Shipping is an integral part of most companies the world over. From having goods shipped to a location to make a product, to shipping the final product to the customer, shipping comprises a huge amount of cost for many companies.
This expense is especially felt in a country like Canada. So, what makes shipping in Canada so expensive? A package from Toronto to Calgary that weighs only half a kilogram and that is only 38 cm by 38 cm costs around $40 CAD to mail. So, what are the causes of these shipping prices? Let's take a closer look at it.
In short: Shipping can be expensive in Canada due to a number of factors such as the size of the country. The large distance required to send a package from Vancouver, BC to Toronto, ON would result in high transportation costs.
On top of that, there are the lower population density in some areas, (which can make it less cost-effective for shipping companies to serve those regions) and the tariffs and taxes applied to imported goods.
Geography and Scale
The sheer size of the country of Canada and the topography as well as the weather are a major factor when it comes to the overall cost of shipping. Canada is a rather mountainous country, in some areas is snows often making delivering packages harder.
Also, Canada is very large, if you wanted to send an item from one coast of Canada to the other, even if it was small, it is still going to take days to do so, making the cost of shipping higher.
This also pertains to a principle called density of scale. This means that there are fewer people in a country like Canada and they live far apart. Even in the most densely populated areas of Canada, there are still not as many people as there are in single states in the United States. The further people are apart, the more it costs to get them their mail.
Another reason for increased shipping costs is the actual postal service itself. Canada Post is the main postal provider for the entire country. They are also required to do certain things that a private shipper is not, which does push up their costs.
First, they have to provide a universal service, this means that they have to deliver to every address no matter the difficulty. They cannot close rural routes because they are not profitable or they are hard to get to. They also have to charge uniform rates no matter what they are delivering and where it is going. An example is helpful in this case.
Say you have a postage address that is very far, there is only one house on that route, the postal worker has to go out of their way to deliver that specific package. In order to ensure that Canada Post is not going to lose money on that route in particular, the rates need to be higher to cover the cost of delivering there, even if the package is very small. Since they have to charge uniformly, they have to charge these higher rates even in easy to deliver areas to help make sure that their pricing is the same across the board.
Still another factor is that Canada is not as populous as other countries like the United States. Since the country is less populous, there are less carriers, less trucks, and the infrastructure is not as large as it is for countries like the United States. As a result, it is necessary to charge more to make up the difference in cost.
High Price of Gas
The high price of gas in Canada is also a factor that makes shipping higher. The current price of gas in Canada is $6.29 CAD a gallon while diesel is up to $7.75 CAD per gallon. These higher fuel prices coupled with the fact that the country is rather far-flung and expansive make it necessary to raise costs to help offset these prices
Highly-Paid Post Workers
Still another cost that does drive up the price of shipping is that postal workers are paid well in most countries, Canada is no exception. The average salary for a postal worker in Canada is anywhere from $19 to $28 CAD per hour. This does reflect in the prices that are charged for shipping. When asking “why is shipping in Canada so expensive?” the price of paying the postal workers does figure into the overall number.
The last thing to keep in mind is going to be brokerage fees. These are not the same as brokerage costs. Brokerage costs are a set rate that applies to all packages. Brokerage fees on the other hand can vary depending on what province of Canada you are in and what the goods and services are and so on.
Canada Post also charges what is called a brokerage cost, these are costs that are charged when an item comes into the country via a shipping service. This fee does vary depending on where the package is coming from and what service the package is coming from as well. UPS is going to have to pay $26.60 for entry while FedEx has to pay a fee of $25.50.
Import and Tax
This is another fee that is going to be tacked on to the cost of shipping for packages in Canada. If the item is coming from outside of Canada, there is going to be an import tax paid for that item to get into the country. You also have to pay taxes on the item when it comes in.
The Bottom Line
When it comes to finding the best shipping in Canada, it is always going to be best to shop around with. With a private shipper they can dictate where they ship to, they can mitigate their own shipping charges, and they can charge more for difficult deliveries and less for easier deliveries.
This allows you to get a better shipping price and ensures that your delivery time is better as well. Most private shipping carrier services like FedEx or even freight shipping for larger shipments, you can also be sure you are going to get a faster and better delivery time.
If you are shipping products within Canada, there are options that you can choose that will save you money. You just have to take the time to go through and find your options then get an estimate on your overall shipping rates. Shipping does not have to cost more than the item that you are selling, you can find good rates if you take the time to look.