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Shipping Fee Surprise – Here Is How To Overcome Unexpected Package Surcharges

Even experienced shippers are surprised on many of their parcel carrier invoices by “extra” package surcharges. As every add-on shipping fee directly eats into profit, every shipper needs to proactively work to minimize these fees. Further, this analysis of “surprise” shipping fees is not just something to turn over to an audit firm. Indeed, to avoid or minimize many of these fee types requires the attention of shipping operations. For specifics, this article offers you some tips on how you can avoid or at least control these fees, and not get surprised on your next carrier’s invoice. 

The Reasons For An Add-On Shipping Fee, Some That You Can Avoid.

Steve Has A Price Shock Moment - Shipping Fee Surprise
Steve Has A Price Shock Moment

Besides transportation charges, you may also face other costs such as accessorial, surcharges, value-added charges, or fees. Indeed, it’s important to be aware of these. The reason you are getting these add-on shipping fees above and beyond the freight charge are many. Specifically, below are the major reasons you are getting surprised by these “extra” charges

  • Atypical Package Characteristics. Here your package has exceptional characteristics from a parcel carrier’s perspective. For example, your package could be large or hazardous, to name a few.
  • Rural or Residential Pickup / Delivery Location. Most of these charges are due to the delivery location where the delivery address is residential or considered a rural area. Note, these rural area charges are usually called delivery area surcharges (DAS).
  • Base Transportation Charge Add-Ons. Here carriers are just basically adding charges to their base freight rate. For example, most parcel carriers have a variable-based fuel surcharge that they add to the freight charge. Also, another key charge type are peak or demand charges. Specifically, this is where the carrier charges additional delivery fees during select times of the year.
  • Other Carrier Value-Added and Accessorial Fees. Parcel carriers can have hundreds of value-added services and shipping fees. For example , a carrier can charge you a value-added charge for a signature service or dry ice service. Another example is where a carrier can charge you an accessorial fee such as a Value Added Tax (VAT) because of a requirement by some countries when goods cross a border.

Major Types Of Accessorial And Value Added Shipping Fees and How To Avoid

As shipping costs can be a significant part of your budget, recommend that you personally review the specific charges on your parcel carrier’s invoice.  Every shipping fee you can eliminate is pure profit so it pays to look at the details. For specifics, below are the major types of shipping fees that parcel carriers can charge you besides the base freight charge. Additionally for each charge type, there are tips and recommendations on how you can reduce and avoid these “extra” charges.

“Every shipping fee you can eliminate is pure profit so it pays to look at the details”

1. Fuel Surcharges.

Compare Carriers Service Guides as Most Carriers Add This Variable Charge to the Base Transportation Charge.

Many parcel carriers charge a variable fuel surcharge which is a percentage of your transportation charges. Moreover, this charge percentage changes weekly and can be 20% or more of your transportation charges when gas prices are high. In some cases such as with economy services, the parcel carrier does not include a fuel surcharge. Hence, this may be an option if timely delivery is not needed. Note: As of this writing, the USPS does not charge a fuel surcharge as USPS incorporates it into their normal freight charge. 

2. Residential / Delivery Area Surcharges.

Compare Carriers’ Service Guides and Specific Service Types to Minimize These Charges.

If your packages are going to a resident or rural area, most parcel carriers will charge you an extra charge that can be several dollars a package. Of note, USPS does not have these charges. Also, other carriers’ more economical services do not have these charges. However, the carriers’ economical services are slower, thus you need to consider the trade off between speed and cost.

3. Large Package and Additional Handling Charges.

Know How Dimensional Pricing Works and Find Solutions to Reduce Package Handling Charges.

Generally, parcel carriers will start charging you “extra” package handling charges when your package  either weighs over 50 lbs (billed) or the longest side is greater than 48 inches? Surprisingly, these charges can cost you more than the base shipping charge. In this case, you will need to do more research to determine how best to reduce costs for these types of shipments. See Large Package Shipping for a detailed explanation of dimensional pricing, mistakes to avoid when shipping large packages and how to take steps to reduce costs

4. Peak Or Demand Surcharges.

Intensively Manage Your Shipping During Peak Periods to Minimize the Add-On Delivery Charges.

Watch out for these charges during the holiday season or during specific time periods such as during national emergencies (ex. COVID pandemic). Specifically, peak charges are even more additional charges usually for residential deliveries and large packages.  Absolutely, please read the fine print and be on the look out for carrier price change alerts. 

5. Return / Address Correction Charges.

Optimize Your Shipping Operations to Control These Costs.

There are always going to be a small percentage of your packages that either cannot be delivered or have address problems. Do whatever you can to not provide the carrier an incorrect delivery address. Indeed, the address correction charges can be more than the cost of the packages. Also if a package is returned to you no matter what the reason, you have to pay the return shipping charges. 

Worse, charges like address corrections all points to a delivery exception and an unhappy customer. For more details to minimize delivery exceptions, see my article, The Horrific Delivery Exception: Exploit Shipment Data To Eliminate, Make Your Customer Experience Better.

6. Pickup Fees.

Avoid Parcel Pickup Fees for Your Low-Volume Shipping Locations.

USPS does not charge for parcel pickup, but other carriers do. For example, most parcel carriers will charge a weekly pickup fee based on how many times a week they pickup. Also, these fees add up and they are for each shipping location. Ask yourself, “do you need the parcel carrier to pick up daily at all your shipping locations?

7. All Other Fees.

Know Carriers’ Value Added Charges and Accessorial Fees and Avoid Incurring Them.

Unless you have some unique shipping requirements, avoid other value-added services like extra insurance, signature service, etc.

Major Parcel Carrier Shipping Fee Service Guides

Again, recommend you stay knowledgeable of parcel carrier shipping fees. Namely, you can find a listing of these fees in the parcel carrier’s service guide. Specifically, you can usually find these “add-on” shipping fees at the end of the carrier’s service guide where it will describe the charges as either value added fees, surcharges, or accessorial charges. Here are the links for the major U.S. parcel carrier service guides: USPS, UPS, and FedEx. Note, these shipping fees are updated every year so look for carrier announcements usually starting in November and December.

Also for more cost saving tips on your parcel shipping, see Supply Chain Tech Insights, Package Delivery – See How To Stop Surging Costs And Still Make Your Customers Happy.

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