Types Of Shipping Explained – All the Options For SMBs in 2024

Shipping is the backbone of the world economy. It’s what moves goods from one location to the other. For SMBs, this means not only getting shipments from a warehouse to a fulfillment center, but to customers’ doorsteps as well.

Understanding the different types of shipping and your options can help you make an informed decision when fulfilling customer orders. Let’s take a closer look at all the shipping options for SMBs and what they entail.

Shipping options for SMBs selling direct to consumers

If you’re an online SMB that sells direct to consumers, you know shipping is one of the biggest challenges you face. How will you get your packages to customers? What are your options? 

Because the shipping industry is vast and complex, you may feel overwhelmed by the process. Let’s simplify things and take a closer look at your shipping options.

We can divide the different types of shipping into two broad categories: bulk freight and small-volume. Most SMBs will be interested in the latter. Let’s take a closer look:

1. Bulk freight

When most people talk about bulk freight, they just mean “stuff that’s shipped in large quantities”. In the logistics industry, though, it has a more specific meaning. Here it refers to commodities that are loaded directly onto a vessel or specialized vehicle without any kind of packaging or container. If you’ve ever watched a train pulling a string of tank cars or hoppers, you’ve seen bulk freight in action. Examples of bulk freight cargo include grains, petroleum products and chemicals. 

Most SMBs don’t need this kind of bulk freight. The most common ways to move large quantities of goods use pallets and containers. With palletized shipping, multiple products are loaded onto pallets and wrapped in plastic film to secure them The pallets are loaded onto a truck, or into a container, and transported from the production facility to a warehouse or distribution center.

Some SMBs that may need to use bulk freight as their operations grow include:

• Farms 
• Food producers
• Clothing manufacturers (to send to distributors or stores)
• Manufacturers of bulk goods
• Furniture makers

You can use a service like FedEx Freight or a trucking company for palletized or container shipping.

If you’re an SMB selling direct to consumers, you probably won’t be using any kind of bulk freight shipping. You’ll likely be relying on small-volume or single-item package shipping options.

2. Small-volume or single-item packages

Small-volume or single-item shipping is what most people think of when they hear the word “shipping.” 

When customers order products from an online retailer, their items are boxed up and shipped one at a time. Small-volume shipping helps get these packages from the business to the consumer’s doorstep.

You’re likely to use small-volume shipping methods if you run a business like:

• A small retail shop that offers online ordering
• An Etsy or Shopify store selling handmade goods
• A local bakery that offers delivery 
• A monthly subscription box

With this type of shipping, packages can be sent to customers overseas (international) or anywhere in the country (domestic).

International shipping

Small-volume shipping options are available to SMBs that want to serve international customers. Most SMBs aren’t knowledgeable in international customs brokerage requirements and all of the complex logistics that come with international shipping. For this reason, they outsource their shipping to a courier or shipping company.

Couriers like FedEx, DHL and UPS have the resources and expertise to ensure packages reach customers anywhere in the world. They also provide business owners with tools to make global shipments as simple as possible. 

Domestic shipping

For domestic customers, SMBs have a few options in terms of shipping speed and last mile delivery methods. 

💡The last mile is the final leg of the package’s journey from the warehouse shelf to the customer’s doorstep. It’s when the package moves from a transportation hub to its final destination. If you’re an SMB that only serves local customers, last mile will refer to the transport of the product from your business’s location to your customer’s address.

First, let’s talk about shipping speed options before moving on to last mile shipping.

Shipping speed options

In small-volume shipping, SMBs have two primary options for transit time: standard/economy or expedited. Expedited can go by many names, including priority and overnight.

Standard

Standard shipping is just another term for regular or ground shipping. It’s the most economical option for SMBs, but transit times can range from 5-7 days or more in some cases. 

Priority/overnight/expedited

The terms priority, overnight, and expedited generally refer to the same thing: expedited shipping. These shipments move through the system more quickly than standard shipments.

Typically, fast shipping methods like these use next day air couriers and other means to get shipments to their destinations as quickly as possible. They usually come at a higher cost. 

Couriers may offer expedited shipping options that don’t specify the transit time. Other types of speedy shipping options will have transit times of two days or even one day. 

💡 Pro Tip: Check the shipping company’s definition of “expedited.” In some cases, it may not be the quickest shipping option. Some couriers offer “same-day” or “overnight” shipping in addition to “expedited.” In this case, “expedited” may be just one level up from “standard.” Understanding the transit time for each shipping option will help you choose the right one for your business.

Last mile shipping methods

For the last leg of the package’s journey, or the final mile, SMBs have a few options. If you use a shipping company like FedEx, UPS, or USPS, they will likely handle the last mile logistics for your shipments.

But shipping companies aren’t your only option for final mile delivery. You can also:

• Use a local courier service
• Offer your own delivery service
• Offer pickup options

If you have a brick-and-mortar location, customers can pick up their orders from your store, which can help reduce last mile costs and concerns. 

But what about offering your own delivery or using a local courier? Let’s take a closer look at these two options.

Local delivery options: outsource or DIY?

Business owners should consider their local delivery options to find ways to improve customer satisfaction and delivery times. There are two primary options here: outsourcing or DIY.

Outsource delivery

Outsourcing delivery allows you to run your business and offload the delivery to a third party. You don't have to worry about the mode of transport, route optimization, or dispatch. You can spend your business days focusing on generating more sales.

Instead of worrying about deliveries, you’ll:

• Work with a company like FedEx, UPS, USPS or DHL
• Partner with these companies 
• Schedule a good pick-up or drop-off 
• Rely on the shipping partner to deliver consumer goods

For example, if you run an ecommerce business, you can have the delivery partner pick up the goods at your warehouse or store. If your operation is smaller, you may be able to drop off the goods at the shipper’s location.

If you ever want to expand operations, working with a third-party shipping company will give you peace of mind that you can ship various types of freight, from candles to furniture, shipping containers, and even frozen goods.

Partnerships in delivery do come with less control. If the partner wants to raise rates, you’ll need to either absorb these costs or pass them on to the consumer. 

Offering white-glove service may be an option, too. A home gym company, for example, may offer white-glove installation of their product using a third-party delivery or logistics company. Drivers will be trained on how to install the product and use their own vehicles for the delivery and installation.

This type of partnership may be possible for your small business as sales volumes increase and you can negotiate better contractual terms.

DIY delivery

Global parcels shipped every second reached 5,000 in 2021. It’s estimated by 2027, there will be 256 billion deliveries per year. As a business owner, strengthening the supply chain may mean bringing some delivery services in-house.

In-house services allow you to optimize internal processes, may reduce shipping costs, and can improve delivery time. Depending on the customer base, DIY delivery may not be an option due to its high upfront costs and logistics. Still, it’s worth exploring this option.

Here are some things to consider.

Vehicles, fuel, maintenance, and employees

What is the cost of DIY deliveries? It will depend on a multitude of factors, including:

1. Upfront cost for delivery vehicles
2. Type of vehicles necessary for your goods
3. Employee costs: salary, benefits, etc.
4. Insurance costs
5. Fuel
6. Maintenance

If you deliver small packages, the employees may work on a contractual basis and use their own vehicles. USPS rural carriers, for example, often use their own vehicles, reducing your costs in the process.

Ordering tracking, route planning, optimization, and other key tasks

The shipping process has many moving parts, all happening behind the scenes from the moment an order is placed until it arrives. Standard shipping, locally, will include:

• Order tracking: Systems need to be in place to track orders, identify which orders can be delivered through DIY deliveries, and begin dispatching shipments.
• Route planning and optimization: Shipping goods inefficiently will cost you money. Teams need to optimize route planning and transit time to account for road closures, traffic, and other conditions that can change day-to-day. Shipping time estimates must be as accurate as possible and sent to customers.
• Dispatch management: Who is handling which shipments? Who is closest to the delivery location? Dispatch management and tracking are necessary and complex parts of DIY shipping. Dispatch management becomes exponentially more challenging if intermodal or international shipping is offered. 
• White-glove service: If you plan to offer white-glove services, you’ll need to add this to your mix of responsibilities and logistics. For example, furniture companies can upsell white-glove delivery to local customers to increase revenue. Keep in mind that you’ll need to train your team to handle the assembly and moving of the pieces into the customer’s home.

💡 Routific delivery management software empowers dispatchers and business owners with the ability to adjust and customize routes, track driver progress in real-time, update customers using SMS and email, and even collect proof of delivery.

Optimizing your delivery and bringing it in-house allows you to offer same-day delivery (at a higher charge) and take greater control over the customer experience. But it’s an undertaking that should start small and expand as you succeed in the local market. For example, air freight is best left to large enterprises with the logistics and back-end in place to make shipping feasible.

If you cater to a local or regional customer base, it may make sense to handle the last mile delivery on your own. Only 27% of online customers had zero problems with the delivery process.

And that’s an unacceptable rate.

A mix of shipping types and partnerships will allow you to have greater control over local deliveries and can improve customer satisfaction in the process.

What do the top shipping companies charge for different shipping methods?

Shipping costs can vary greatly, depending on the type of shipping you choose, package dimensions, package weight, and delivery location. In the examples below, we’ve given examples of costs from the leading shipping services, based on a package from North Carolina to Nevada with dimensions of 6” x 4” x 4” and a weight of 3 pounds.

Obviously the prices for your own specific shipments will be different. But these examples show how the different shipping options compare and how they can impact your profit margins if, for example, you need to ship a late order overnight.

UPS 

USPS 

FedEx 

DHL 

*This is the only shipping option that DHL offered for the locations chosen.

Leveraging the right types of shipping for your business will empower you to offer cost-effective delivery options for consumers. Flat rate options, like those from USPS, might work for a small business where delivery times can be longer, but FedEx, UPS, DHL, and local shippers may be a better option.