September 22, 2015
Posted by Jeremy Bodenhamer

Why is it so Difficult to Determine the Full Cost of Shipping?

What does it cost to ship? From the outside, the question seems innocent, innocuous even. Our world revolves around costs, so how could they be so difficult to determine? Every day people are easily accessing and comparing the costs of new cars, real estate, electronics, cupcakes, airfare, groceries and gasoline. So shouldn’t it be easy to access the same information about the full cost of shipping?

I found out that this was not the case during my first day on the job at a small pack and ship store I used to own. A customer walked into the store with a life-sized wooden rocking horse—solid wood and at least six feet tall.

At the time I didn’t know anything about freight, freight brokers, or really anything about shipping methods that didn’t involve a small brown box. So, I did what any self-respecting shipping professional would’ve done at the time. I called UPS.

I should warn you now. The call did not go well.

Me: Hello, I need to ship a rocking horse. UPS: Okay sir, what are the dimensions of the box? Me: It’s not in a box.
UPS: Well it has to be in a box, sir. Me: Let’s pretend it’s in a box so I can get a quote. I’ll figure out how to box it, somehow. UPS: Okay sir, what are the dimensions of your pretend box? Me: The thing is at least six feet tall and probably seven and a half . . . UPS: guttural laughter Me: Why are you laughing?UPS: We can’t ship that! Me: But you’re UPS! UPS: Hold on. Let me transfer you to UPS Freight, and maybe they can help.

[Transfers me to UPS Freight]

UPS Freight: How may I help you?Me: Hello, I need to ship a rocking horse.UPS Freight: Okay sir, what are the dimensions?Me: (Wise to their games) 72”x90”x27”UPS Freight Weight?Me: You expect me to get this thing on a scale?UPS Freight:Well we have to know the weight sir in order to Yeah yeah, I get it. Let’s say it’s 275lbs.UPS Freight:Well is it 275lbs.? Because if it’s not then the quote won’t be right. Me: I’m sure it’s 275 lbs. (I had no idea, but I was sure I needed a quote and didn’t have time for this argument).UPS Freight:Freight class? Me: I don’t know what that means.

The conversation continued on and on, but you get the picture. I’ll revisit how that story ended in another post on the insanity of freight pricing. But for the time being, let’s just say I learned a lot that first day.

First of all, carriers speak their own language. While you and I go online to buy and sell chairs and tables and clothing and iPhones, carriers ship four cubes and pallets and lift vans and items with NMFC codes. And the translation gets messy. In fact, the translation is often worse than the quoting process because when the final bill is sent through, it’s somehow always higher than the quote said it was going to be. So what good was the quote anyway?

Second of all, in addition to the item’s size and density, carriers also have to take into consideration its value to calculate the amount of liability. Third, carriers also need to know the item’s origin and destination to account for how long the item will be on the road and how many trucks must be used to bring it to the relevant corner of the earth.

When this complexity is applied to eCommerce retailers, it can easily kill the transaction for a few simple, but frustrating, reasons. The seller doesn’t know the geographic location of each buyer or what else the buyer may put in the shopping cart, which means they can’t predict the cost of the freight. Without this information, it’s almost impossible to present the lowest and most cost-effective shipping options to the customer. This means that aside from the cost of the goods themselves, transportation is usually the largest expense retailers face.

I continued stumbling alongside my peers in the opaqueness that was shipping logistics until 2011, when I decided I’d had enough. I was tired of my phone ringing with people asking me the same question, “What does it cost to ship X?,” leaving me to guesstimate and often get the cost completely wrong. I wondered how it could be that is there’s no technology solution on the market to solve this problem.

I put the store up for sale and started to build ShipHawk. The process of creating an encyclopaedia of every item that anyone may want to ship, along with a network of shipping companies and carriers to deliver that item is an immeasurably large task. New items and regulations pop up to complicate the issue almost daily—but, technology has made this possible. And now, finding out the full cost of shipping a life-size wooden rocking horse (and anything else) is just a click away.

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