The United States shipped approximately 23.9 billion parcels in 2025, reflecting how deeply e-commerce has become embedded in everyday business. For small businesses, however, every additional package carries a growing financial risk. Fuel surcharges on some FedEx and UPS shipments have exceeded 26%, while changes to delivery-area fees, dimensional pricing, processing charges, and other adjustments continue to raise the final cost of fulfillment.
These expenses arrive as small businesses are already managing higher product, labor, and customer acquisition costs. Yet shipping is still frequently treated as a back-office expense that can be reviewed after an order is fulfilled. That approach no longer reflects the economics of online commerce.
Shipping has become a core component of Cost of Goods Sold (COGS). When businesses fail to measure its full impact at the order level, they can generate sales while unknowingly losing money on the transactions they worked hardest to win.
The Published Rate Is Not the Final Shipping Cost
Annual carrier rate increases receive the most attention because they provide a clear headline number. The actual cost of shipping, however, is shaped by a much broader and increasingly dynamic collection of fees.
Fuel surcharges fluctuate with carrier formulas. Residential and delivery-area surcharges vary by destination. Dimensional weight pricing can make a lightweight package expensive because of the space it occupies. Address corrections, additional handling, oversized packaging, pickup-area fees, and post-shipment adjustments can all change the economics of an order after it leaves the warehouse.
Carrier pricing can also change throughout the year. FedEx, for example, adjusted several fees and surcharge rules during 2026. On July 20, the carrier changed its delivery-area and pickup-area surcharge ZIP-code lists and increased its disbursement fee from the greater of $15 or 2% of applicable charges to the greater of $17.50 or 2.5%.
For a large enterprise, an unexpected fee may be absorbed across millions of transactions. A small business has far less room for error. An additional few dollars on a low-value order can eliminate its profit, particularly when the company has already offered free or discounted shipping to secure the sale.
The damage is not always immediately visible. A business may estimate shipping when the customer checks out, record the sale as profitable, and discover weeks later that the carrier applied an adjustment. By then, the pricing decision has already been made, and the order has already shipped.
Shipping Must Be Managed as Part of Cost of Goods Sold (COGS)
Many small businesses categorize shipping as an operating expense because fulfillment occurs after the product is sold. Financially, that separation can create a misleading picture.
Shipping is directly connected to delivering the product and completing the transaction. It influences gross margin, pricing, order profitability, inventory placement, promotions, and customer experience. That makes it a fundamental cost-to-serve variable, not simply an administrative expense.
A small business may appear to have a healthy product margin when looking only at manufacturing or wholesale cost. Once postage, packaging, labor, surcharges, marketplace fees, and returns are included, the same order may be barely profitable or generate a loss.
Greater visibility into fully loaded cost per order helps owners identify these differences before they spread across hundreds of shipments. It can reveal that certain products are expensive to ship because of their dimensions, particular regions trigger frequent surcharges, or a free-shipping threshold is encouraging orders that do not generate enough margin to cover fulfillment. This information should influence several decisions:
- Pricing: Product prices and shipping charges should reflect the actual cost of serving the customer, not an outdated carrier estimate.
- Free-shipping policies: Thresholds should be based on order profitability, average shipping expense, and customer behavior.
- Packaging: Better-matched packaging can reduce dimensional weight charges and prevent unnecessary handling fees.
- Inventory planning: Understanding where customers are located can guide inventory placement and reduce fulfillment distance.
- Product strategy: Businesses can identify which products, bundles, and order combinations remain profitable after all shipping costs are included.
Better Data Creates Better Decisions
Shipping information is often scattered across storefronts, marketplaces, carrier accounts, spreadsheets, and accounting systems. This fragmentation prevents many small businesses from understanding what they actually spend per order.
A monthly shipping total may show that expenses increased, but it does not explain why. The increase may come from higher volume, longer shipping zones, poor packaging choices, carrier adjustments, or more residential deliveries. Without order-level data, owners are left reacting to costs rather than managing them.
Centralized fulfillment data can connect each shipment to the product sold, destination, package characteristics, selected service, promised delivery time, and final carrier charge. That level of detail turns shipping records into decision-making information.
It also helps businesses evaluate customer experience more intelligently. The cheapest service is not always the best option if it creates delays, support requests, or repeat-delivery problems. Conversely, paying for premium service on every order may add cost without improving satisfaction.
The goal is not simply to minimize every shipping charge. It is to choose the most appropriate service for the order while protecting the margin and meeting customer expectations.
AI and Automation Can Reduce Avoidable Margin Leakage
Small businesses cannot control carrier pricing, fuel markets, or national transportation costs. They can control how consistently they respond.
AI-powered shipping technology can analyze order patterns, package details, destinations, carrier services, and historical costs faster than a small team can compare them manually. Used correctly, these tools can improve financial visibility without removing human oversight.
Three capabilities are particularly valuable:
- More accurate cost forecasting: Predictive tools can account for destination, package size, service level, fuel adjustments, and common surcharges before prices or promotions are set.
- Automated shipping rules: Repeated decisions can be translated into rules based on weight, destination, delivery requirements, order value, or product type.
- Real-time service comparison: Technology can compare eligible carriers and service levels for each shipment rather than relying on a single default option.
Automation can also reduce avoidable mistakes, such as selecting an unnecessarily expensive service, entering incomplete addresses, or repeatedly using packaging that triggers dimensional weight charges.
The value of AI is not that it makes carrier increases disappear. Its value is that it helps small businesses identify the most financially responsible response before a preventable cost becomes a recurring problem.
Profitability Depends on Seeing the Full Cost Earlier
The shipping industry is becoming more sophisticated. A recent multiyear agreement valued at more than $10 billion made the U.S. Postal Service the exclusive last-mile delivery provider for DHL eCommerce in the United States. The partnership combines DHL’s automated transportation network with USPS access to more than 170 million delivery points.
Small businesses do not need enterprise-scale infrastructure to adopt the same principle. They need connected systems, reliable data, and a clear understanding of how each fulfillment decision affects profitability.
Carrier costs will continue changing. Surcharges will shift, new fees will appear, and customer expectations for affordable delivery will remain high. Businesses that review shipping only after receiving the invoice will continue discovering margin problems too late.
Those that treat shipping as part of COGS can make stronger pricing, inventory, packaging, and customer experience decisions. With better visibility and practical automation, fulfillment becomes more than a cost to absorb. It becomes a financial function that can be measured and improved.
The small businesses best positioned to grow will not necessarily be those that ship the most packages. They will be the ones that understand the profit behind every package before it leaves the building.
Kyle Henzel is the President and Chief Operating Officer of Ship.com, a SaaS shipping platform that helps e-commerce brands simplify fulfillment and protect margins. With extensive experience in logistics and e-commerce operations, Kyle leads shipping rates, carrier strategy, and platform integrations — ensuring sellers have the infrastructure and visibility needed to scale profitably.
