Canadian shipping prices have been a common cause of frustration for both consumers and businesses. Across remote communities and urban centers, the increasing logistics cost remains a critical problem. But did you ever pause to wonder: why is shipping so expensive in Canada?
In this article, we will discuss the main reasons for high shipping fees, how they pile up against global rates, and what small businesses and individuals can do to reduce costs.
Geographic Size and Low Population Density
Geographically, Canada is the second biggest country in the world by area, but it has a small population (which is concentrated) in a vast land area. This geography is one of the primary reasons why is shipping so expensive in Canada.
Shipping companies have to ship parcels over great distances to service customers across provinces and territories. Whether you are shipping from Toronto to Vancouver or Halifax to Calgary, the price per kilometre will add up quickly. In addition, and in some instances, remote or rural communities use air or ferry services, which can have costs three to four times higher than ground or transportable shipping for moving goods.
When one speaks of shipping across Canada, this sheer distance creates logistical difficulties. Carriers need more fuel, more vehicles, and more workers, all of which add to higher costs.
Limited Competition Among Carriers
Another reason why is shipping in Canada so expensive is that there is not enough competition between shipping and logistics providers.
In a country like the United States, the abundance of courier companies contributes to competitive pricing. Conversely, Canada has a few main players or courier companies, such as FedEx, Canada Post, and Purolator. These players reduce flexibility in pricing and innovation.
This is particularly difficult for small business shipping in Canada, where finances generally limit companies from being able to provide free or low-cost shipping options to clients. The fewer the options, the more consumers and businesses have to settle for high base prices.
High Fuel and Operational Costs
Fuel costs are also another big part of shipping so expensive in Canada. The long travel distances, harsh winter, and lots of bad weather create so much maintenance and fuel cost for vehicles, especially in the winter months. Additionally, seasonal delays and rerouting issues with deliveries often exacerbate the problem.
In addition to fuel costs, operational costs (e.g. warehousing, customs brokerage (for international shipments), and labor) are generally high in Canada. Even standard shipping in Canada, which we expected to be the cheapest option, cost more than anticipated due to these additional variables.
Customs and Duties for International Shipments
If you have sent or received packages from outside of Canada, you may have pondered, why is shipping to Canada so expensive when viewed from an international lens? There are customs duties, import tax, and handling fees that raise the total costs to be paid.
Products that come from abroad may get stuck waiting while crossing borders, undergoing customs inspections, and being processed for movement into large container shipping.
Ultimately, the delays cause holding costs, but sometimes the costs of holding entail the customer going to pick up the items on the side of the road or shipping charges. This is also why is Canada so expensive when it comes to international trade and e-business.
Lack of Infrastructure Investment
Inadequate infrastructure, especially in rural areas, is a logistical obstacle. Typically, large urban areas have the infrastructure, but smaller towns don’t have the roads, airports or rail lines that would reduce costs.
This is an important, but often unnoticed, reason why is shipping in Canada is so expensive. Without proper infrastructure, it’s impossible to develop efficient supply chain networks. Delivering to these locations becomes a premium service. And as is always the case, that premium will be paid for by the end user.
Impact on E-Commerce and Small Businesses
E-commerce has grown rapidly in the past few years, but obstacles for Canadian businesses exist by way of shipping costs. Many users, upon finding out what the shipping cost is, when shopping online, abandon the cart, essentially telling the online seller that they cannot find value proportionate to the shipping fees (even on smaller items).
This puts Canadian online sellers at a disadvantage in competition with U.S.-based retailers that may offer lower or free shipping. Those inadequately informed about Small Business Shipping in Canada, meeting budget wisely and pleasing customers take logistics know-how.
Knowing how shipping zones work to your advantage, accessing third-party fulfillment centers, and building partnerships with logistics carriers to benefit from their volume discounts can help businesses relieve some of the pressure.
What Can Be Done?
While complex, issues surrounding why is shipping in Canada so expensive. are beginning to have solutions and tactics that individuals and businesses can use.
1. Use Flat Rate Shipping
Some courier organizations offer flat-rate shipping boxes! Basically, you can send things for a fixed rate to a specified weight. This will help you with price consistency for Domestic Shipping within Canada.
2. Leverage Shipping Aggregators
Many services connect consumers to many carriers and provide discounted shipping rates. These services are super useful for comparison and to find the best price.
3. Think about Using Local Fulfillment Centers
Third-party logistics (3pl) companies have fulfillment centers all over Canada, which may help you reach customers faster and cheaper, reducing the distance deliveries must travel across the country.
4. Educate Your Customers
Be honest with your customers about shipping costs, and consider bundling your shipping into the product price. Free shipping based on a minimum order value is also a great strategy.
Conclusion
Shipping costs in Canada are not due to one single reason but instead to a combination of geographic, economic, and logistical constraints. Consumers and businesses bear the costs, but awareness and better planning can mitigate the impacts.
The initial step to understanding why is shipping in Canada so expensive is to be aware of it. The next step is to adapt to it with cost-saving strategies and informed options. With enough tooling and creativity, even small businesses can survive, and potentially thrive in this high shipping cost environment.
From investigating domestic shipping in Canada to rethinking Standard Shipping in Canada practices, there’s more than enough you can do to remain ahead.
FAQs
Q: Why are Canadian shipping expenses so high compared to other countries?
A: There are many factors to consider: Canada’s large geography, limited competition between carriers, expensive operating expenses, expensive fuel, customs, and underdeveloped infrastructure. Collectively, these factors make logistics more expensive than in other countries.
Q: What are some effective solutions for expensive shipping in Canada?
A: Flat-rate shipping, aggregators, third-party logistics, and regional fulfillment centers can all aid in lowering shipping costs. Additionally, you may want to negotiate volume discounts with major carriers.
Q: Are there any strategies to manage high shipping fees for small businesses in Canada?
A: Definitely! Finding ways to use Chit Chats, lower-cost options, setting minimum order values for free shipping, and small zones can all help small businesses. More tips are in our guide on Small Business Shipping in Canada.
Q: How can I reduce international shipping rates here in Canada?
A: Select international shipping consolidators that batch packages, combine lightweight packaging, and avoid express packaging unless necessary. Also, compare rates from several carriers to find the lowest rate.
