Parcel Shipping Zones
“Zone Shipping” refers to the practice of dividing regions and countries into zones that shipping carriers can then base fee structures on. The farther a package travels relative to its origin, the more zones it must cross, therefore driving up the cost of shipping. By learning a few rules about domestic and international shipping zones, small and mid-sized businesses can learn how and where to take advantage of pricing and enjoy significant savings.
“The better you understand Zone shipping rules, the better you can leverage multiple carriers to keep shipping costs down.”
Domestic Shipping Zones
All major carriers use zones to calculate postage, but rates do vary depending on the carrier and service type. Understanding how zones are priced is an important piece in reducing your total overhead and improving shipment efficiency.
The United States is split into 8 zones, including Alaska, Hawaii and Puerto Rico. Zone 1 would be the closest zone relative to a package’s origin and Zone 8 would be the farthest away. The maps below demonstrate what zones look like for USPS and UPS if, for example, the greater Los Angeles area is the point of origin.
Figure 1: USPS Zone Chart
Figure 1: USPS Zone Chart 2
International Zones from U.S. as Point of Origin
International shipping is similarly broken into zones, or Price Groups. Some countries have their own zones, but most are grouped together based on region. Basic international pricing groups by carrier are shown in the chart below. Note that a higher number or letter does not necessarily correspond to a greater distance from the point of origin.
Know Your Zones
Employing strategic shipping strategies that take zones into account will become increasingly important to the success of any business. United States e-commerce sales reached $396 billion in 2016, and sales are estimated to grow beyond $684 billion by 2020; that’s nearly double the sales in just four years! Over 53 percent of global Internet users made online purchases in 2016—about 1 billion people. As a result, growing companies that aren’t proficient in shipping could lose thousands, if not millions, of dollars.
“Employing strategic shipping strategies that take zones into account will become increasingly important as e-commerce sales continue to grow.”
The following chart outlines the USPS percent price increase per package as it moves farther away from its point of origin.
More Ways to Save
With over 50 percent of the United States population living on the coasts, shipping farther distances is inevitable and expensive. If you operate from a single distribution point and ship across multiple zones, there are two ways to reduce costs and improve service levels:
- Zone Skipping: Zone skipping allows shippers to combine parcel distributions and ship them together to the destination region. Parcel carriers assign rates, in part, based on distance and on how many zones a package travels through. With zone skipping, packages enter the carrier’s system in the final delivery zone, avoiding the high cost of multi-zone moves.
- Country-wide Shipping: Country-wide shipping focuses on setting up a distribution point that can ship to both coasts by crossing the minimal number of zones in either direction. Alternatively, creating a second point of inventory and distribution creates an opportunity to reduce cost as well as manage business risk; Two distribution centers can provide situational management in the event of electrical outages, major weather events and inventory issues. Below is an example of a country-wdie zone chart.
By choosing a country-wide strategy, your average zone will be lower than if you had one distribution center on either coast, thus lowering the average cost per parcel.
“50 percent of the population in the United States lives on either coast. Get to know your options when it comes to lowering the average zone your parcels are sent to.”
The more you understand about parcel shipping, the better prepared you are to meet the shipping demands of your customers. Paying attention to Zone Shipping, and other best practices, will help you maximize efficiency throughout your shipping process while increasing your bottom line.