In this article I will demonstrate how to write custom shipping method in Magento commerce.
First we need to write our shipping method, it’s a class in folder app/code/core/Mage/Shipping/Model/Carrier/.
I called it Inchoocustom.php and it’s based on Flat rate shipping method but you can developed your own class.

< ?php

class Mage_Shipping_Model_Carrier_Inchoocustom
    extends Mage_Shipping_Model_Carrier_Abstract
    implements Mage_Shipping_Model_Carrier_Interface
{

    protected $_code = 'inchoocustom';

    public function collectRates(Mage_Shipping_Model_Rate_Request $request)
    {
        if (!$this->getConfigFlag('active')) {
            return false;
        }

        $freeBoxes = 0;
        if ($request->getAllItems()) {
            foreach ($request->getAllItems() as $item) {
                if ($item->getFreeShipping() && !$item->getProduct()->isVirtual()) {
                    $freeBoxes+=$item->getQty();
                }
            }
        }
        $this->setFreeBoxes($freeBoxes);

        $result = Mage::getModel('shipping/rate_result');
        if ($this->getConfigData('type') == 'O') { // per order
            $shippingPrice = $this->getConfigData('price');
        } elseif ($this->getConfigData('type') == 'I') { // per item
            $shippingPrice = ($request->getPackageQty() * $this->getConfigData('price')) - ($this->getFreeBoxes() * $this->getConfigData('price'));
        } else {
            $shippingPrice = false;
        }

        $shippingPrice = $this->getFinalPriceWithHandlingFee($shippingPrice);

        if ($shippingPrice !== false) {
            $method = Mage::getModel('shipping/rate_result_method');

            $method->setCarrier('inchoocustom');
            $method->setCarrierTitle($this->getConfigData('title'));

            $method->setMethod('inchoocustom');
            $method->setMethodTitle($this->getConfigData('name'));

            if ($request->getFreeShipping() === true || $request->getPackageQty() == $this->getFreeBoxes()) {
                $shippingPrice = '0.00';
            }

            $method->setPrice($shippingPrice);
            $method->setCost($shippingPrice);

            $result->append($method);
        }

        return $result;
    }

    public function getAllowedMethods()
    {
        return array('inchoocustom'=>$this->getConfigData('name'));
    }

}

Pay attention on following lines:

$method->setCarrier('inchoocustom');
$method->setCarrierTitle($this->getConfigData('title'));

$method->setMethod('inchoocustom');
$method->setMethodTitle($this->getConfigData('name'));

They determine how we will set up our method. Keyword is ‘inchoocustom’.
In folder app/code/core/Mage/Shipping/etc/ we need to edit
system.xml and config.xml in order to enable our new shipping method.

system.xml:

                <inchoocustom translate="label">
                    <label>Inchoo Custom Shipping Method</label>
                    <frontend_type>text</frontend_type>
                    <sort_order>2</sort_order>
                    <show_in_default>1</show_in_default>
                    <show_in_website>1</show_in_website>
                    <show_in_store>1</show_in_store>
                    <fields>
                        <active translate="label">
                            <label>Enabled</label>
                            <frontend_type>select</frontend_type>
                            <source_model>adminhtml/system_config_source_yesno</source_model>
                            <sort_order>1</sort_order>
                            <show_in_default>1</show_in_default>
                            <show_in_website>1</show_in_website>
                            <show_in_store>0</show_in_store>
                        </active>
                        <name translate="label">
                            <label>Method name</label>
                            <frontend_type>text</frontend_type>
                            <sort_order>3</sort_order>
                            <show_in_default>1</show_in_default>
                            <show_in_website>1</show_in_website>
                            <show_in_store>1</show_in_store>
                        </name>
                        <price translate="label">
                            <label>Price</label>
                            <frontend_type>text</frontend_type>
                            <sort_order>5</sort_order>
                            <show_in_default>1</show_in_default>
                            <show_in_website>1</show_in_website>
                            <show_in_store>0</show_in_store>
                        </price>
                        <handling_type translate="label">
                            <label>Calculate Handling Fee</label>
                            <frontend_type>select</frontend_type>
                            <source_model>shipping/source_handlingType</source_model>
                            <sort_order>7</sort_order>
                            <show_in_default>1</show_in_default>
                            <show_in_website>1</show_in_website>
                            <show_in_store>0</show_in_store>
                        </handling_type>
                        <handling_fee translate="label">
                            <label>Handling Fee</label>
                            <frontend_type>text</frontend_type>
                            <sort_order>8</sort_order>
                            <show_in_default>1</show_in_default>
                            <show_in_website>1</show_in_website>
                            <show_in_store>0</show_in_store>
                        </handling_fee>
                        <sort_order translate="label">
                            <label>Sort order</label>
                            <frontend_type>text</frontend_type>
                            </sort_order><sort_order>100</sort_order>
                            <show_in_default>1</show_in_default>
                            <show_in_website>1</show_in_website>
                            <show_in_store>0</show_in_store>

                        <title translate="label">
                            <label>Title</label>
                            <frontend_type>text</frontend_type>
                            <sort_order>2</sort_order>
                            <show_in_default>1</show_in_default>
                            <show_in_website>1</show_in_website>
                            <show_in_store>1</show_in_store>
                        </title>
                        <type translate="label">
                            <label>Type</label>
                            <frontend_type>select</frontend_type>
                            <source_model>adminhtml/system_config_source_shipping_flatrate</source_model>
                            <sort_order>4</sort_order>
                            <show_in_default>1</show_in_default>
                            <show_in_website>1</show_in_website>
                            <show_in_store>0</show_in_store>
                        </type>
                        <sallowspecific translate="label">
                            <label>Ship to applicable countries</label>
                            <frontend_type>select</frontend_type>
                            <sort_order>90</sort_order>
                            <frontend_class>shipping-applicable-country</frontend_class>
                            <source_model>adminhtml/system_config_source_shipping_allspecificcountries</source_model>
                            <show_in_default>1</show_in_default>
                            <show_in_website>1</show_in_website>
                            <show_in_store>0</show_in_store>
                        </sallowspecific>
                        <specificcountry translate="label">
                            <label>Ship to Specific countries</label>
                            <frontend_type>multiselect</frontend_type>
                            <sort_order>91</sort_order>
                            <source_model>adminhtml/system_config_source_country</source_model>
                            <show_in_default>1</show_in_default>
                            <show_in_website>1</show_in_website>
                            <show_in_store>0</show_in_store>
                        </specificcountry>
                        <showmethod translate="label">
                            <label>Show method if not applicable</label>
                            <frontend_type>select</frontend_type>
                            <sort_order>92</sort_order>
                            <source_model>adminhtml/system_config_source_yesno</source_model>
                            <show_in_default>1</show_in_default>
                            <show_in_website>1</show_in_website>
                            <show_in_store>0</show_in_store>
                        </showmethod>
                        <specificerrmsg translate="label">
                            <label>Displayed Error Message</label>
                            <frontend_type>textarea</frontend_type>
                            <sort_order>80</sort_order>
                            <show_in_default>1</show_in_default>
                            <show_in_website>1</show_in_website>
                            <show_in_store>1</show_in_store>
                        </specificerrmsg>
                    </fields>
                </inchoocustom>

config.xml:

	<inchoocustom>
                <active>0</active>
                <sallowspecific>0</sallowspecific>
                <model>shipping/carrier_inchoocustom</model>
                <name>Inchoo Custom Shipping Method</name>
                <price>5.00</price>
                <title>Inchoo Custom Shipping Method</title>
                <type>I</type>
                <specificerrmsg>This shipping method is currently unavailable. If you would like to ship using this shipping method, please contact us.</specificerrmsg>
                <handling_type>F</handling_type>
        </inchoocustom>

Now we need to enable our new shipping method in admin panel (System->Configuration->Shipping Methods)
And we have our custom shipping method.
Enjoy coding.