Why Is Shipping So Expensive Right Now Understanding Supply Chain Costs Simplified

In recent years, consumers and businesses alike have noticed a sharp increase in shipping costs. What once cost $5 to send a small package now often exceeds $15—or more. Online shoppers see higher delivery fees at checkout. Small business owners struggle with shrinking margins due to freight charges. Even large retailers are adjusting pricing strategies to account for logistics inflation. The question on everyone’s mind is: why is shipping so expensive right now?

The answer isn’t found in one single cause but rather a complex web of global disruptions, economic shifts, and structural changes in how goods move across continents. This article breaks down the key drivers behind today’s high shipping prices—without jargon—and offers practical insights into what you can do to manage these costs.

Global Supply Chain Disruptions Since 2020

The pandemic triggered an unprecedented series of bottlenecks that continue to ripple through global trade. When factories shut down in early 2020, production halted while consumer demand for home goods, electronics, and fitness equipment surged. As economies reopened, manufacturers scrambled to catch up, flooding ports with containers faster than they could be unloaded.

Major shipping hubs like Los Angeles, Long Beach, Shanghai, and Rotterdam faced months-long backlogs. Ships waited weeks offshore just to dock. Warehouses overflowed. Trucking companies couldn't keep pace due to driver shortages. These delays created a domino effect: cargo that used to take 30 days to cross the Pacific began taking 60 or more.

Even as port congestion has improved since 2022, the system remains fragile. A single storm, labor strike, or geopolitical incident can still trigger cascading delays. For example, Houthi attacks in the Red Sea forced many carriers to reroute around Africa, adding up to two weeks per journey and increasing fuel and labor costs significantly.

Tip: Monitor global shipping news—if there's unrest in key waterways or port strikes, expect temporary rate hikes.

Labor, Fuel, and Equipment Costs Are Up

Shipping isn’t just about moving boxes—it relies heavily on people, machines, and energy. All three have become substantially more expensive.

Fuel prices, which directly impact ocean freight, air cargo, and last-mile delivery, spiked after Russia’s invasion of Ukraine. Though oil prices have stabilized somewhat, they remain above pre-pandemic levels. Carriers pass these costs on via “fuel surcharges,” which can add 20–30% to base rates.

Labor is another major factor. Truck drivers, warehouse workers, and dockhands are in high demand but short supply. Wages have risen to attract and retain staff, especially in North America and Western Europe. Union negotiations have also led to higher pay and benefits, further increasing operational costs.

Equipment scarcity played a critical role during peak disruption. Empty shipping containers were stranded far from manufacturing centers. It cost thousands to reposition them. While container availability has normalized, leasing and maintenance costs remain elevated due to inflation and supply constraints in steel and manufacturing.

“Carriers aren’t just charging more because they can—they’re under real cost pressure from every angle.” — David Lin, Logistics Economist at MIT Center for Transportation & Logistics

Carrier Consolidation and Reduced Competition

Over the past decade, the ocean freight industry has seen significant consolidation. Three major alliances—2M, Ocean Alliance, and THE Alliance—control over 80% of global container capacity. This concentration gives carriers greater power to set rates, especially when demand outpaces supply.

During the height of the crisis in 2021–2022, spot rates from China to the U.S. West Coast exceeded $20,000 per container—ten times the historical average. While rates have fallen since then, they remain well above pre-2020 levels. With fewer players in the market, there’s less incentive to compete on price.

Air freight, though a smaller segment, saw similar trends. Passenger flights—which normally carry belly cargo—were grounded during lockdowns, reducing available air capacity by nearly 50%. Freight airlines raised prices to match limited space, and even as passenger travel resumed, dedicated cargo carriers maintained premium pricing for time-sensitive shipments.

Regulatory and Environmental Pressures

New international regulations are reshaping how ships operate—and how much it costs to run them. The International Maritime Organization (IMO) introduced stricter emissions rules in 2020 requiring vessels to use low-sulfur fuel, which is more expensive than traditional bunker fuel. Compliance added roughly $50–$100 per ton of fuel, translating into higher freight rates.

Upcoming carbon reduction targets (like IMO 2030 and 2050 goals) mean carriers must invest in cleaner technologies—slower speeds, alternative fuels, and new vessel designs. These investments are costly and will be reflected in future pricing models.

Additionally, customs procedures have tightened in many countries. Enhanced security checks, import documentation requirements, and sanctions enforcement slow down processing and increase administrative overhead—all contributing to overall shipping expenses.

Real-World Impact: A Small Business Case Study

Consider Maya’s Handmade Ceramics, a small online store based in Portland, Oregon. Before 2020, Maya shipped mugs and bowls to customers nationwide for $6.50 per package. Her profit margin on each item was healthy, and free shipping over $50 was sustainable.

By late 2021, her average shipping cost had jumped to $14.75. Carrier surcharges, regional ground rate increases, and packaging inflation all contributed. She faced a tough choice: absorb the cost and cut profits, or raise prices and risk losing customers.

Maya opted for a hybrid strategy. She introduced tiered shipping: flat-rate for local deliveries, calculated rates for distant zones, and free shipping only on orders over $75. She also switched to lighter packaging and negotiated a small business discount with a regional carrier. These changes helped stabilize her logistics budget, though she acknowledges shipping will never return to \"normal\" pre-2020 levels.

Her experience reflects a broader trend: businesses must now treat shipping not as a fixed cost, but as a dynamic variable requiring active management.

Strategies to Reduce Shipping Costs Today

While global forces are beyond individual control, shippers can take concrete steps to mitigate expenses. Here’s a checklist of actionable tactics:

Tip: Weigh your packages precisely—overestimating triggers unnecessary charges.

Shipping Cost Reduction Checklist

• Negotiate discounted rates with carriers (especially USPS, UPS, FedEx, or regional providers)
• Use dimensional weight pricing wisely—optimize box size and packing density
• Batch shipments to reduce frequency and qualify for volume discounts
• Offer local pickup or delivery to bypass third-party networks
• Compare multi-carrier options using platforms like Shippo or Easyship
• Pass on some costs transparently—customers often prefer clear fees over hidden markups
• Insure high-value items selectively to avoid blanket coverage costs

Do’s and Don’ts of Modern Shipping

Do	Don’t
Measure and weigh packages accurately	Guess package dimensions or weight
Use carrier-compliant labeling and barcodes	Handwrite addresses or use non-standard formats
Track shipment performance monthly	Ignore delivery delays or customer complaints
Reevaluate carrier contracts annually	Stay with the same provider without comparison
Educate customers about potential delays	Promise delivery dates you can’t guarantee

How Pricing Models Have Changed

In the past, shipping was relatively predictable. You paid a base rate based on weight and zone. Today, carriers use complex pricing structures that include:

• Base rate: The starting fee for transportation
• Fuel surcharge: Adjustable percentage tied to diesel or oil indexes
• Residential delivery fee: Extra charge for home addresses
• Delivery area surcharge: Applies to remote or low-density regions
• Additional handling fees: For irregular shapes, fragility, or overweight items
• Peak season surcharge: During holidays or high-volume periods

These layers mean two identical packages can cost different amounts depending on destination, timing, and service level. Understanding this breakdown helps businesses audit invoices and identify savings opportunities.

FAQ: Common Questions About High Shipping Costs

Will shipping ever go back to being cheap again?

It’s unlikely that shipping will return to pre-2020 price levels. Structural changes—including higher labor costs, environmental compliance, and reduced overcapacity—mean baseline rates are permanently elevated. However, competition and technology may help moderate future increases.

Why do my shipping costs vary so much month to month?

Variability comes from fluctuating fuel surcharges, seasonal demand (e.g., Q4 holidays), carrier rate resets (usually January), and changes in package volume or weight. Review your shipping data quarterly to spot trends and adjust budgets accordingly.

Is it better to use USPS, UPS, or FedEx for small packages?

Each carrier excels in different areas. USPS is often cheapest for lightweight parcels under 2 lbs, especially with Commercial Plus Pricing. UPS and FedEx offer better reliability and tracking for heavier or time-sensitive shipments. Use a multi-carrier platform to compare real-time rates before printing labels.

Looking Ahead: The Future of Shipping Costs

The era of ultra-cheap, fast, and reliable shipping may be over. Consumers who grew accustomed to two-day Amazon Prime delivery are beginning to accept longer transit times and clearer cost transparency. Businesses are adapting by building buffer time into fulfillment, investing in local warehousing, and redesigning packaging for efficiency.

Automation, AI-driven route optimization, and electric delivery fleets may eventually reduce costs—but these technologies require upfront investment. In the near term, expect shipping to remain a significant line item in personal and business budgets.

What hasn’t changed is the importance of smart logistics planning. Whether you're sending birthday gifts or running an e-commerce brand, understanding the true cost of getting goods from point A to B empowers better decisions.

Final Thoughts: Take Control Where You Can

Global supply chains are shaped by forces far beyond any individual’s reach—geopolitics, pandemics, climate policy, and corporate consolidation. But within that system, there’s room for action. By measuring shipping spend, comparing carriers, optimizing packaging, and communicating clearly with customers, you can reduce the financial sting of high freight rates.

Shipping doesn’t have to be a passive expense. Treat it as a strategic function—one that, when managed well, improves customer satisfaction and protects profitability.

🚀 Start today: Audit your last month’s shipping invoices, identify the top three cost drivers, and explore one alternative carrier or packaging solution. Small changes compound into real savings over time.