Postal zones are fundamental in the world of order fulfillment. For e-commerce businesses to truly thrive, it’s important to understand what postal zones are, how they function, and how a 3PL can help optimize and automate fulfillment.
In this blog, we’ll explore how postal zones operate and share some tips on how you can simplify and optimize your order fulfillment process.
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 define pricing contracts where each package price is based on the destination zone.
Shipping zones are measured in ZIP codes, rather than miles. U.S. domestic shipping zones can be broken down by the following ranges:
- Zone 1. The site where the package is originally shipped, also known as the point of origin.
- Zone 2-8. The end location of the package is called the destination zone. The zone number of the destination zone is dependent on how far away it is from the point of origin (also known as zone 1).
Understanding UPS, USPS, and FedEx Shipping Zones
For businesses still handling their own fulfillment, understanding what postal zones are and how to ship products across the United State’s 2,500+ miles of coast-to-coast customers can be understandably complicated.
UPS, USPS, and FedEx shipping zones are broken down as follows:
- 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
Anything a company ships within 50 miles of their fulfillment location would fall under Zone 1.
The best places to determine postal zones for your orders are below:
- USPS Domestic Zone Chart: Click the “Get Zone for ZIP Code Pair” tab. Then, enter the ZIP code you’re mailing from and the ZIP code you’re mailing to.
- UPS Zones and Rates for the 48 Contiguous States: Enter your ZIP code of origin and download zone charts to Excel.
- FedEx Zone List – Select “Yes” & “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 to Excel.
What Is Transit Time in Shipping and How Does it Affect Costs?
The cost to ship a package is typically dependent on how far the package needs to be shipped. In most cases, the higher the destination’s shipping zone number, the more the carrier will charge to ship the package.
Most carrier services are zoned, which means they calculate shipping costs based on the Zone 1-Zone 8 formula. However, there are specific services that offer a flat rate.
Flat rates allow businesses to pay the same price regardless of the destination of the package. 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.
How to Calculate Shipping Costs
The final aspect that affects shipping rates, aside from carrier and shipping service, is order weight and dimensions. A heavier package will cost more to ship, and a heavier package shipping to a higher number zone will cost even more.
Shipping costs are calculated based on whichever number is higher: the physical weight of the parcel or the dimensional weight, which is a metric based on the volume of a package. The following formula is used to calculate the cost of shipping:
Shipping Zone x Package Weight = Shipping Cost
What About Free Shipping?
Amazon’s free Two-Day Prime Shipping Guarantee has caused customers to expect their packages sooner and with lower shipping costs. While free two-day shipping is possible for a global corporation like Amazon, many smaller brands are struggling to keep pace with the demand.
However, there are a few ways you can get creative to meet customer expectations and cut shipping costs wherever possible. One option to consider is narrowing the number of locations you offer shipping to.
Narrowing Brand Presence
This isn’t always the go-to option for businesses looking to expand their brand awareness, but shipping to a farther zone costs more. By reducing the number of zones you ship to, you may actually save money on shipping costs. This may result in a higher net income, even though you’re servicing less customers from a geographic point of view.
Shipping to a closer zone also takes fewer days. With nearly half of online shoppers believing that 2-3 days is the maximum acceptable time to wait for package delivery (down from 5.5 in 2012), ensuring competitive delivery speeds could improve the customer experience and build brand loyalty.
Reduce Shipping Transit Times and Costs with a 3PL
For most retailers (unless they’re Nike, Amazon, or another retail mammoth), shipping costs can eat up a lot of gross income on a product, and in some cases, even cause a negative net profit margin. Shipping 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 personal order fulfillment costs. Technologically-advanced 3PLs will use what’s referred to as “least cost routing software” to direct orders to the closest, least expensive distribution center for fulfillment.
Least-cost routing software (LCR) is an effective model designed to help businesses cut costs on shipping. It maps out a package’s delivery destination based on the most effective and cost-efficient route. This helps reduce time in transit which reduces shipping costs.
Decrease Shipping Zones by Increasing Fulfillment Locations
Another way to decrease time in transit is to expand across the country and create strategically-placed facilities, an unlikely possibility for many e-commerce companies. This is where partnering with a 3PL can help.
By outsourcing fulfillment, you gain greater flexibility and control over where you can ship your products. If upon analyzing order history, you find your customers are geographically distributed, finding a strategically placed fulfillment center that can service high-traffic areas can make a huge difference.
Close to Customers
If you decide to partner with a 3PL, the location of the fulfillment center you choose should be close to your primary customer base to reduce shipping costs. If your customers are dispersed throughout the U.S., at a minimum, select an east coast and west coast facility.
For instance, if a company uses only one fulfillment center located in California, an order to New York will typically be in Zone 8. By using fulfillment centers on both sides of the country, shipping zones can be reduced from 8 to around 6 zones.
Develop a Strategy for Shipping Zones
A thoughtful e-commerce fulfillment strategy is crucial to delivering on customer’s expectations of fast and affordable shipping. With rising shipping 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 what postal zones are and reducing the number of shipping zones your packages are sent to can help cut shipping costs, increase delivery speeds, and improve your bottom line.
Take advantage of zone shipping. Select a fulfillment location based on the location of an existing customer base. And if possible, opt for multiple distribution center locations to minimize the number of zones shipped to.
Partner with a 3PL to help you reach your customers, no matter where they are. Learn more about our fulfillment services.
This blog was originally published on May 22, 2019. It was updated on October 12, 2021.
