Your shipping costs aren’t just about weight and speed—postal zones could be the hidden factor eating into your profits. Keep reading to break down questions like, “What are postal zones?” and “How can I cut shipping costs?” We’ll also share smart tactics to help your eCommerce business reduce time in transit and increase customer satisfaction.
What Are Postal Zones?
Postal zones (also referred to as shipping zones) are used by shipping carriers to measure the distance a package travels from the point of origin to its final destination. Carriers use these zones to determine shipping costs. The farther you ship, the higher the price.
Shipping zones are based on distance, but carriers group locations by ZIP code instead of calculating exact mileage for each shipment. Zone 1 is the site where the package originally shipped, also known as the point of origin. The end location is called the destination zone and can be split into Zones 2-8, depending on how far the package has to travel.
United States shipping zones can be broken down into the following ranges:
- Zone 1: 50 mile radius
- Zone 2: 51 – 150 mile radius
- Zone 3: 151 – 300 mile radius
- Zone 4: 301 – 600 mile radius
- Zone 5: 601 – 1,000 mile radius
- Zone 6: 1,001 – 1,400 mile radius
- Zone 7: 1,401 – 1,800 mile radius
- Zone 8: 1,801+ mile radius
Let’s put this into practice. Anything your company ships within 50 miles of your fulfillment location would fall under Zone 1. If you’re shipping from Philadelphia, Pennsylvania to Dallas, Texas, you’d be shipping to Zone 6. However, if you’re shipping from Nashville, Tennessee to Dallas, you’d be shipping to Zone 4.
Here’s an easy resource to determine the shipping zones for your orders:
- USPS Domestic Zone Chart: Click “Get Zone for ZIP Code Pair.” Enter the ZIP code you’re mailing from and the ZIP code you’re mailing to.
- UPS Daily Shipping Rates and Zone Charts: Enter your ZIP code of origin and download the zone chart.
- FedEx Zone List: Select “Yes” and “Domestic” when generating a rate sheet. Enter the ZIP code of origin. Choose the shipping service type, whether that’s Same Day, 2-Day, or Ground. Download the zone chart.
How Do Postal Zones Affect Costs?
If you’re handling your own fulfillment, understanding postal zones and how to ship products across the United States’ 2,500+ miles of coast-to-coast customers can be complicated (and expensive).
The cost to ship a package depends on how far it needs to travel. In most cases, the higher the destination’s zone number, the more the carrier will charge. Most carrier services are zoned. However, there are specific services that offer a flat rate.
Flat rates allow you to pay the same price regardless of where the package is going. USPS lists out which services are zoned versus which ones have a flat rate. In each case, it’s important to visit the selected carrier’s website for more information.
Another factor that influences the shipping cost is the weight of the package. A heavier parcel will cost more to ship, and a heavier parcel to a higher zone will cost even more. You can calculate shipping cost based on whichever number is higher: the physical weight or the dimensional weight (how much space it takes up in transit).
The easiest way to calculate shipping cost is with a shipping calculator. Include details about your point of origin, destination address, and parcel weight and dimensions. Get your rates for UPS, USPS, and FedEx.
How to Reduce Shipping Costs
As consumers, we all love free shipping. But how does it work on the business end? Amazon’s free Two-Day Prime Shipping Guarantee has caused customers to expect their packages sooner (and with lower shipping costs). Dubbed the “Amazon Effect,” this may be possible for global corporations, but many smaller brands are struggling to keep pace with this demand.
However, there are a few ways you can get creative to meet customer expectations and cut shipping costs wherever possible.
Limit Shipping Options
One idea to consider is narrowing the number of locations you ship to. This isn’t always the go-to choice for businesses looking to expand, but shipping to a farther postal zone costs more. By reducing the number of zones you ship to, you can save money. This may result in a higher net income even though you’re servicing fewer customers geographically.
Shipping to a closer zone is also faster. With nearly half of online shoppers believing that 2–3 days is the maximum acceptable time to wait for a package delivery (down from 5.5 in 2012), ensuring competitive delivery speeds could improve the customer experience and build brand loyalty.
Partner with a 3PL
For most retailers—unless you’re a Nike, Amazon, or other retail giant—shipping costs can eat up a lot of gross income on a product. Sending heavy packages to far away zones is often the culprit here.
Many businesses find that partnering with a 3PL costs less than the annual amount spent on in-house order fulfillment. Technologically-advanced 3PLs like Jay Group will use what’s called a “least-cost routing software” (LCR) to direct orders to the closest, least expensive distribution center for fulfillment.
LCR is an effective model designed to help businesses cut costs on shipping. It maps out a parcel’s delivery destination based on the most effective and cost-efficient route. This helps reduce time in transit, which lowers shipping costs.
Increase Fulfillment Locations
Another way to decrease time in transit is to expand across the country. With strategically-placed facilities on different coasts, you will ship packages faster and to closer zones. However, this is an unlikely possibility for many eCommerce companies. That’s where partnering with a 3PL can help.
By outsourcing fulfillment, you gain greater flexibility and control over where you can ship your products. Finding a fulfillment center that can service high-traffic areas around the country can make a huge difference.
Here’s a visual example to see why working with a partner like Jay Group is so beneficial. Our three strategically-placed fulfillment centers in Lancaster, Pennsylvania and Reno, Nevada allow us to reach over 78% of customers in two days. Having only one would leave the entire opposite coast in Zone 8, an expensive market for your business.
If you decide to partner with a 3PL, reduce shipping costs by choosing a fulfillment center that is close to your primary customer base. If your customers are dispersed throughout the U.S., at minimum, select an east coast and west coast facility.
Develop a Strategy for Postal Zones
A thoughtful eCommerce fulfillment strategy is crucial to meeting customers’ expectations of fast and affordable shipping. With rising costs that eat into every company’s profit, it’s more important than ever for retailers to understand each part of their fulfillment chain.
A good zone shipping strategy is a short one. Understanding United States shipping zones and reducing the number of zones your packages are sent to can help cut costs, increase delivery speeds, and improve your bottom line.
Take advantage of zone shipping. Select a fulfillment center based on the location of your existing customer base. And if possible, opt for multiple distribution centers to minimize the number of zones you’re shipping to.
Cut shipping costs with Jay Group’s advanced fulfillment services.
