What are shipping surcharges?
A shipping surcharge (also called accessorial fees or accessorials) is an additional fee applied to the base shipment costs. These surcharges commonly appear as “service charges” or “handling fees”.
Shipping carriers apply different surcharges to pass the cost of fuel price fluctuations and other transportation costs to the customer.
In this article, we will review some of the most common shipping surcharges and look at the ways to avoid or lessen paying them.
Types of Shipping Surcharges with UPS, FedEx, and USPS
Individual shipping surcharges may seem negligible, but they quickly add up to seriously impact your bottom line. Your shipping invoice is affected by a number of factors other than the shipping fees, handling fees, and fuel costs. They’re called surcharges.
Shipping carriers revise these charges yearly, and in some cases on a weekly basis.
UPS and FedEx have increased their shipping rates by 5.9% in 2022, in addition to the hike in surcharge rates.
It is important to be aware of the various shipping surcharges you may incur so you can reduce these fees or avoid them altogether.
Shipping carriers have a lot of surcharges. Below, we break down the most common surcharges with UPS, FedEx, and USPS you should be aware of.
Fuel surcharges are additional fees added to the base rate to account for the regional or seasonal changes in fuel prices. This extra charge is intended to pass on the fluctuations in fuel costs to the customer.
UPS and FedEx adjust their fuel surcharge rates on a monthly and weekly basis respectively.
Visit FedEx’s site on fuel surcharges for the latest FedEx surcharges.
UPS fuel surcharges range between $1.50 and $3.95.
Residential delivery surcharges
Residential surcharges are extra fees added to the base rate when orders are delivered to home residential addresses including businesses operating from a home, or places that the carrier deems as residential such as a farm.
FedEx residential delivery charges are $5.30 per package.
UPS residential delivery charges are $4.85 per package.
Oversize package surcharges
Oversize package surcharge is applied to packages that don’t meet the dimensions or weight limits set by shipping carriers.
For example, FedEx charges an oversize surcharge to a package that is more than 96 inches in length, has a combined length and girth of more than 130 inches, or if it weighs heavier than 90 lbs
Similarly, UPS charges a Large Package Surcharge when the combined length and girth of a package is more than 130 inches, its length exceeds 96 inches, or it is heavier than 90 lbs. Note that UPS does not charge an additional handling charge when this surcharge is applied.
FedEx determines oversize surcharges based on shipping zones, ranging between $110 to $170 per package.
UPS determines oversize surcharges based on shipping zones and package characteristics, ranging between $14.00 to $30.50 per package.
USPS (United States Postal Service) determines oversize surcharges based on shipping zones and weight, ranging between $84.00 to $220.50 per package.
Saturday surcharges are added to the base shipping fees for shipments that happen outside the regular work week (i.e Monday to Friday). These surcharges are types of expedited delivery surcharges (time-sensitive such as weekend delivery surcharges and overnight shipping surcharges).
FedEx Saturday delivery fee is $16 per package.
UPS Saturday delivery fee is $4.00 per package.
USPS doesn’t charge Saturday surcharges.
Signature upon delivery surcharges
As the name suggests, it is the service fee added to the shipping charges if you choose to require a signature upon delivery.
FedEx signature upon delivery fee is $5.90 per package.
UPS signature upon delivery fee is $5.90 per package.
USPS signature upon delivery fee is $3.45 per package.
Address correction surcharges
The address correction surcharge is an additional fee charged on a shipment that is incorrectly addressed.
FedEx address correction fee for U.S. Express Package Services, International Express Package Services, International Express Freight Services, U.S. Ground Services, and International Ground Service is $19.50 per correction.
UPS address correction fee for Package and UPS Worldwide Express Freight Services is
$18.00 per package.
USPS address correction fee is $0.67 per manual notice issued.
Delivery area surcharges
Delivery area surcharge is added to the base shipping rate when your shipment is going to a less-populated area. These fees are charged to cover the labor and transportation costs for the extended distance it takes to make the delivery.
FedEx delivery area surcharges for FedEx Home Delivery, U.S. Express Package Services, U.S. Ground Services, U.S. Express Package Services, FedEx Ground, Express Alaska Package Services, and Express Hawaii Package Services range between $4.80 to $34.50 per package.
UPS delivery area surcharges for UPS Ground and UPS Air range between $0.00 to $6.50 per package.
Declared value surcharges
Declared value surcharge is a fee charged to compensate the shipper in case their package gets damaged, lost, or stolen.
FedEx declared value surcharges is $3.75 for shipments valued between $100.01 and $300.
UPS declared value surcharges range between $0.00 to $3.45 for shipments valued between $0.00 and $300.
USPS declared value surcharges start at $13.75.
The declared value surcharges for all three carriers depend on the value of the shipment.
Weekly service charges
This fee applies to shippers who send deliveries regularly (i.e., they schedule a regular automatic pickup with their carrier for a weekly service charge).
FedEx weekly service charges are $13.50 for a deposit within 48 hours or $43.50 for a deposit in 24 hours.
UPS weekly service charges vary based on the number of pick days selected, ranging between $15.50 to $34.00.
For more information on FedEx surcharges, view FedEx Ground surcharges & fees.
For more information on UPS surcharges, view UPS Rate & Service Guide.
For more information on USPS surcharges, view USPS price list.
Note that there are other shipping surcharges as well that affect your profit margins such as additional handling surcharges, insurance surcharges, and peak season surcharges.
How eCommerce Businesses Can Reduce and Avoid Shipping Surcharges
Let’s look at some of the ways you can protect your bottom line against shipping surcharges:
- Parcel Consolidation: When the same customer places more than one order in your order management system one after the other, you can pack those items together in the same box. This can allow you to lower your shipping fees since shipping one package is cheaper than shipping multiple packages while staying within carrier thresholds. It will also help you optimize your supply chain logistics by saving and reducing shipping costs.
- Do the research: Drill deep in your shipping invoices to get a better understanding of your shipping surcharges. Next, look into different shipping options available to you. This information will not just allow you to eliminate unnecessary surcharges by optimizing your shipments, but puts you in a better position to renegotiate carrier contracts and get better rates.
- Audit your invoices: An efficient invoice auditing process helps you ensure that the carrier delivers the service levels you pay for. Surcharge errors in your invoice can quickly balloon shipping costs and negatively impacting your bottom line. Use an invoice auditing software to identify discrepancies and miscalculations in your shipping invoices to gain more control over your shipping spend.
- Invest in a logistics intelligence solution: A logistics optimization software can help you compare and analyze different shipment scenarios using data. You can then use this information to optimize your logistics budget, enabling you to make the cost-effective supply chain decisions to drive up profits.
Sifted Logistics Intelligence solution helps shippers keep track of surcharges
It’s a good idea to familiarize yourself with the shipping surcharges we’ve explained above and the actions you can take to avoid them. Parcel consolidation, auditing your invoices, and doing proper research into surcharges and shipping options are just a few simple ways you can minimize shipping surcharges.
Sifted is a logistics optimization solution that offers tools for shippers to accurately calculate surcharges to get a better handle on shipping costs.
Ready to protect your business from the ever-changing shipping surcharges? Get a demo with Sifted today!