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How to calculate shipping costs

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When it comes to the cost of shipping, nobody wants unpleasant surprises. From package weight to custom duties, there's a lot to consider when estimating your shipping costs, whether you're shipping domestic or international.

Let's take a closer look at how the UPS® Calculate Time and Cost tool can help take the guesswork out of calculating shipping costs.

Time in transit

The main factor to consider when calculating shipping costs is speed to destination.

“It really all depends on when you need your shipment delivered," says Joe Rayburn, UPS customer technology marketing manager. "Speed to customer and cost of shipping are closely aligned. The nice thing is that the Calculate Time and Cost tool takes the uncertainty out of the process, providing you with costs that are broken out by each unique service level.”

Once you have determined a delivery speed that will meet your customer's needs, choose from a wide selection of service offerings, from next flight out to day-definite ground services.

Dimensional weight

The next thing to factor in is dimensional weight. Dimensional weight reflects package density, which is the amount of space a package occupies in relation to its actual weight. Dimensional weight can apply to all domestic and international packages, and it's important to consider when calculating shipping costs by weight.

To calculate dimensional weight, multiply the package length (the longest side of the package) by the width and by the height. The result is the cubic size in inches. Divide the cubic size in inches by the appropriate rate type divisor – whether daily or retail – to arrive at the dimensional weight in pounds.

The divisor varies by rate type: 139 for daily rates, and 166 for retail rates. Increase any fraction to the next whole pound. The billable weight will be the larger of the actual or dimensional weight.

If that sounds complicated, don't fear. Take the heavy lifting out of the math and let our shipping cost calculator crunch the numbers for you. Simply input your actual weight and packaging dimensions into the calculator, and the system will determine your billable weight.

Shipping insurance and declared value1

Protecting your goods while in transit is another consideration when calculating shipping costs. Shipping insurance helps protect against the costs associated with loss or damage to your package in transit.

Packages shipped with UPS are automatically covered up to $100 in the event of damage or loss. Beyond that, you can choose to declare a higher value for your shipment. Expect to pay an incremental cost for every additional $100 in declared value.

In addition to the protection that declared value affords, explore comprehensive insurance solutions to ensure total peace of mind.

Delivery surcharges

Delivery area surcharges may apply to your shipment for pickup or delivery in areas that are less accessible or remote within the United States. These charges, designed to help cover the higher operating cost of providing service to harder-to-reach areas, are based on zip code.

“Delivery surcharges are assessed to more accurately reflect the cost of providing service to less populated or accessible areas. Using tools, such as the Calculate Time and Cost calculator, can help better assess these charges and prevent any unexpected surprises later on,” says Rayburn.

Collect on delivery (COD)

There may be instances in which your customer requests to pay for your goods at the point of receipt of their shipment. Perhaps you are unable to arrange the payment electronically because the purchaser does not have a credit card. In some parts of the world, collect on delivery is a common method of payment.

Usually, the total amount is shown somewhere on a tag or package label where the carrier is able to identify the amount that needs to be collected before releasing the package for delivery.

The shipping cost calculator automatically factors in COD charges when you select this service.

Shipping supplies

Remember to have packaging material at hand if you are packing shipments yourself. Pack your goods securely and use enough packing material inside the box to reduce the risk of damage during transit. Damage caused by ineffective packing increases the likelihood of costly returns.

Order enough packaging supplies, or purchase what you need from The UPS Store® locations. 

International shipping costs

When shipping internationally, there are additional costs to factor in.

First, it’s important to understand duty rates and how they work. Generally, the duty rate you pay is based on the type of product you're shipping as well as the country you're shipping into, says Tim Darst, UPS customs brokerage compliance manager.

“Depending on the type of commodity being imported, you will be associated with a tariff schedule code and then a duty rate," he explains. "Most often the duty rate is based on an ad valorem rate, which is itself based upon a percentage applied to the value of that commodity. Sometimes the rate is determined by the number of units instead.”

Don't forget to check out whether your shipment might benefit from duty relief under free trade agreements that may be in place between the United States and the country of import/export (depending on if you are shipping into or out of the United States). Free trade agreements are a great way to lower your total cost of shipping, if your product qualifies under the relevant terms. The United States has free trade agreements in operation with many countries around the world.

De minimis

De minimis is the threshold under which imports can enter a market duty free under certain conditions. De minimis varies from country to country with the U.S. allowance of $800 per person per day for most imports. Outside of the United States, de minimis thresholds are generally much lower.

Bear this in mind when shipping product into the United States. Restrictions on the use of de minimis may apply for shipments of alcohol and tobacco as well as other types of goods. In addition, de minimis only applies to any shipment of merchandise imported by one person on one day having a fair retail value not exceeding $800. De minimis does not apply if the shipment is one of several lots covered by a single order or contract which was sent separately for the express purpose of avoiding duty/fee payment.  

Simply input your details and our international shipping cost calculator will give a preliminary estimate on what impact de minimis may have on your total cost of shipping, although it is your responsibility to fully review the de minimis requirements and determine if your shipments qualify.   

Taxes & additional fees

When shipping internationally, your shipment might be subject to additional charges and taxes dependent on the country of import. "In the U.S. for example, we have what we call a merchandise processing fee. In Europe there is a Value Added Tax (VAT), so it just depends on where you are shipping to,” says Darst.

For certain imports into the United States, a partnering government agency fee may apply. “If you have product that is regulated by one of 47 government agencies in the U.S., we may need to submit an additional declaration to that government agency in addition to Customs and Border Protection (CBP) to support that release.”

Shipments with multiple commodity lines may also be subject to additional brokerage charges, Darst continues. “If you send an invoice and it has multiple commodity lines and multiple products within the shipment, what we have to do as a broker is break out and classify each of those commodities independently. If the classifications exceed three commodity lines, we begin charging a per classification fee above that.”

Support with international shipping

Global markets can certainly be complex. There's no doubt shippers value expert help when it comes to understanding the cost of international shipping.

“Customers will ask, 'What can I do to reduce my expense?'," says Darst. "We certainly have the expertise to talk through some of the various options concerning how they ship. A customer's business model may better suit individual rather than consolidated shipments, for instance.”

Seek out expert guidance in navigating international regulations and requirements so that your shipments keep moving and you stay on top of costs.

Know your costs

Understanding how to determine shipping costs doesn’t need to be a headache. Log into your UPS.com account, or set one up today, and let our shipping cost calculator do the work for you.

1Declared Value is not insurance or an insurance product. If interested in parcel insurance, consult UPS Capital for information.

This is for informational purposes only.  It does not constitute legal advice – please consult with your own legal counsel for such advice. Also, do not rely on this information without performing your own research.

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