How to Lower Delivery Area Surcharges

by | Mar 23, 2021

3 min read

Everyone knows surcharges can add a significant amount to the cost of your shipment. The causes of some costs can be controlled, but others — like where your packages are headed — can’t.

The Delivery Area Surcharge is one of those destination-based charges, and though you can’t control where your customers want their packages shipped, you can make some adjustments on your end to help lower the cost.

What is the Delivery Area Surcharge?

The Delivery Area Surcharge (DAS) is a fee carriers add when your shipment is going to a less-populated area because it takes the driver more time between deliveries. The Extended Area Surcharge (EAS) applies when your shipment is going to an even more remote location. Both surcharges are defined by a set of more than 25,000 ZIP codes. For many shippers, it’s the third-highest surcharge (after fuel and residential) they have to deal with.

Neither should be confused with the Residential Surcharge, which kicks in when a delivery goes to a location zoned as residential.

In 2020, more than a quarter (26%) of the U.S. population was in a ZIP code that would incur the Delivery Area or Extended Area Surcharge. Depending on the carrier and the service level, the surcharge rates can range from $3.10-$5.90 per package in the contiguous United States.

Delivery area surcharge challenges

It probably won’t shock you to learn that last-mile delivery accounts for 41% of the cost in the supply chain — and it will only get more costly in 2021 because the major carriers have added hundreds of ZIP codes that this surcharge will apply to.

Shippers and carriers have tried many methods to cut these costs while maintaining palatable delivery times for rural shoppers. Even academics have given it a try: Texas A&M University studied whether the state could use existing rural transportation services to help far-flung eCommerce customers get their packages faster. (Their conclusion? Yes, if they could drum up enough awareness of the service.)

By and large, there hasn’t been a magic bullet for reducing these costs. But there are several ways you can give it a go.

How to combat delivery area surcharges

The best way to avoid these charges is to avoid shipping to these costlier ZIP codes when possible. You can:

  1. Ship to one of your locations if you have retail stores.
  2. Encourage shoppers to ship to their workplace, which is more likely to be in a commercial area, allowing you to also avoid residential surcharges. Many workers will be heading back to the office in 2021, making this a more viable option than last year.
  3. Make shoppers aware of alternative options like lockers and access points offered by carriers.
  4. Try a regional carrier. They generally have lower surcharges overall, and many don’t charge a delivery area surcharge at all.

Nudge customers in the right direction

So how do you get shoppers to choose these options when it’s so much easier for them just to let a package come to their home? One option: Use microcopy in your checkout process to prod shoppers toward options that are less costly for you.

Microcopy isn’t fine print that tricks, overwhelms or confuses shoppers — it’s just the opposite. It’s short, often witty, bits of copy that reassure and guide the shopper toward completing their purchase.

Try directing shoppers toward preferred shipping options with copy next to them like “Banish porch pirates” or “Protect your package.” A few short words from you can go a long way toward easing a customer’s mind and helping them safely ship their order.

You can’t win them all

Delivery area surcharges will always be a challenge. Ultimately, you need to keep customers happy by shipping them their orders in a timely manner no matter where they want them delivered. The right logistics intelligence platform can help you find strategic ways to lower surcharges and your shipping costs overall.

That makes it all the more important to keep close tabs on all the other surcharges that could affect your unique business. Take a look at our General Rate Increase guide for 2021 to find out how to do it.

Topics: Customer Experience, Delivery Area Surcharge, Residential Surcharge
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