How Singapore Ecommerce Companies Should Measure Shipping Costs

Every example and amount on this page is illustrative. It shows the method and is not a benchmark, a quote or advice.

What the Shipping Cost Number Actually Measures

For a Singapore ecommerce operation, the per-order shipping cost is the logistics cost required to move one order from its relevant supply point to the customer. It is a cost of fulfilment, not the shipping fee shown at checkout. If a customer pays S$6 for delivery and the business pays S$8 to fulfil it, the shipping cost is S$8; the S$6 is revenue or a shipping recovery, depending on how the accounts record it.

The outbound portion normally includes the carrier’s pickup or collection charge, domestic linehaul, last-mile delivery, fuel or peak surcharges, redelivery fees and other shipment-specific carrier charges. Add packaging materials when they are used specifically to prepare the parcel for transport, such as mailers, cartons, labels and protective inserts. A fulfilment provider’s pick-and-pack charge can also belong here when it is charged per order or parcel.

For imported inventory, the number may also need an allocated share of the logistics costs incurred before the parcel reaches the customer. These can include international freight, freight insurance, customs clearance, brokerage, port or terminal handling, permits and delivery from the Singapore entry point to the warehouse. Include import duty or import GST only where the business bears that amount as a cost rather than recovering or claiming it under its tax treatment. The allocation must follow a consistent basis, such as units, cartons, weight or shipment value.

Keep the boundary explicit. Product purchase price, storage rent, warehouse salaries, software, payment fees, advertising and general overhead are not shipping costs merely because they support fulfilment. A return shipment can be added when measuring the full logistics cost of a returned order, but it should not be silently mixed into the first-delivery figure. State whether the reported number covers outbound delivery only, or inbound and import logistics as well, before comparing Singapore ecommerce shipping costs across products, channels or companies.

The denominator should represent the orders whose fulfilment the measure is intended to describe. Cancelled orders have no completed delivery cost; returned orders need a separate treatment if their reverse logistics cost is included. This definition prevents a low headline number created by spreading shipping charges across orders that never shipped.

The Formula, Stated Plainly

Start with the shipment invoice, not the carrier’s headline rate. For each invoice, calculate: <strong>allocable shipping cost = base freight + fuel or peak surcharges + handling and delivery fees + shipment-specific duties or import charges − credits and discounts</strong>. Include GST only if it is a real cost to the business; exclude recoverable GST. Keep outbound delivery, inbound freight and return transport in separate buckets unless the reporting question explicitly combines them.

Then calculate the comparable figure: <strong>shipping cost per order = total allocable shipping cost ÷ number of fulfilled orders</strong>. For a unit view, use <strong>shipping cost per unit = total allocable shipping cost ÷ units shipped</strong>. Use the same period, currency and cost scope in both numerator and denominator. A monthly invoice covering several dispatches should be assigned to those dispatches rather than matched to the invoice date alone.

For a mixed consignment, allocate the invoice before calculating the average. Choose a basis that reflects the charge: actual carrier weight where freight is weight-rated, chargeable volume where dimensional weight applies, or shipment value where the fee is value-based. If no better driver exists, allocate by order count. For order i, the allocation is: <strong>invoice cost × order i’s allocation base ÷ total allocation base for the consignment</strong>. The allocated order costs should add back to the original invoice total, including rounding differences.

Do not divide a mixed invoice equally by SKU unless every order genuinely consumed the same shipping resource. Report the allocation basis alongside the result, so a change from weight-based to order-count allocation is visible rather than mistaken for a change in carrier performance.

A Worked Example From Supplier to Customer

A Singapore skincare merchant imports 100 units from a supplier in Vietnam. The supplier shipment invoice shows SGD 420 for freight, SGD 38 for fuel, and SGD 55 for origin handling. Once the goods arrive in Singapore, the merchant pays SGD 72 for port and customs clearance. No import duty applies in this example. Import GST is SGD 58.80, but the merchant is GST-registered and can claim it, so it is kept outside the shipping-cost figure.

The merchant then sends the 100 units to customers in 100 separate orders. Singapore last-mile delivery costs SGD 600, and order packaging costs SGD 80. The shipment-level calculation is therefore SGD 1,265: SGD 420 + 38 + 55 + 72 + 600 + 80. Dividing by 100 orders assigns SGD 12.65 of shipping cost to each order.

The merchant paid SGD 1,323.80 in total cash, including the recoverable import GST. That cash total is not the same as the operating cost used for profitability. If the import GST were not recoverable, it would be added to the allocable cost, producing SGD 1,323.80 ÷ 100 = SGD 13.24 per order. If an order contained two units, the inbound portion should be allocated using the chosen unit or weight basis rather than blindly assigning the same amount to every order.

The Mistakes That Make the Number Wrong

The billed weight may not be the physical weight. Carriers often charge dimensional weight: length × width × height divided by the carrier’s volumetric divisor, compared with actual weight, with the higher figure used. A 40 × 30 × 20 cm carton is 24,000 cm³. At a divisor of 5,000, it bills as 4.8 kg even if it weighs 2 kg. Minimum charges can override both calculations, so a small parcel may still incur the carrier’s 1 kg or zone minimum.

Exchange rates create another silent error. If a USD freight invoice is converted at the payment-date rate but the order value uses the month-end rate, the comparison mixes two currencies and two valuations. Choose a stated accounting rate, retain the original currency, and apply the same policy to freight, fuel surcharges and customs charges. Do not automatically treat every tax line as shipping cost: recoverable GST is usually a tax receivable, while non-recoverable GST belongs in the cost base. Import GST and GST charged on a carrier invoice may also need separate treatment.

Failed deliveries and returns must remain visible. Suppose SGD 120 covers 10 outbound parcels, but two fail delivery. Allocating it across all dispatched parcels gives SGD 12 each; measuring cost per successfully delivered order gives SGD 15 before any reattempt fee. Neither is universally correct. The denominator must match the question, and reattempt, return-to-sender and reverse-logistics charges should not disappear because the customer did not keep the order.

Allocation becomes unreliable when similar invoices use different rules. One month may assign inbound freight to units received, another to orders shipped, and a third to product revenue. Keep the basis consistent—such as carton volume, chargeable weight, units or order count—and record exceptions. Otherwise a bulky, low-priced product can appear profitable while its freight is being assigned to lighter products. This is the same landed-cost issue that can materially change cross-border shipping economics, as shown in de minimis suspension shipping costs.

How to Reconcile the Number to Your Accounts

Reconciliation starts by fixing the same scope across every source: shipment date or invoice period, origin, destination, currency, and whether GST is included. Do not compare a per-delivered-order metric with a platform report covering all created orders. Match the period first, then match the shipment or order IDs.

Use the carrier invoice as the external control total for freight. Sum the allocable charges for the relevant period, subtract credits and voided labels, and compare that result with the shipping lines in your calculated dataset. For illustration only, SGD 8,400 of carrier charges less SGD 300 of credits gives SGD 8,100. If 900 delivered orders are in scope, the reconciled cost is SGD 9.00 per delivered order.

A 3PL bill needs a different check. Separate freight from pick-and-pack, storage, receiving, packaging, and other warehouse fees. If the bill is SGD 12,000, with SGD 8,100 freight and SGD 3,900 fulfilment services, only the SGD 8,100 belongs in the shipping-cost control total. The platform report should then be checked for order count, shipment status, and any shipping charges collected from customers; customer-paid shipping is revenue or a pass-through, not proof of the carrier cost.

Finally, tie the result to bookkeeping. Reconcile the period's freight expense account to invoices received, accruals for shipments not yet billed, and credits posted later. Document the difference rather than forcing the numbers to agree: timing, GST, unallocated shipments, currency conversion, or non-shipping 3PL fees should each have an owner and adjustment.

• A practical reconciliation schedule has four columns: source total, included items, excluded items, and variance. Investigate any variance that cannot be explained by timing, tax treatment, credits, or scope.
• If the merchant uses ORVX alongside Shopify, keep the same trading currency and compare its delivered-order view with the carrier and accounting period—not with cancelled or returned orders.

What to Do With the Answer

Use the realized shipping cost as an input to decisions, not as a standalone KPI. For a free-shipping threshold, compare the extra shipping cost with the gross profit created by the additional items in the basket. If shipping costs SGD 6 and the added item contributes SGD 18 before shipping, a threshold that increases the average basket by one item can absorb the cost. If the added item contributes only SGD 4, free shipping reduces order contribution by SGD 2.

For pricing, allocate shipping by product or order rule consistently. A SGD 12 product with SGD 5 shipping does not have the same economics as a SGD 60 product with the same shipping cost. Include the relevant fulfilment cost when setting a contribution margin target, then check the result against returns and advertising spend. ORVX can show product- and collection-level profitability, realized revenue from delivered orders, and contribution after advertising.

Compare carriers and fulfilment routes using the same destination, service level, package dimensions and delivery outcome. A lower quoted rate may be worse after surcharges, split shipments, failed deliveries or a longer route. Model each route's cost per delivered order rather than choosing from the headline rate. Cross-border examples often require this landed-cost treatment, as shown in Ecommerce Shipping Costs UK to USA: The Real Cost.

• Free-shipping threshold: set it where incremental margin covers incremental fulfilment cost.
• Product pricing: add the product's allocated shipping burden before approving a target margin.
• Carrier selection: choose on delivered-order cost and service requirements, not base freight alone.
• Fulfilment route: compare local stock, supplier-direct and consolidated routes using the same order mix.
• Margin control: investigate products or collections where shipping pushes contribution below target, then decide whether to reprice, change packaging, alter the route or stop promoting the offer.

A useful Singapore shipping cost is not a carrier’s advertised rate; it is the fully allocated amount your business incurs to move an order from supplier or warehouse to the customer. Calculate it consistently, reconcile it to actual invoices, and use it alongside product margin and fulfilment data before changing prices, shipping policies, or logistics partners.

General information only: tax, duty and import rules change and depend on your situation, so check with an accountant or the official source before acting.