Why is Shipping in Canada So Expensive

In the realm of eCommerce, shipping is not just a necessity; it's critical for customer satisfaction and business success. 

However, Canadian eCommerce businesses face a unique challenge: shipping costs that are significantly higher than those in many other countries.

This article aims to delve into the reasons behind these high shipping costs in Canada and offer Potential  solutions for expensive shipping to help eCommerce businesses thrive despite this challenge.

Canadian Shipping Expenses Overview

Canada's shipping landscape is diverse, with options from a range of carriers like Canada Post to international giants such as FedEx and UPS, as well as innovative local solutions. 

However, the average costs can be daunting. Here are the estimated shipping costs in Canada for a small package: 

In the eCommerce world, you already know these prices are going to deter customers from buying your products. So let’s take a look at why these prices are so high, and how your business can go about reducing shipping expenses.

Understanding the High Shipping Costs in Canada: The Key Factors

The elevated shipping costs in Canada can be attributed to an interplay of factors, each contributing to the overall expense. Here’s a deeper dive into these key elements:

1. Geography and Weather Conditions

Canada's sprawling geography, being the second-largest country in the world, presents logistical challenges. Shipping across such vast distances drives up fuel and labour costs. Our severe weather conditions, particularly in the winter, can disrupt transportation routes and schedules, leading to increased expenses due to delays, rerouting, and the need for specialized equipment to navigate snow and ice.

2. Population Distribution

Unlike densely populated countries where delivery routes are short and heavily frequented, Canada's population is thinly spread across its massive land area. This distribution means that many deliveries cover long distances to reach remote locations, significantly increasing per-package shipping costs. The sparse population in northern regions and the extensive rural areas further exacerbate these challenges, making shipping less cost-effective for carriers.

3. Canada Post's Role

As the primary and first postal service provider, Canada Post has a mandate to offer universal service, which requires delivering to every address in Canada, regardless of its remoteness or accessibility. 

Uniform pricing across the country, regardless of the actual shipping distance or difficulty, means that some of the costs of delivering to remote areas are absorbed by all users of the service, contributing to higher operational costs and overall higher rates.

4. Limited Competition

The Canadian shipping market is characterized by limited competition, especially in remote and rural areas where Canada Post often operates as the sole provider. This lack of competition can lead to high shipping fees, as there are fewer incentives for carriers to lower their rates.

5. Tariffs, Taxes, and Brokerage Fees

International shipments entering Canada are subject to tariffs, taxes, and brokerage fees, which can significantly increase the cost of shipping. These fees are levied to comply with Canadian customs regulations and can vary depending on the type and value of the goods being shipped. 

By recognizing the unique aspects of the Canadian shipping landscape, businesses can better navigate its complexities and explore solutions for expensive shipping costs.

Potential Solutions for High Shipping Costs in Canada

Despite these challenges, there are some solutions for expensive shipping costs. Here are some ideas for your eCommerce business: 

1. Negotiating with Shipping Companies 

Building strong relationships with carriers is key. Businesses should not hesitate to discuss their shipping volume and ask for better rates or explore loyalty discounts. Regularly reviewing your shipping needs and carrier performance can also open opportunities for further negotiations.

Here at eShipper, we have already negotiated up to 70% discounts with all major carriers due to the large volume of shipments. Reach out to us to learn how you can take advantage of these discounts! 

2. Utilizing Regional Fulfillment Centers

Distributing inventory across several strategically located fulfillment centers can drastically reduce the distance packages need to travel, thereby lowering shipping costs. 

eShipper offers access to over 35 fulfillment centers across Canada, enabling businesses to store their products closer to their customers. This not only reduces shipping fees but also speeds up delivery times (which your customers will love).

3. Efficient Packaging

Optimizing packaging can lead to direct savings by reducing the dimensional weight of shipments, which is how carriers determine shipping costs. Use packaging that fits the product snugly without unnecessary weight or bulk. 

4. Leveraging Technology

Implementing advanced shipping and logistics software can streamline operations, from automating label creation to optimizing shipping routes. Tools that offer real-time carrier rate comparisons can help businesses choose the most cost-effective shipping options for each order. 

5. Partnering with a 3PL

Third-party logistics providers like us here at eShipper offer comprehensive solutions, from negotiated rates with carriers to fulfillment services, all aimed at reducing shipping expenses for eCommerce businesses. This solution takes all of the logistical headaches off of your plate, and onto ours.

Conclusion

Understanding and addressing the factors contributing to high shipping fees in Canada is crucial for eCommerce businesses looking to optimize their operations and enhance profitability. 

By implementing the Potential solutions outlined above, businesses can navigate the complexities of the Canadian shipping landscape more effectively, reducing shipping expenses. 

Don’t let these high shipping costs hinder your business growth. With competitive rates, strategic fulfillment services, and advanced technology, we can help you overcome the challenges of shipping here in Canada, and reach customers all over the country. 

Frequently Asked Questions (FAQs)