Understanding and Preventing Shipping Surcharges

They say there are two kinds of people: those who like surprises, and those who don’t. Of course, we’re talking about the good surprises — like finding a $20 bill on the sidewalk or being complimented for your dashing good looks. But there are also bad surprises, like the worst of them all: shipping surcharges.

Maybe we’re exaggerating a little, but they do kind of suck. While shipping surcharges are unavoidable, there are steps you can take as a business owner to prevent or even avoid them. Read on to learn more about these pesky little fees!

What Are Shipping Surcharges?

The setting is familiar: You receive an order, print the shipping label, and check out the listed postage cost. Turns out, this listed postage cost isn’t written in stone — rather, it’s an estimate made by the carrier of what you’ll be paying for shipping based on factors such as the size, weight, and destination. 

However, once your package is in transit, everything changes. If any of the information listed (like size or weight) is inaccurate or if the carrier runs into certain situations (like the ones listed below) which require additional fees, the expenses incurred while delivering the package are added to your final shipping cost. These additional costs (a.k.a. surcharges) are the bad surprises of shipping.

The ABCs of Shipping Surcharges Include…

  • Additional handling surcharge: Applies to packages over 48 inches in length.
  • Delivery area surcharge: Applies to addresses in rural areas or areas outside of a specified range of the UPS or FedEx hub.
  • Fuel surcharge: Companies like FedEx and UPS have fuel surcharges built into their rates, which is used to compensate them for the amount of fuel used when making deliveries. USPS is the exception.
  • Signature surcharge: A fee for the task of receiving a signature upon delivery.
  • Residential surcharge: Applies to businesses that operate out of a home address.
  • Declared value surcharge: This surcharge can give shippers reassurance and the ability to protect their investment for packages valued at $100 or higher. This allows shippers to state the value of the package in case it is lost, stolen, or damaged in transit.
  • Delivery reattempt surcharge: For when the first delivery just didn’t work out.
  • OS extra surcharge: Applies to “other shipping” surcharges, which can be monitored if your business has an auditing system that notifies you of unexpected or inaccurate fees charged to your account.
  • Oversized package surcharge: Much like the additional handling surcharge, this applies to those larger than life orders.
  • Saturday delivery surcharge: For those overtime deliveries.

We know, that seems like a lot! And while surcharges may not affect all of your shipments, they can be costly if they do. If there’s one thing you should be certain of when it comes to shipping surcharges, it’s that they’re are here to stay. 

Why? Well, as eCommerce continues to grow, surcharges become absolutely essential for carriers as a tool to manage shipping volumes, forecast demand, steer shipping trends, and avoid package congestion. Last holiday season, UPS increased their residential surcharge fee in order to manage demand during peak season. However, even with this alteration, they simply could not stay ahead of the high volume of packages in transit, which, in turn, actually caused their total profit that quarter to decrease.

What Can I Do About My Shipping Surcharges?

While shipping surcharges may not be going anywhere, there are ways to combat them as a business owner. 

Audit Your Shipping Invoices

Did you know you should be auditing your own shipping invoices on a regular basis? We know, that sounds a little tedious, but being conscious of your shipping expenses goes a long way in preventing unwanted and unneeded costs. If you’re outsourcing, it’s possible that your fulfillment center has a system which allows you to download billing and order information, making the process a little easier. Hint: ShipMonk can help with that!

If your business is shipping a high volume of packages, it may also be worth looking into partnering with a shipping auditor. 

Contest Your Charges

You won’t always be able to do this, but you can contest some of your shipping surcharges. An example of this would be when a carrier delivers a package later than promised. In this case, carriers may refund some or all of the associated surcharges for that package, but you have to be the one to request this. Ask and you shall receive… sometimes!

Negotiate with Your Shipping Carriers

Ah, the power of negotiation. Carriers will take into account your company’s shipping volume, growth potential, and their expected profit to provide you with discounted rates. You can also use this as an opportunity to become familiar with the fees that would most impact your business. For example, if you ship mainly to residential addresses, you may want to focus on getting a residential surcharge removed from your contract.

Outsource to a 3PL

Third-party logistics companies (3PLs) and fulfillment centers ship a large volume of packages on behalf of their clients. The sheer magnitude of packages shipped is often much more than what an individual business could achieve on its own, which means 3PLs and fulfillment centers can usually negotiate better carrier contracts. These contracts can come with reduced or even completely removed surcharges, which means a win-win situation for everyone!

Triple-Check Your Information

Santa makes his list and checks it twice. As a business owner, you’ve got to check it thrice! Make sure all of the information printed on your shipping labels is correct, including the size, weight, and destination address. Remember how we talked about outsourcing? Another huge benefit that comes with outsourcing is that 3PLs and fulfillment centers often have sophisticated software that can automatically verify addresses. Awesome, right?!

Use Shipping APIs

If you don’t want to or are not ready to outsource, another great way to stay on your toes when it comes to shipping is by using APIs. Shipping APIs (which stands for Application Programming Interface) are tools that can calculate shipping rates and print shipping labels. Nowadays, most shipping APIs will also include address verification as part of their service. There’s a solution for everyone!

There you have it, folks! Breaking down a topic like shipping surcharges can be a little complicated, but we hope we have made it easy, and maybe just a little bit fun. If you have any questions, please do not hesitate to contact us. We’re here for you!