Rate-limiting is what we call policing and it is done from the ISP side.
It is bi-directional so you can rate limit input & output. You can define
what is the policy to be followed when traffic is within range and what
to be done once exceeded  like pass, mark, drop.

Traffic-shapping is done from the client side and it is unidirectional (
Controlling the outgoing traffic from an interface. Shapping helps when 2
sites are communicating with each other, one of them is 1M while the
other is 256K, traffic shapping would be defined from the 1M side inorder
not to flood the 256K link and lots or retransmission occurs.

>From: "Mohamed Saro" > >what is the difference and the direction of
rate-limit and traffic shapping > >FAQ, list archives, and subscription
info: http://www.groupstudy.com/list/cisco.html >Report misconduct and
Nondisclosure violations to [EMAIL PROTECTED]

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