diff --git a/app/decorators/models/solidus_easypost/spree/shipment_decorator.rb b/app/decorators/models/solidus_easypost/spree/shipment_decorator.rb
index f2d92a7..8f0ad15 100644
--- a/app/decorators/models/solidus_easypost/spree/shipment_decorator.rb
+++ b/app/decorators/models/solidus_easypost/spree/shipment_decorator.rb
@@ -26,6 +26,32 @@ def self.prepended(base)
           prefix: :selected,
           allow_nil: true,
         )
+
+        base.state_machine do
+          state :inbound_ready
+          state :inbound_shipped
+          state :complete
+
+          event :ship do
+            transition from: [:ready, :canceled, :pending, :inbound_ready, :inbound_shipped], to: :shipped
+          end
+
+          event :inbound_ready do
+            transition from: :pending, to: :inbound_ready
+          end
+
+          event :inbound_ship do
+            transition from: :inbound_ready, to: :inbound_shipped
+          end
+
+          event :pending do
+            transition from: :inbound_shipped, to: :pending
+          end
+
+          event :complete do
+            transition from: [:shipped, :inbound_shipped], to: :complete
+          end
+        end
       end
 
       def easypost_shipment
@@ -100,6 +126,9 @@ def generate_inbound_label
             end
           end
         )
+
+        update!(easy_post_inbound_tracker_id: purchased_shipment.tracker.id)
+        inbound_ready! if easy_post_inbound_tracker_id.present?
       rescue StandardError => e
         Rails.logger.error "Failed to generate inbound label or create pickup: #{e.message}"
         raise e
@@ -123,6 +152,8 @@ def generate_return_label
         order.update!(admin_metadata: order.admin_metadata.merge(
           return_label_url: return_label.postage_label.label_url
         ))
+
+        update!(easy_post_tracker_id: return_label.tracker.id)
       rescue StandardError => e
         Rails.logger.error "Failed to generate return label: #{e.message}"
       end
diff --git a/app/subscribers/solidus_easypost/status_tracker.rb b/app/subscribers/solidus_easypost/status_tracker.rb
new file mode 100644
index 0000000..9c526cd
--- /dev/null
+++ b/app/subscribers/solidus_easypost/status_tracker.rb
@@ -0,0 +1,45 @@
+# frozen_string_literal: true
+
+module SolidusEasypost
+  class StatusTracker
+    include Omnes::Subscriber
+
+    handle :'solidus_easypost.shipment_tracker.updated',
+      with: :handle_shipment_tracker_updated
+
+    def handle_shipment_tracker_updated(event)
+      shipment = event.payload[:shipment]
+      payload = event.payload[:payload]
+      tracker_id = payload[:result][:id]
+      status = payload[:result][:status]
+
+      if shipment.easy_post_tracker_id == tracker_id
+        update_outbound_shipment_status(shipment, status)
+      elsif shipment.easy_post_inbound_tracker_id == tracker_id
+        update_inbound_shipment_status(shipment, status)
+      end
+    rescue StandardError => e
+      Rails.logger.error("Failed to update shipment status: #{e.message}")
+    end
+
+    private
+
+    def update_outbound_shipment_status(shipment, status)
+      case status
+      when 'in_transit'
+        shipment.ship!
+      end
+    end
+
+    def update_inbound_shipment_status(shipment, status)
+      case status
+      when 'pre_transit', 'unknown'
+        shipment.inbound_ready! unless shipment.inbound_ready?
+      when 'in_transit', 'out_for_delivery'
+        shipment.inbound_ship! unless shipment.inbound_shipped?
+      when 'delivered'
+        shipment.pending! unless shipment.pending?
+      end
+    end
+  end
+end
diff --git a/bin/sandbox b/bin/sandbox
index f60e8db..8976af2 100755
--- a/bin/sandbox
+++ b/bin/sandbox
@@ -66,6 +66,8 @@ unbundled bundle add solidus --github solidusio/solidus --branch "${BRANCH:-main
 unbundled bundle exec rake db:drop db:create
 unbundled bundle exec rails generate solidus:install --payment-method=none --auto-accept "$@"
 unbundled bundle add ${extension_name} --path '../'
+
+unbundled bundle add 'solidus_webhooks'
 unbundled bundle exec rails generate $extension_name:install --auto-run-migrations
 
 echo
diff --git a/config/initializers/webhooks.rb b/config/initializers/webhooks.rb
index 5373725..a48a728 100644
--- a/config/initializers/webhooks.rb
+++ b/config/initializers/webhooks.rb
@@ -4,4 +4,8 @@
   SolidusWebhooks.config.register_webhook_handler :easypost_trackers, ->(payload) do
     SolidusEasypost.configuration.webhook_handler_class.call(payload)
   end
+
+  SolidusWebhooks.config.register_webhook_handler :shipment_status_trackers, ->(payload) do
+    SolidusEasypost::ShipmentStateHandler.call(payload)
+  end
 end
diff --git a/config/locales/en.yml b/config/locales/en.yml
index 811b429..d6b76c8 100644
--- a/config/locales/en.yml
+++ b/config/locales/en.yml
@@ -1,5 +1,9 @@
 en:
   spree:
+    shipment_states:
+      inbound_shipped: 'Inbound Shipped'
+      inbound_ready: 'Inbound Ready'
+      complete: 'Complete'
     postage_label: 'Postage Label'
     download_shipping_label: 'Download your Shipping Label'
     open_postage_label: 'Open'
diff --git a/db/migrate/20250326093651_add_easypost_tracker_to_shipments.rb b/db/migrate/20250326093651_add_easypost_tracker_to_shipments.rb
new file mode 100644
index 0000000..f9c687b
--- /dev/null
+++ b/db/migrate/20250326093651_add_easypost_tracker_to_shipments.rb
@@ -0,0 +1,6 @@
+class AddEasypostTrackerToShipments < ActiveRecord::Migration[7.2]
+  def change
+    add_column :spree_shipments, :easy_post_inbound_tracker_id, :string
+    add_column :spree_shipments, :easy_post_tracker_id, :string
+  end
+end
diff --git a/lib/solidus_easypost.rb b/lib/solidus_easypost.rb
index 295e363..62fb2bc 100644
--- a/lib/solidus_easypost.rb
+++ b/lib/solidus_easypost.rb
@@ -17,6 +17,8 @@
 require 'solidus_easypost/calculator/base_dimension_calculator'
 require 'solidus_easypost/calculator/weight_dimension_calculator'
 require 'solidus_easypost/tracker_webhook_handler'
+require 'solidus_easypost/shipment_state_handler'
+
 require 'solidus_easypost/errors/unknown_partial_resource_error'
 
 module SolidusEasypost
diff --git a/lib/solidus_easypost/engine.rb b/lib/solidus_easypost/engine.rb
index f7e41e4..8863bf8 100644
--- a/lib/solidus_easypost/engine.rb
+++ b/lib/solidus_easypost/engine.rb
@@ -20,6 +20,8 @@ class Engine < Rails::Engine
       unless SolidusSupport::LegacyEventCompat.using_legacy?
         app.reloader.to_prepare do
           ::Spree::Bus.register(:'solidus_easypost.tracker.updated')
+          ::Spree::Bus.register(:'solidus_easypost.shipment_tracker.updated')
+          SolidusEasypost::StatusTracker.new.subscribe_to(::Spree::Bus)
         end
       end
     end
diff --git a/lib/solidus_easypost/shipment_state_handler.rb b/lib/solidus_easypost/shipment_state_handler.rb
new file mode 100644
index 0000000..da4b95c
--- /dev/null
+++ b/lib/solidus_easypost/shipment_state_handler.rb
@@ -0,0 +1,19 @@
+# frozen_string_literal: true
+
+module SolidusEasypost
+  class ShipmentStateHandler
+    def self.call(payload)
+      return unless payload['description'] == 'tracker.updated'
+
+      shipment = find_shipment_by_tracker_id(payload['result']['id'])
+      return unless shipment
+
+      ::Spree::Bus.publish :'solidus_easypost.shipment_tracker.updated', shipment: shipment, payload: payload
+    end
+
+    def self.find_shipment_by_tracker_id(tracker_id)
+      ::Spree::Shipment.find_by(easy_post_tracker_id: tracker_id) ||
+      ::Spree::Shipment.find_by(easy_post_inbound_tracker_id: tracker_id)
+    end
+  end
+end