Small business shipping costs are rising from four directions simultaneously: tariff exposure, higher fuel prices, increasing last-mile rates, and carrier rule changes that arrive with minimal notice. The majority of shippers absorbing these increases operate without a dedicated trade compliance staffer or logistics analyst on staff. This is the segment that has driven the e-commerce expansion of the past decade — sellers who built their businesses on platforms like Shopify, Amazon, and Etsy and now find that back-end logistics complexity is outpacing their ability to manage it manually.

Tom Madine, CEO of ShipStation Global — the multi-carrier shipping software platform serving over 3 million users worldwide — told FreightWaves that the instinct in this segment is to handle the problem in-house. With three decades of experience in logistics, he describes this as the most common — and most expensive — trap that small and midsize shippers encounter.

"What I think they try to do a lot of it on their own," Madine said. "That personality type sometimes says, 'Well, I'm going to go out there and navigate all this on my own because I'll do it better than someone else.' And that's where you can end up in an industry as big as ours, as complex as ours, as ever-changing as ours [getting into trouble]."

The instinct itself is not irrational — it is how most of these companies were built. However, it is poorly suited to a cost environment where variables reset on a quarterly basis. Carrier general rate increases, which historically averaged 4.9% to 5.9% annually for the major parcel carriers, are now compounded by surcharge adjustments, dimensional weight rule changes, and zone-based fee restructuring that can shift effective rate increases well above the announced headline figure.

Uncertainty Has Become the Norm

Businesses crave predictability, and for the past 18 months, it has been absent.

"Businesses want certainty, right? That's what they want and that's what we've been lacking for the last 18 months," Madine said.

Scale determines how a company absorbs that uncertainty. Large shippers possess the resources to model scenarios and dedicate staff to the problem, but they lack turning speed.

"It takes a lot now. If you're a big company, you're trying to move your supply chain, it takes a long time," Madine said. "I think small businesses, although they may not have the resources in-house to make big sweeping moves, they're a lot more nimble. That's the one thing about most of our smaller business customers. They're still run by entrepreneurs. They're really nimble."

Madine has observed this tradeoff within his own organization.

"I look at us today versus how we were 30 years ago: We were way more nimble 30 years ago, but we're way more prepared to deal with things today," he said. "Any business that's thriving in this environment, they're good at making change, whether they're doing it in a structured way or they're nimble."

Structural Shifts Point to Higher Transportation Costs for Longer

Not all cost pressures in the market are temporary, and Madine draws a firm distinction between the two categories.

"I think there are some structural changes in the transportation market that are occurring right now independent of tariffs, independent of the Strait of Hormuz and oil, independent of all that," he said. "There are some structural changes going on in the world of freight where it's going to be more difficult than it was for new capacity to come online. So that means that we're probably in an environment where the cost of transportation is going to be higher for longer."

Those structural pressures include a trucking industry still working through elevated insurance costs, persistent driver shortages in certain segments, and infrastructure constraints — factors that persist regardless of fuel price fluctuations or trade policy shifts.

The impact is not uniform across all modes of transport, but it does alter the planning horizon. Madine emphasized that while transitory shocks call for tactical adjustments, structural shifts warrant reworking sourcing and network strategy.

"Should you make a change to your long-term strategy because of a six-month or eight-month short-term blip? No," Madine said. "Could you make a change to your strategy because of something longer-term and more structural? That's when you make big strategic changes."

The Inventory Question Has No Universal Answer

Shippers face a core dilemma: buy ahead of duties and absorb the carrying cost, or stay lean and pay the tariff later. Madine said the answer depends heavily on the balance sheet.

"If you're a large business with a big balance sheet and you can afford to hold more inventory on it, that may be the right answer for you," he said. "But if you're a small business where cash flow is king, that's not the right answer for you."

"Everyone always wants the one-size-fits-all solution, but they don't exist."

Smaller Shippers Face Distinct Challenges

ShipStation Global serves more than 3 million customers worldwide, with a concentration among small and midsize shippers. Madine noted that the most persistent misread of this segment is treating it as a scaled-down version of enterprise shippers.

"Most people assume that the needs of a smaller shipper are the same as the needs of an enterprise shipper. It's just that the smaller shipper does less of it. And that's not really the case," he said. "Smaller shippers don't have the same expertise in-house. They don't have the same scale in their operations. So they need solutions that can work with the resources that they have."

This mismatch surfaces in the advice small shippers receive. Madine pointed to one recurring question: Should we move volume to a regional carrier?

"For some customers maybe the answer is yeah, that's a good idea. But for most of our customers: You're not the right size business to do that," he said. "Let's look at some ways for your size business how you should fix this problem."

Regional parcel carriers have expanded their footprints in recent years through acquisitions and network investment, but their coverage remains geographically limited compared to the national networks of FedEx and UPS — a constraint that matters for small shippers whose customer base is dispersed.

Visibility Remains a Critical Gap

The other major gap is visibility. Most small shippers either cannot track their freight after it leaves the dock or can only do so by logging into multiple platforms.

"Once it leaves my dock, how do I know where it is? How do I make sure that it's getting through customs? A lot of that can be done through technology today," Madine said. "And most businesses either don't have access to it, or they've got access to it in seven different systems."

Madine was candid about the limits of any vendor, including his own.

"There's not a company on the planet that can change how tariffs are being implemented or not implemented. There's not a company on the planet that can change the price of oil," he said. "So you react to that environment."

There is a scale threshold at which handling logistics in-house becomes viable, and Madine places it high.

"If you're one of the world's five or 10,000 largest shippers, you may be able to get all that done without the help of a company like ShipStation, and you should," he said. "But if you're not one of the world's 5,000 largest shippers, you're going to need a lot of help."

The specific pressures will shift over time, but Madine regards that constant change as a given.

"This year it's just straight-up Hormuz and tariffs, but next year it's going to be something else, because I've been in this industry for 30 years and it's always something," he said. "It's ever-changing, and it's going to be something new next year that we're talking about. So you've got to have the right tech, the right visibility, the right partners, the right relationships."