Why is International Shipping so Expensive?

Shipping costs often seem quite steep, and there are several reasons for this. These factors make shipping increasingly expensive for business owners, including sellers like you.

Although international shipping offers many benefits, shipping costs are a major factor for eCommerce businesses.

To reduce shipping costs, you can implement several strategies, including negotiating rates, leveraging technology, and optimizing packaging.

Partnering with a reliable shipping carrier allows businesses to deal with international shipping challenges.

We will cover the factors that make international shipping so expensive in 2025 and discuss solutions. 

Understanding International Shipping Costs

Multiple factors contribute to the total cost, and each of them is the key in determining the final cost.

Here are the main elements of international shipping charges for your understanding:

Base Rate

The base rate is a major element of your international shipping costs, making the core of your charges. 

This basic transportation fare for your shipment reflects the cost of moving your package from the origin to the destination. It contains factors including weight, distance, and dimensions.

Fuel Surcharges 

The global fuel prices often fluctuate drastically. To provide consistent service without getting significantly impacted by these changes, carriers often implement fuel surcharges. It is a variable cost that reflects the current market price of fuel. 

Taxes and Duties

After arriving in the destination country, your shipment must go through customs. Here is where taxes and duties are relevant.

The government imposes these fees on imported items. The applied rates depend on the customs rules of the destination country, the type of items being shipped, and their worth.

Handling Fees

Costs associated with processing, loading, and unloading the shipment at ports or warehouses.

Key Factors Contributing to High International Shipping Costs

 Shipping costs have gone up sharply in recent years and have become a pain for businesses and consumers. 

Here are the main factors that contribute to expensive shipping fees:

Distance and Destination

Distance and destination are the main factors to consider when calculating the shipping costs. This cost impacts your bottom line.

Usually, the longer the distance your package travels, the more expensive it will become. This is because carriers spend more time, fuel, and manpower to send the shipments over longer distances.

Additionally, many carriers like FedEx and UPS divide the world into zones based on distance. Shipping within a zone is usually cheaper than sending something across multiple zones.

Shipping internationally will always likely have higher shipping costs than domestic shipping. The reasons for this increase are due to the factors below:

• Possible import duties or taxes
• Customs clearance process
• Increased complexity of dealing with the regulations of different countries

Additionally, most less-developed countries have weak infrastructure. Roads, railways, and waterways that are poorly maintained can significantly slow down the movement of shipments. Overcoming these obstacles requires more time and resources to complete deliveries, driving up costs.

Distance and destination often work together to influence costs. This process involves a substantial distance covering thousands of kilometers. The increased distance results in higher fuel consumption and longer carrier transportation times.

Also, a package needs to cross several international borders before arriving at its destination. These extra steps cause additional fees, leading to higher shipping costs. For more information on standard international shipping check out this blog.

Logistics

Logistics play a crucial role in international shipping costs. It works like a complex network that ensures your package securely moves from one place to another. 

There are meticulous planning, coordination, and implementation to move packages across borders. Here’s how logistics increase international shipping costs:

Carriers need to deal with different elements, including:

• Tax laws
• Customs regulations
• Mandatory documentation for every country.

These additional steps need more paperwork and expert knowledge to comply with the rules, adding to the costs.

On top of it, an international shipment can involve a handoff between several logistics providers, including:

• Freight forwarders
• Trucking companies
• Customs brokers
• Ocean liners
• Local postal services

Supply Chain Issues

The shipping industry is dynamic. Its ecosystem constantly charges by the interplay of supply and demand, seasonal variations, and economic fluctuations. 

Peak seasons, economic slowdown, and equipment shortages can all lead to capacity constraints and price hikes, affecting your profit margins significantly.

Customs and Taxes

Customs and taxes contribute another layer to shipping costs. When shipments cross borders, they go through inspection to ensure their legality. The governments also charge taxes, customs duties, and tariffs.

These charges vary depending on the nature and value of the items, as well as trade agreements between countries. 

Also, dealing with customs procedures needs paperwork and other resources, which add to expenses. Failure to comply with customs regulations can result in penalties and delays.

Fuel Cost

Cargo ships are large, and they need more fuel. However, with the increasing fuel costs, the shipping costs get higher.

Shipping carriers often pass on the charges to customers to make up for these costs. They often add fuel surcharges or increase freight rates, which make shipping costlier for small eCommerce businesses.

Cargo Weight and Volume

Larger and bulkier shipments generally add to transportation costs. Also, the space a shipment occupies relative to its weight affects shipping costs. 

Specific types of goods like perishable items or those needing special handling may cause additional fees.

Trade Tariffs and Customs

Cross-border shipping to another country requires paying trade tariffs, or taxes on items imported from another country. 

When a consumer or company orders items from another country with applicable trade tariffs, they will need to pay a tax on this purchase, spiking the cost of international shipping. 

A country may impose trade tariffs as a way of boosting domestic production and manufacturing, or use it as a way of penalizing a country that’s engaged in unlawful activities. 

Security and Insurance

Keeping your items safe during international shipping adds more cost. However, enhanced security protocols can add expenses for shipping carriers.

For example, if a carrier wants to include container inspections and cargo screening, they need to hire people to supervise the procedure. As a result, it will increase the shipping costs.

While insurance is optional, it is a safety net, but premiums go up with the value of your shipment. 

Global Shipping Issues

Global shipping issues can directly affect shipping costs. Some of the issues that eCommerce businesses can encounter are:

• Congested port
• Shortage of vessel and shipping container
• Global supply chain disruptions
• Natural disasters

Labor strikes

Challenges like labor strikes can push up costs. It may lead to longer processing time and potentially higher fares. These issues have a ripple effect, making it more expensive to move your items overseas.

Impact of International Shipping Costs on eCommerce Businesses

High international shipping costs can affect your pricing strategies by forcing businesses to raise product prices to cover the added expense.

Higher overall shipping costs potentially reduce profit margins and negatively affect customer satisfaction. Customers tend to abandon carts or seek out competitors with lower shipping fees. 

High international shipping costs affect business operations the following ways:

Adjusting Price: To maintain profitability, you may need to increase product prices to absorb the high shipping costs. But increasing prices can make your products less competitive in the market. 

Reduced Profit Margins: When a substantial portion of the selling price is used for covering shipping costs, it directly eats the profit margin. It will likely impact the company’s overall financial performance. 

Customer Dissatisfaction: High shipping costs can result in customer frustration, especially when they do not receive any clear communication. In such cases, customers abandon their shopping cart or look for options with lower shipping fees. 

Impact on Market Outreach: Sometimes, high shipping costs can restrict a company’s ability to effectively reach international markets, particularly for less valuable items. 

Strategies to Ease the Impact of High International Shipping Costs:

Proper Packaging: Reducing package size and weight through efficient packaging can reduce shipping costs. 

Negotiate with Shipping Carriers: Developing strong relationships with shipping carriers can get you better rates and potentially lower costs. 

Introduce Tiered Shipping Options: You can offer customers different shipping speed options. It will allow them to choose the most suitable price point. 

Transparency on Shipping Costs: Communicate shipping costs to customers and avoid surprises at checkout. 

Product Localization: Localizing products in specific markets can reduce shipping costs by optimizing packaging and using local materials.

Want to expedite international shipping? Check out this blog on expedited international shipping.

Strategies to Mitigate International Shipping Expenses

You need strategies to reduce international shipping expenses. You can negotiate with a carrier for better shipping rates based on your volume, optimize package size and weight through efficient packaging.

Besides, you can consider partnering with a 3PL to leverage their expertise and access to discounted carrier rates.

Negotiating with Carriers Based on Volume:

Provide Data: Present data on your historical shipping volume with details like destination countries, weight distribution, and shipping frequency. 

Negotiate Volume-based Discounts: Ask for tiered shipping fees based on your shipping volume, where larger volumes will have lower per-package rates. 

Long-term Contracts: Consider signing a long-term contract with a carrier for guaranteed volume. It will possibly get you better rates. 

Consolidate Shipments: Try consolidating smaller shipments into larger ones to maximize your volume and be eligible for lower rates. 

Reducing Package Size and Weight:

Optimize Packaging Materials: Use lightweight yet robust packaging materials that fit your items snugly, minimizing excess space and weight.

Consider Dimensional Weight: Keep in mind dimensional weight charges (depending on package size) and adjust the packaging to minimize DIM.

Analyze Packaging: Regularly review your packaging to identify areas for improvement. 

Benefits of Partnering with a 3PL:

Discounted Shipping Rates: 3PLs often have relationships with multiple carriers, allowing them to negotiate for lower rates due to their large shipping volume. 

Logistics Expertise: 3PLs can give valuable insights into shipping optimization strategies, including route planning, customs clearance, and packaging design. 

Warehousing and Fulfillment services: A 3PL can efficiently manage your inventory and order fulfillment, possibly reducing shipping costs. Negotiation Support: 3PLs can do negotiations with carriers on your behalf, using their expertise to get the best possible rates.

Key Things to Remember:

Compare Carriers: Do not rely solely on one carrier; compare quotes from multiple providers to find the best rates. 

Monitor Your Shipping Costs: Monitor your shipping expenses and renegotiate with carriers as needed to maintain cost-effectiveness. 

Communicate with Carriers: Communicate with your carrier regarding shipment details and volume to ensure accurate pricing.

Future Trends in International Shipping Costs

International shipping costs are likely to be affected by the following factors:

• Fuel Prices: Oil price is volatile and can directly impact shipping costs. 

• Capacity Shortages: A shortage of shipping capacity can increase freight rates. 

• Rerouting: Geopolitical risks can cause ships to be rerouted, which can increase shipping costs. 

• Port Congestion: Congestion at ports can increase shipping costs. 

• Operational Costs: Higher operational costs can contribute to higher shipping costs. 

• Demand: High demand for shipping services on certain routes can increase shipping costs. 

• Trade Volume: The volume of trade may grow more slowly than in the past. 

• Circular Economies: The move towards more circular economies could impact future trade. 

The Future Trends of International Shipping

• Dimensional Weight Pricing: We may witness a shift from actual weight to dimensional weight pricing, which considers package size. This could encourage businesses to use smaller, more flexible packaging. 

• Sustainable Shipping: There is an increasing focus on sustainable shipping practices and eco-friendly initiatives. This could include using low-carbon fuels, more efficient hulls, and improved voyage planning. 

• Geopolitical Risks and Supply Chain Pressures: Geopolitical tensions, such as the escalating risks in the Red Sea, are influencing shipping operations. Vessels are often rerouted, leading to delays and higher fuel costs. 

Additionally, labor unrest in countries like India and on the U.S. East Coast may further disrupt supply chains. Companies must adapt to these pressures by investing in resilient logistics solutions and closely monitoring geopolitical developments.

• AI and IoT technologies: There is an increased adoption of AI and IoT technologies for logistics optimization. 

International partnerships: Canadian shipping companies may continue to form international partnerships to access new markets and diversify.

Conclusion

International shipping is expensive due to various reasons, such as long distances, fuel costs, and country regulations. Special packaging and insurance contribute to the overall cost, too. 

By understanding these factors, you can make strategies to save costs on international shipping. 

To reduce your company’s international shipping costs, explore other alternatives. For example, moving production units closer to your customer base can reduce shipping costs. 

Integrating automation in your supply chains or partnering with a leading carrier can effectively reduce your international shipping costs in this volatile global market.

FAQs

Q: What are the main factors that make international shipping expensive?

Ans: Supply chain issues: Global supply chain issues, such as the COVID-19 pandemic, can cause a shortage of shipping containers. 

Fuel prices: Rising fuel prices can increase shipping costs. 

Shipping season: Shipping costs can increase during peak shipping seasons, such as between July and October. 

Shipping route: The distance and route of the shipment can impact the cost. 

Package size and weight: The size and weight of the package can affect the cost. 

Customs and duties: Customs and duties fees can increase the cost of shipping. 

Optional services: Optional services like insurance and tracking can increase the cost of shipping. 

Type of goods: The type of goods being shipped can impact the cost. 

Carrier: The carrier used to ship the goods can impact the cost. 

Operational costs: Operational costs, such as disruptions in major maritime routes, can increase the cost of shipping.

Q: How do fuel surcharges influence shipping costs?

Ans: Fuel surcharges directly impact shipping costs by adding a fee on top of the base shipping rate. It fluctuates based on the current price of fuel, which means when fuel prices rise, so does the shipping cost due to the added surcharge.

Q: Why do customs duties and taxes vary between countries?

Ans: Customs duties and taxes vary between countries mainly because each nation sets its own policies based on factors like their economic needs, trade agreements, the type of goods being imported, and the goal of protecting domestic industries. It results in different rates and regulations depending on the country of origin and the destination country.

Q: How can eCommerce businesses reduce international shipping expenses?

Ans: To reduce international shipping expenses, eCommerce businesses can optimize packaging size and weight, and negotiate with carriers to secure better rates. They can also use flat-rate shipping options when possible, consider regional carriers, buy packaging supplies in bulk, offer local pickup options, and analyze shipping destinations.

Q: What is dimensional weight, and how does it affect shipping prices?

Ans: Dimensional weight or ‘DIM weight,’ is a method that shipping carriers use to calculate the weight of a package based on its size (length, width, and height) rather than its actual physical weight. It means that even a lightweight package can be charged more if it takes up a large amount of space in transit, thus impacting shipping prices.

Q: Are there alternatives to traditional carriers for international shipping?Ans: There are alternatives to traditional carriers such as ShippingChimp, Purolator and others. With ShippingChimp, the international shipping starts at $7.42 only.