Shipping costs
Bond
Bond

Calculating Shipping Costs

Published on: July 28, 2020

Liraz Postan
Post Purchase Expert

Direct-to-consumer brands or e-commerce brands are rapidly replacing brick and mortar stores as the preferred way to shop. The convenience of shopping online outweighs the wait for a package. Thanks to online retailers diligently tuning into customer demand, everything from housewares to electronics to groceries is now available to the consumer at the click of a button.

What if there was a tech-driven and data-driven way to revolutionize the logistics of fulfillment and delivery?

Here is an overview of how shipping costs are calculated in the shipping process.

Package Size

The size of a package is perhaps the most prominent factor in determining the price to ship goods. Major carriers use both dimensional weights and package weight in determining the shipping cost of an item. Dimensional weight is based on the size of the box used to ship a product, whereas package weight only takes into consideration the weight of the package. The final cost is based on the higher of the two values.

Destination

Standard logic applies here. The longer the distance a package must travel before it reaches its destination, the higher the cost the carrier incurs in shipping this package. A courier also incurs additional costs if the package contains items that require special handling. In either case, the courier may impose extra charges to cover its costs.

Shipping and Handling Charges

Shipping and handling charges are assessed in order to cover the costs associated with getting the parcel from point A to point B. One example of a shipping charge is a remote area surcharge. A carrier may impose a handling charge for shipping a fragile or dangerous item.

Duties and Taxes

Although taxes still apply to packages shipped domestically, they are a particularly important consideration when shipping parcels internationally. Depending on the contents or value of the package, either the sender or the recipient may be required to pay extra duties and taxes in order for the parcel to be delivered.

Carrier Selection

The carrier that a sender chooses is another factor that affects shipping costs. Depending on the needs of the sender or the recipient (or both), one carrier may be the best choice among the three.

USPS

USPS offers three types of shipping service – Retail Ground, Priority Mail Two-Day, and Priority Mail Express. Flat-rate shipping is available.

Retail Ground is the slowest choice, with a shipping speed of seven days. Priority Mail two-day shipping, as suggested by its name, delivers within a two-day time-frame. Priority Mail Express offers Next-Day delivery and, unsurprisingly, has the highest shipping cost.

USPS offers a Regional Rate that calculates the shipping cost based on the zone where the package is being sent. Utilizing the USPS Regional Rate may save the sender’s money if they are shipping parcels to a nearby destination.

UPS

UPS uses dimensional weight to calculate shipping costs. UPS offers UPS Ground, which has a shipping speed of four days, as well as, three-day Select and Second Day Air. UPS is a reliable option for domestic ground delivery.

FedEx

FedEx also bases shipping costs on dimensional weight. FedEx offers FedEx Ground, which ships packages in a four-day time-frame, plus FedEx two-day, Standard Overnight, and Same-Day. While FedEx tends to be pricier than the other two carriers, it is an excellent choice for international shipping.

BOND

Unlike the above-mentioned brands, Bond is a tech-driven company that goes way beyond shipping. Due to its smart platform, it allows you to focus not only on your same-day delivery but also, on your customers’ post-purchase experience– which can result in fewer returns, fewer support calls, and a high LTV.

Additional Considerations

Shipping Insurance

Senders who are shipping a highly valuable package can opt to purchase shipping insurance to guarantee that the contents of the parcel are covered should they become damaged, stolen, or lost during the handling process. This rate depends on the carrier being used and can be a percentage of the package’s declared value.

Conclusion

While many retailers, such as Amazon, have dedicated fulfillment and delivery strategies, the average person or business is often left with deciding how to get a parcel safely to its intended recipient.

Fortunately for consumers of all levels, carriers today strive to provide fast, accurate, reliable delivery that is also highly transparent.

Bond couriers place customer satisfaction and visibility of their processes at the forefront by including amenities such as shipping insurance, reverse logistics (drop-off returns), and small business services.

Let's talk today, so you can deliver smarter tomorrow!

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