What is zone-to-zone pricing?

Zone-to-zone pricing is a system where shipping origins and destinations are grouped into specific zones. This approach allows carriers to establish pricing structures based on defined geographic areas, simplifying the calculation of shipping costs. By categorizing areas into zones, it becomes easier to determine rates for shipping goods based on the distance between these zones. This model often reflects the variations in transportation costs associated with different regions, taking into account factors like fuel expenses, labor, and other operational costs that may vary by location.

This method contrasts with a system that ignores distance, where pricing would remain constant regardless of the shipping route, making it less responsive to the actual cost of service. Additionally, while some pricing models focus solely on shipment weight, zone-to-zone pricing incorporates both origin and destination zones as key determinants. Finally, the idea of combining regions based on shipping costs may lead to less accuracy since it doesn't require the precision of zone categorization to reflect actual distance traveled and cost incurred, which is central to zone-to-zone pricing.