Ever wondered why it costs less to ship a product from China than to send one back?

This pricing gap isn't random; it's shaped by global trade rules, government-backed logistics, and China's massive manufacturing engine.

We've done the research, so you don't have to!

Quick Answer: Why is shipping from China so cheap?

Shipping from China is cheap due to government subsidies, bulk shipping discounts (economies of scale), low labor costs, and international agreements like the UPU that favor developing countries.

China's large manufacturing output, competitive logistics industry, and established global shipping routes further lower outbound shipping costs.

Let's break down the six biggest reasons shipping from China remains so affordable!

Why Is Shipping From China Cheap? (& What About to China?)

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6 Reasons why shipping from China is so cheap

For a long time, traders enjoyed lower shipping rates transporting goods from China to the United States.

Although shipping costs have risen over the last few years, they're still relatively low.

Here are six reasons why there is cheap shipping from China to the US:

1. Universal Postal Union (UPU)

The Universal Postal Union headquarters in Bern, Switzerland

The UPU is an international postal organization under the United Nations (UN).

It was established to standardize the international postal system.

The UPU streamlines operations among postal services across countries, making international postage easier and cheaper.

To reduce shipping costs between UN member countries, the UPU categorizes nations into several groups based on their level of development and economic size.

In this system, developing economies pay less to have their mail shipped to wealthier, more developed economies. On the other hand, established countries pay more to send mail to less developed countries.

Since China has long regarded itself as a developing economy, it has been able to pay lower shipping costs to ship products to the US, a developed economy.

This changed in 2018, when US President Donald Trump threatened to withdraw the US from the UPU unless it was given greater control over inbound mail rates.

This explains why shipping from China costs more today than it did 10 years ago, but is still cheaper than shipping from the US to China.

Note: Chinese products shipped to the US may now be subject to additional taxes due to the latest tariffs imposed during the Trump administration. Click here to learn more.

2. Economies of scale

China's manufacturing industry is huge.

Thousands of factories across the country produce millions of new products for export each day.

Bulk exports allow manufacturers to negotiate lower rates with shipping companies.

Lower fees for large shipments usually translate into lower per-product shipping fees.

3. Government subsidies

The Chinese government understands its role as a manufacturer on the global stage and that exports are its primary source of revenue.

Therefore, it supports manufacturers by heavily subsidizing export shipping fees to encourage traders to export more.

A shipping fee subsidy is money the Chinese government pays to shipping companies to keep the prices of shipping products out of the country low.

Due to subsidized shipping, foreigners buying goods from China pay lower shipping costs.

Meanwhile, sellers in China get access to a large international market.

It's a win for everyone!

4. Lower labor costs

China's cost of living is much lower than that of developed nations like the US.

Accordingly, labor costs are low, which enables Chinese businesses to keep their production costs lower than those of their competition in the US.

This effect is also present in the Chinese shipping industry. Due to significantly reduced operating expenses, shipping companies can offer low shipping rates.

5. Competition

7 out of the 10 busiest ports in the world are Chinese.

Additionally, Chinese shipping companies produce over 96% of the world's shipping containers and own over 80% of ship-to-shore cranes.

These figures are great indicators of the sheer size of the Chinese shipping industry.

With that level of competition, pricing has to be competitive to acquire new customers, adding to the list of factors that make shipping from China to the US cheap.

6. Established global shipping routes

China has three established shipping routes connecting it to the rest of the world: the Pacific, Indian, and Atlantic Oceans.

Established routes allow Chinese shipping companies to frequently ship goods through them.

In addition to established routes, multiple shipping companies compete to offer the best prices, further reducing the per-product fees.

Comparing shipping from China vs. shipping to China

Shipping a product from China is usually the easy part.

It's also a great motivator for starting a dropshipping business.

However, dealing with returns can be a nightmare because returning products to China is neither easy nor cheap.

Here's why:

Higher export volume from China compared to imports

China is an established manufacturer of nearly anything you can imagine.

And for this reason alone, it doesn't import as much as it exports.

Worse, it doesn't source most of its imports from a single nation.

This, combined with the UPU's policies, makes shipping to China more expensive than shipping from China.

In some cases, the cost of returning a product to China can exceed the cost of the product!

Empty return shipments and their impact on cost

If China sends out more containers than it receives, it implies that most shipping containers and vessels must return to China empty.

Shipping empty containers is costly because there is no benefit to doing so.

Additionally, you don't have the economies of scale you have when shipping to the US from China.

Differences in import/export tariffs

Since President Trump threatened to withdraw from the UPU in 2018, a trade war has ensued between China and the US.

In a trade war, one country raises tariffs on goods imported from or exported to another country.

When tariffs increase, shipping companies usually pass the additional costs to the buyer and seller by increasing their shipping fees.

Therefore, China's tariffs on US goods are another reason you might have to pay more to ship to China.

All in all, if you're in ecommerce or dropshipping, be aware that handling refunds and sending them back to China can be more expensive than sending them the other way!

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Summary

Before we go, we've created a quick summary of this article for you, so you can easily remember it:

Overall, shipping goods from China to the US is cheaper than the other way around.
The UPU, economies of scale, government subsidies, low labor costs, competition, and established shipping routes are major factors that lower the cost of shipping goods from China to the US.
On the other hand, low imports from the US, empty return shipments, and differences in import/export tariffs lead to high shipping prices to China from the US.

Conclusion

As a dropshipper, you want the best profit margins without overcharging your customers.

China offers you the best chance of staying profitable with its low-priced products and low shipping costs.

However, if your supplier is in China, you must have procedures in place to handle returns.

The supplier may not accept returns, and even if they do, sending items back might be too costly. So, you'll need to devise a way of handling returns.

Want to learn more about dropshipping?

Ready to move your dropshipping store to the next level? Check out the articles below:

Plus, don't forget to check out our in-depth guide on how to start dropshipping here!

Why Is Shipping From China Cheap? (& What About to China?)