Ship.com sounded the alarm about higher 2026 shipping costs and offered advice to sellers to regain control over their profit margins. Treating shipping costs as part of their Cost of Goods Sold (COGS) from an operational standpoint can help online retailers determine whether they are profitable – or merely busy, it advised.
We don’t think Ship.com is suggesting sellers change their accounting practices. For example, Investopedia says Cost of Goods Sold represents the direct costs attributable to the production of goods sold by a company, such as: “direct materials; direct labor; manufacturing overhead; freight and shipping costs (but not the cost of shipping products to customers); and direct costs of production”) – so check with your accountant before considering changing the way you report COGS for bookkeeping and tax purposes.
But by treating shipping costs like COGS when analyzing inventory, sellers can determine if products are truly profitable amid ever-rising carrier rates and surcharges.
Ship.com Kyle Henzel said in Monday’s press release, “Shipping is the overlooked profit lever hiding in plain sight. It touches everything – margin, operations, customer experience, and scale. We are here to tell founders that if they don’t treat shipping like COGS, they aren’t running a business; they are subsidizing a carrier.”
Ship.com said the major carriers’ general rate increase of an “average” 5.9% each year is a myth. “The real threat to 2026 margins lies in the complex web of surcharges that stack on top of base rates, causing shipping costs to compound year after year, including the following:
- peak season surcharges and fuel fees
- residential surcharges of $4–6 per package
- dimensional weight charges
- additional handling fees (which can add $15-30 per package)
- address correction fees (which can add $10-15 per package)
It’s important to understand true profit per order, not just revenue, Ship.com warned, including packaging, labor, dimensional weight, surcharges, and post-shipment adjustments. It offered the following advice:
- Know your numbers: Track profit per order, not just topline revenue. Calculate your full shipping cost—product, packaging, carrier fees, and your own time. Build a simple spreadsheet that lays it all out so you can see where every dollar goes.
- Standardize the process: Document every shipping step as an SOP (Standard Opreating Procedure). This slashes wasted time, keeps your process consistent, and makes it possible to delegate or scale without chaos.
- Automate the grind: Batch label creation, automated tracking emails, inventory sync, and address validation should all be handled by your shipping platform. Don’t waste hours on manual tasks when technology delivers faster, more accurate results.
- Forecast with your eyes open: Expect peak season surcharges and rate hikes. Bake buffer into your shipping rates so holiday spikes don’t catch you flat-footed—or gut your profit.
- Relentlessly track what matters: Monitor profit per order, shipping as a percentage of order value, on-time delivery, claims rate, and dimensional vs. actual weight. If you don’t have these metrics at your fingertips, you’re flying blind.
