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 2024, 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 and FedEx you should be aware of.
Fuel surcharges
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.
Visit UPS’ page on fuel surcharges for the latest UPS surcharges.
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 Ground® residential delivery charges are $5.55 per package in 2024.
UPS Ground® residential delivery charges are $5.65 per package in 2024.
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.
FedEx determines oversize surcharges based on shipping zones and service, ranging between $160 to $240 per package in 2024.
UPS determines large package surcharges based on shipping zones and service, ranging between $160 to $235 per package in 2024.
Saturday surcharges
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).
UPS Saturday delivery fee is $4.00 per package.
FedEx doesn’t charge Saturday surcharges on Home Delivery.
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 $6.75-$8.15 per package in 2024.
UPS signature upon delivery fee is $6.75-$8.15 per package in 2024.
Address correction surcharges
The address correction surcharge is an additional fee charged on a shipment that is incorrectly addressed.
FedEx address correction fee for Ground and Express is $22.50 per correction in 2024.
UPS address correction fee for Ground and Air is $21 per package in 2024.
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.
These surcharges vary greatly depending on service type for both FedEx and UPS.
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 start at $4.20 in 2024.
UPS declared value surcharges start at $4.35 in 2024.
The declared value surcharges for both carriers depend on the value of the shipment.
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!
FAQs
Q: How do shipping carriers determine which areas qualify for delivery area surcharges, and what criteria are used to define less-populated areas?
A: Shipping carriers typically determine delivery area surcharges based on various factors such as the remoteness of the destination, population density, and the distance from major transportation hubs. Carriers often have predefined zones or regions where these surcharges apply, and they may periodically review and update these zones based on factors like population shifts or changes in infrastructure.
Q: Are there any specific strategies or best practices recommended for eCommerce businesses to negotiate better rates with shipping carriers and potentially reduce the impact of surcharges?
A: Negotiating better rates with shipping carriers involves several strategies. Businesses can leverage their shipping volume, establish a strong shipping history, explore alternative shipping options or carriers, and utilize technology to optimize packaging and reduce dimensional weight charges. Additionally, engaging in contract negotiations with carriers based on data analysis of shipping patterns and costs can help secure more favorable rates and terms.
Q: What are the typical consequences for businesses if they fail to accurately audit their shipping invoices and address any discrepancies related to surcharges?
A: Failing to accurately audit shipping invoices and address discrepancies related to surcharges can have significant financial implications for businesses. Overlooking surcharge errors can lead to inflated shipping costs, impacting profit margins and overall business performance. Additionally, recurring surcharge discrepancies may indicate broader issues with carrier billing accuracy or contract compliance, potentially resulting in strained carrier relationships or even legal disputes. Therefore, implementing robust auditing processes and utilizing technology solutions to identify and rectify billing discrepancies are essential for businesses to maintain control over their shipping expenses and ensure financial integrity.
