said world is getting smaller and smaller everyday with such facilities.

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