Courier Pricing: Everything You Need to Know

The cost of shipping is increasing. UPS and Fedex announced a minimum 5.9% price increase for 2023, and other major shippers are following suit. In light of these changes, we want to explain our pricing philosophy with the goal of giving customers visibility into how we arrive at a final price. 

Understanding the basis for pricing should give customers an expectation of the standard and quality of service they can expect to receive, and allow them to make an educated decision about whether or not to use our services.

How is Shipping Price Determined?

Shipping prices are determined by the required timeframe, the distance to travel, the size of the package, and any special handling requirements. In any given Am-Tran delivery, labor is the single greatest cost component, comprising more than 70% of the direct cost. 

Timeframe

The sooner an item must be delivered, the more expensive the delivery. This is because we must expend additional resources to fulfill the shipment on short notice. Conversely, shipments that can be made within longer time frames cost less because we can better leverage existing schedules and routes to get it done. 

We offer three basic tiers, determined by the number of minutes from pick-up to drop-off. They are as follows:

• Direct Delivery – 90 Minutes
• Priority Delivery – 3 Hours
• Same Day Delivery – 6 hours

This timeframe is set for the initial 30 miles. Beyond that the timeframe is extended by 15 minutes for every additional five miles.

Distance

Every courier company calculates distance differently, but most follow this same general framework: deliveries are charged a flat fee for an initial distance and then a per mile charge beyond that. 

Am-Tran charges a flat fee for the first 12 miles from the pickup location and then a per mile charge beyond that. The charges will vary depending on the type of vehicle required.

Size

Weight, dimensions, and piece count comprise the variables that determine a shipment's size. Generally speaking, larger, heavier items cost more to ship than smaller, lighter ones. 

Am-Tran charges a flat fee for items up to 5 pounds and 36 inches (excluding freight shipments). Beyond that weight and size, there is a base per pound and/or oversize package surcharge plus an additional surcharge if the package requires a cargo van or bobtail with liftgate.

Special Handling

Sensitive materials and/or packages destined for air travel require careful special handling, which contributes to the cost of the delivery. 

Am-Tran is an Indirect Air Carrier qualified to handle these special transport scenarios: 

• Shipping hazardous materials
• Temperature-controlled shipments, including dry ice transports
• Air Freight

Factors that Impact Our Pricing

Am-Tran’s goal is to limit price adjustments on everything but fuel to once a year.

Cost of Labor

By far the largest component of Am-Tran’s direct cost is labor (more than 70%). Am-Tran uses employed drivers and qualified contractors (those that also use employed drivers) to make its deliveries. The wages and benefits we offer are designed to keep turnover at a reasonable level, which is essential when handling extremely sensitive material with very specific delivery requirements.

Insurance 

Insurance costs have steadily increased for auto, general liability, and workers compensation  insurance, even for companies with limited claims.

Fuel 

Fuel costs are constantly changing and Am-Tran factors that fluctuation into their shipping costs on a monthly basis with a specific line item. When the price of fuel goes up, the cost of shipping goes up; when the price of fuel goes down, the cost of shipping goes down.

3 Ways to Lower Your Shipping Costs

Am-Tran likes to partner with its customers to drive efficiency and lower cost. The best way to do that is improve predictability.

1. Scheduled or Route Deliveries

Customers that place stops onto a route, or schedule deliveries on a regular basis can expect significant cost-savings when compared to regular rates.

2. Consolidate Deliveries  

Customers that can consolidate multiple deliveries into single pickup or delivery destinations can expect special price consideration.

3. Volume

Customers that provide meaningful volume on a consistent basis will receive a discount.

Key Takeaways

Current inflation has impacted shipping companies large and small, resulting in price increases that are much larger than recent past. Labor shortages in particular have driven up the primary direct cost of delivery at a rate that exceeds base inflation. Am-Tran is committed to keeping costs as low as possible without sacrificing service quality and is thankful for all its customers who work with us in partnership to drive greater efficiency.