Understanding Shipping Rates
Master shipping economics to optimize your costs and improve margins.
How Rates Are Calculated
The Pricing Formula
Shipping cost = Base Rate + Fuel Surcharge + Service Fees + Zone Adjustment
Base Rate Factors
| Factor | Impact | How to Optimize |
|---|---|---|
| Weight | Higher weight = higher cost | Use lightweight packaging |
| Dimensions | Dimensional weight may apply | Right-size your boxes |
| Distance | Farther = more expensive | Strategic warehouse placement |
| Service Level | Faster = more expensive | Match urgency to service |
| Carrier | Rates vary by carrier | Compare all options |
Weight vs. Dimensional Weight
Carriers charge the GREATER of actual weight or dimensional weight.
Dimensional Weight Formula
USPS: L x W x H / 166 FedEx: L x W x H / 139 UPS: L x W x H / 139 DHL: L x W x H / 139
Example Calculation
A 12" x 10" x 8" box weighing 3 lbs:
Actual Weight: 3 lbs DIM Weight (FedEx): (12 x 10 x 8) / 139 = 6.9 lbs, rounds to 7 lbs Billable Weight: 7 lbs (the greater value)
Savings Tip: A box 1 inch smaller in each dimension could save 20%+ on shipping.
Zone-Based Pricing
Understanding Zones
Zones are based on distance from origin:
| Zone | Distance | Typical Transit |
|---|---|---|
| Zone 1-2 | Local (0-150 miles) | 1-2 days |
| Zone 3 | Regional (150-300 miles) | 2-3 days |
| Zone 4 | 300-600 miles | 3-4 days |
| Zone 5 | 600-1000 miles | 4-5 days |
| Zone 6 | 1000-1400 miles | 5-6 days |
| Zone 7 | 1400-1800 miles | 6-7 days |
| Zone 8 | 1800+ miles | 7+ days |
Zone Skipping Strategies
Reduce zones = reduce costs:
- Use multiple fulfillment centers
- Partner with 3PL in different regions
- Consolidate shipments
Carrier Rate Comparison
USPS Strengths
- Best for lightweight packages (under 1 lb)
- No residential surcharge
- Free carrier pickup
- Flat rate options for heavy items in small boxes
- Note: Limited tracking granularity
FedEx Strengths
- Excellent for 5-70 lb packages
- Reliable transit times
- Strong business delivery network
- Note: Residential surcharge applies
UPS Strengths
- Best ground network coverage
- Weekend delivery options
- UPS Access Points reduce residential fees
- Strong B2B delivery
- Note: Higher base rates offset by discounts
DHL Strengths
- Strong express network
- eCommerce solutions
- Competitive pricing for certain routes
Additional Fees Breakdown
Common Surcharges
| Fee | Typical Cost | How to Avoid |
|---|---|---|
| Residential Delivery | $4-6 | Ship to commercial address or use USPS |
| Fuel Surcharge | 5-15% | Cannot avoid - factor into pricing |
| Signature Required | $3-7 | Only use when necessary |
| Saturday Delivery | $15-20 | Plan ahead for Monday delivery |
| Address Correction | $15-20 | Validate addresses before shipping |
| Oversized Package | $30-100 | Stay under 96" length + girth |
| Additional Handling | $15-30 | Proper packaging |
Peak Season Surcharges
Holiday Season (Nov-Jan):
- Additional $1-5 per package
- Announced by carriers in October
- Plan inventory positioning early
atoship Rate Advantages
Pre-Negotiated Discounts
| Carrier | Typical Savings vs. Retail |
|---|---|
| USPS | 20-40% off Commercial Base |
| FedEx | 30-50% off list rates |
| UPS | 25-45% off daily rates |
| DHL | 40-60% off published rates |
Volume Tiers
Ship more, save more:
| Monthly Volume | Discount Level |
|---|---|
| 0-100 labels | Standard rates |
| 100-500 labels | 5% additional |
| 500-2000 labels | 10% additional |
| 2000+ labels | Custom pricing |
Rate Shopping in atoship
Automatic Comparison
When you create a label, atoship automatically:
- Queries all connected carriers
- Applies your negotiated rates
- Includes all fees and surcharges
- Sorts by price or transit time
- Shows estimated delivery date
Smart Rules
Set up automatic carrier selection:
- IF weight < 1 lb AND domestic THEN Use USPS First Class
- IF value > $100 THEN Add insurance automatically
- IF delivery by Friday needed AND today is Wednesday THEN Filter to 2-day services only
Cost Optimization Tips
- Accurate Weights: Avoid adjustment fees
- Right-Size Packaging: Minimize dimensional weight
- Batch Shipping: Group orders for pickup
- Zone Skipping: Use multiple warehouses
- Timing: Non-urgent can use slower services
- Carrier Mix: Use each carrier's strengths
Hidden Costs to Avoid
- Address correction fees: $15-17
- Failed delivery attempts: $5-15
- Return shipping costs
- Storage fees for undelivered packages
- Peak season surcharges
Billing and Invoicing
Payment Methods
| Method | Processing Time | Notes |
|---|---|---|
| Credit Card | Instant | 2.9% + $0.30 fee |
| ACH Transfer | 2-3 days | No fee |
| Wire Transfer | 1 day | $25 fee |
| Prepaid Balance | Instant | Recommended |
Invoice Details
Your invoice includes:
- Line-by-line shipment costs
- Fee breakdown per shipment
- Carrier adjustments
- Credits and refunds
- Tax information
Billing Disputes
If you are overcharged:
- Check dimensions and weight used
- Compare to your measurements
- File dispute within 15 days
- atoship handles carrier negotiations
Need Help?
- Rate Analysis: Contact sales for custom pricing review
- Live Chat: Click chat icon for rate questions
- Email: [email protected]