Understanding Your Shipping Costs

If you're new to ecommerce or have just secured a job in logistics, you might be taking a bit of a closer look at your shipping costs.

There are a few different factors that determine how a price is calculated. But then there are some additional charges that are considered variables. These are generally extra fees that the courier company needs to pass on to their customers.

If you're curious about how a courier service works out the dollar figure to charge you, you've come to the right place. Here's a breakdown of shipping costs to help you better understand what you're paying for.

How Shipping Prices are Calculated

Three key factors make up the fundamentals of shipping costs. These will always be a part of the price no matter which courier company you choose to use.

Shipment Type

The first factor is what you're shipping. The size and weight of your parcel will determine how much you'll pay to get it delivered. That's one of the reasons why we recommend using Smart Boxing to combine multiple orders into one package and reduce costs.

Destination

The further your parcel has to travel, the more you will pay for your shipping. There is also a significant difference between domestic and international delivery. Customs charges are not included in the initial quote and if applicable it will be billed to the receiver either in transit or after delivery. If you sell small and lightweight products, our Interparcel International Bulk Solution can help you save costs on international shipping.

Speed of Delivery and Type of Service

The final factor is how quickly you want your parcel to arrive in your customer's hands. You can pay more for an express service which will offer fast and cost-effective delivery options. Alternatively, it will cost you less for the standard option which is designed for less urgent deliveries. Depending on your needs, you may want to choose between air freight and road service, same day or express service, etc...

Optional Additional Costs

You can choose to pay extra for some additional services depending on the courier you're using. For example, you may want to buy insurance or warranty to protect the product you're sending. It will save you from having to replace the item out of your own pocket.

You may opt for the courier company to be responsible for customs and the clearance of your product if you're shipping overseas. Sometimes this can fast track the process of delivering your product to another country. However, if you're sending parcels overseas regularly, then there are better solutions available.

Shipping Surcharges

In addition to the above costs, some surcharges can get added to your invoice. That means they won't be included in your quote and will be invoiced while in transit or after delivery. These amounts may get charged for the type of parcel you are sending. For example, you may get a surcharge if you are sending a cylinder instead of a box. They may differ from service to service, but it's worth keeping an eye out for these line items.

Fuel Surcharge

With the price of petrol fluctuating regularly, many courier companies have implemented a fuel surcharge. This additional cost applies to both domestic and international deliveries and covers the fuel rates for delivery trucks and air travel.

Peak Surcharge

There are courier companies that may charge a peak surcharge to help manage their costs related to supply chain disruptions. Air freight shipment prices have significantly increased while their capacity has reduced. The peak surcharge covers the costs involved to help ensure the best service possible for you.

How to Best Manage Shipping Costs

It can be overwhelming to analyse every aspect of your shipping costs. However, when you use a multicarrier solution, it becomes much easier to track down the best courier service for your needs and your budget.

The Interparcel Shipping Manager allows you to create rules within the platform based on your preferred suppliers. When you're ready to ship parcels, it will automatically select the cheapest service or the provider that meets your service requirements. Not only will this feature save time processing orders, but it will provide you greater control over your shipping costs. Find out more about the Interparcel Shipping Manager here!