There may be occasions in the web store when shipment has to be canceled. This state is set when a shipment cannot be shipped on account of several reasons - for instance, the inventory was marked as available one but after the check-up was not found. Or supplier declined the shipping because of weather conditions and etc.
In Virto Commerce Manager shipment can be set to "Canceled" state from any other state except "Shipped". To cancel a shipment, open the order details and use "Cancel Shipment" button in "Details" tab.