Shipping cost comparison calculator
Compare shipping options on total landed transport cost, including the opportunity cost of goods in transit.
Calculator logisticsLogic updated April 2026
This calculator compares up to four shipping options on total landed transport cost — variable shipping plus fixed booking plus the opportunity cost of capital tied up in transit inventory. It ranks options and surfaces the savings of the cheapest option versus the most expensive, so you can see how transit time interacts with shipping cost.
How this is calculated
Formula
totalShippingCost = fixedCost + costPerUnit × annualUnits ; transitInventoryCost = unitValue × (capitalRate / 100) × (transitDays / 365) × annualUnits ; totalLandedCost = totalShippingCost + transitInventoryCostStep-by-step
- For each option, multiply cost per unit by annual units and add the fixed cost
- Calculate transit inventory cost: unit value × capital rate × (transit days ÷ 365) × annual units
- Sum shipping cost and transit inventory cost for the total landed transport cost
- Rank options ascending by total cost — option 1 is cheapest
- Calculate savings versus worst: the dollar difference between each option and the most expensive
- Surface the cost-per-unit and effective per-unit cost so options can be compared on different metrics
- Rounding mode
- ROUND_HALF_UP
- Precision
- 20-digit internal precision (Decimal.js), rounded to 2 decimal places for display
- Logic last reviewed
Assumptions & limitations
What this calculator assumes
- Transit inventory cost uses a 365-day year and a linear capital cost rate
- Fixed cost is incurred once per annual volume, not per shipment — use a blended value for multi-shipment comparisons
- Minimum order is informational only and does not affect the computed cost
- All options ship the full annual volume — no mode-split modelling
What this calculator doesn’t account for
- Doesn't model fuel surcharges that fluctuate within the year
- Doesn't include duty, taxes, or customs clearance fees (use the landed cost calculator for those)
- Doesn't factor in stockout cost for long-transit options
- Doesn't model insurance variations between shipping modes
- Doesn't include warehousing differences at port-of-arrival vs final destination
Worked example
A business compares ocean freight (35-day transit, $3/unit, $5,000 fixed) vs air freight (4-day transit, $18/unit, $200 fixed) for 10,000 units a year worth $80 each, with a 10% capital rate.
| Input | Value |
|---|---|
| Annual units / unit value | 10,000 / $80 |
| Capital rate | 10% |
| Ocean freight | 35 days / $3 / $5,000 fixed |
| Air freight | 4 days / $18 / $200 fixed |
Ocean: $35,000 shipping + ~$76,712 transit inventory = $111,712. Air: $180,200 shipping + ~$8,767 transit inventory = $188,967. Ocean wins by ~$77,000.
Ocean freight looks cheaper at $3/unit vs $18, but the 35-day transit ties up $80 × 10,000 = $800,000 worth of goods for over a month — that's 76,712 in capital cost at 10%. Air freight cuts this to $8,767. Despite the higher direct shipping cost, ocean still wins by ~$77,000 because the capital cost difference doesn't fully offset the $150k difference in shipping cost. Higher unit values or higher capital rates can flip the answer.
Frequently asked questions
LTL vs FTL vs parcel — when to use each?
Parcel for individual shipments under ~70kg. LTL (Less-than-Truckload) for larger shipments that don't fill a truck — typically 70kg–7,000kg, shared with other shippers' freight. FTL (Full Truckload) when you have enough volume to fill a truck — usually cheaper per kg above the FTL threshold, faster transit because there are no consolidation stops. The break-even point is usually around 5,000–8,000 kg depending on lane.
What is dimensional weight pricing?
Carriers charge based on whichever is greater: actual weight or 'dimensional weight' (volume × a density factor). Lightweight bulky items (pillows, packaging materials) are often priced on dimensional weight, not actual weight. The dimensional factor varies by carrier and lane — typically 5,000–6,000 cubic centimetres per kilogram for road, lower for air. This calculator uses cost per unit, so factor dimensional weight into your per-unit input.
How do fuel surcharges work?
A percentage adjustment applied to the base shipping rate that tracks underlying fuel prices, typically updated weekly or monthly. Common surcharges range from 5% to 25% of base rate. Most carriers publish their fuel surcharge index. When comparing quotes, ensure you're comparing total cost including surcharges — a lower base rate with a higher fuel surcharge can be more expensive than a higher base rate with a stable surcharge.
How to reduce shipping costs?
Five common levers: (1) consolidate shipments to hit FTL or volume break points, (2) negotiate volume discounts with carriers, (3) optimise packaging to reduce dimensional weight, (4) choose slower transit when capital cost permits (significant for low-value goods), (5) use a freight broker or 3PL to access pooled rates. Each typically delivers 5–15% savings; combining them stacks.
Why include transit inventory cost in the comparison?
Because slow shipping ties up capital. A $80 unit in transit for 35 days at a 10% capital rate costs $0.77 of opportunity cost just sitting in transit. Multiply by annual volume and the transit cost can match or exceed the headline shipping cost for high-value goods. Headline-cheapest shipping is often false economy — the calculator surfaces the true total cost.
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