Did you know that 21.2% of total retail sales are expected to occur online in 2024? Increased demand leads to higher shipping expenses, influenced by factors like packaging, transportation, and fulfillment. Keeping this in mind, it is essential for merchants to be well aware of shipping surcharges. They should know what a delivery surcharge is, what a location surcharge is, what a carrier surcharge is, and so on. Why? These shipping surcharges impact their bottom-line. Otherwise, they may end up paying more logistics surcharges than what is truly necessary. Now, let’s discuss what shipping or transportation surcharges are in detail.
What is a shipping or freight surcharge?
In addition to the shipping costs involved in transporting products from one place to another, additional fees are charged by a carrier. These are termed shipping or freight surcharges. The additional costs could be related to special handling of products, signature requirements, and so on.
These are the different types of shipping surcharges:
Delivery area surcharges
These are costs incurred when a carrier like UPS or FedEx has to deliver outside its usual delivery range. Certain zones like war zones, and natural disaster areas may be covered under it. The surcharge is usually applied to overseas and cross-border-deliveries.
Remote area surcharges fall under delivery area surcharges. They are additional charges levied when couriers charge for shipments to and fro remote locations. Remote islands, pin codes where freight is usually not transported, and inaccessible/frequently served locations are classified as “remote areas.” The speed of delivery and the area where the package is to be delivered determines the actual cost and they offset the operational costs associated with transporting shipments.
Additional handling surcharges
Surcharges for packages that are over a specific size are counted under this category. These are based on the shipment’s weight and dimensions.
Signature requirement surcharges:
If a signature is required from an individual whose name is on a package, it classifies as a signature requirement surcharge.
Residential surcharges
For deliveries made to a home, these surcharges are levied. The surcharges apply to all types of residential addresses like homes and places carriers consider residential property like farms. In the past three years, major carriers’ residential surcharges have increased by roughly 20%.
Peak season surcharges
When shipping demands are high and the maximum amount of freight is to be transported from one location to another, peak season surcharges are levied. Surcharges are usually at a flat rate per package, and occasions like Thanksgiving, New Year, and Christmas are when they are the most common. These surcharges are only applicable to imports from Asia.
Address correction surcharges
When a shipment has an incorrect or incomplete address, these surcharges are levied. A missing ZIP code, street number, or house number are some reasons why the address name may be incorrect and surcharges may come into the picture.
Declared value surcharges
These surcharges are levied when the package value exceeds the liability limits. The declared value is the amount that a shipper states a shipment is worth.
Print return label surcharges
These costs are added to the cost of shipping a return parcel, in the form of parcel surcharges.
OS Extra surcharges
These cover the surcharges associated with international freight, shipping, and other special circumstances.
Fuel surcharges
They cover fuel costs as well as fluctuations associated with the cost of fuel. Several factors influence the surcharge, like the distance to a destination and the selected package size.
Weekend surcharges
These refer to surcharges incurred for bookings that take place on a Friday, Saturday, or Sunday. Did you know that Saturday deliveries cost shippers Saturday deliveries cost shippers an additional $13.49 per package and can lead to an increase of $14.95 per package?
Congestion surcharges
These surcharges are additional charges incurred to the base rate ocean freight costs. They are incurred when ship lines are at congested ports. The ultimate objective of the surcharges is to encourage users to leverage a service when it is in lower demand. Strikes, rain, or storms can be some situations where congestion surcharges are incurred.
Hazardous cargo surcharges
These refer to the fees applicable for the administration and handling of regulated dangerous materials or substances. The type of dangerous goods determine the surcharge amount. In accordance with the International Marine Dangerous Goods Code, they apply to products that require on-deck stowage. Lithium batteries, battery-powered devices, oxygen cylinders, and flammable materials are examples.
The US Department Of Transportation also requires one to be trained and certified before they can ship hazardous materials.
Weekly service surcharges
These are applicable for shippers who have regularly scheduled pickups from couriers. These surcharges change according to fuel costs. While private carriers may revise service surcharges annually or biannually, fuel surcharges are increased less often.
The benefit of this service is that the time for a package pickup can be scheduled. Hence, there is no need to wait in line to drop off packages.
Delivery reattempt surcharges
When the delivery of a package is unsuccessful, delivery reattempt surcharges are levied. There can be multiple reasons for these charges, like the equipment not being available to unload a shipment, the delivery location being closed, no one being available to receive a shipment, or the wrong address being present on a bill of loading.
How Do Surcharges Work?
Private carriers use surcharge tools to determine surcharges based on product volumes. Below, we’ve described shipping surcharges and how they change according to the shipping company.
Common Shipping Surcharges Levied By Carriers
USPS
Oversize package surcharge
Packages that are longer than 22 inches but less than 30 inches will incur a $4 surcharge. Packages that are longer than 30 inches or larger than 2 cubic feet will incur a $15 surcharge. Also, packages that are larger than 2 cubic feet will also incur a $25 fee.
Incorrect dimensions surcharge
Entering incorrect dimension details incurs a surcharge of $1.50.
Other charges USPS levies include:
-The non-machinable mailpiece fee imposed on mail that has to be sorted out of the standard and automated mail process
-Fuel surcharges, charged as a percentage of the base shipping rate
FedEx
Address correction surcharge
The charge is $21 per correction.
Oversize surcharge
The cost is $135 per package for Zone 2, $145 per package for Zones 3 and 4, $160 per package for Zones 5 and 6, and $170 per package for Zone 7. It is applicable to shipments more than 243 cm long or 330 cm in combined length and width.
Delivery reattempt surcharge
The greater amount of $80.50 per shipment or $0.088 per lb is levied.
Additional handling surcharge
The cost is $29 per package for Zone 2, $31.50 for Zones 3 & 4, $33.50 for Zones 5 and 6, and $36 per package for Zone 7.
Declared value surcharge
The cost is $3.90 for shipments valued between $100.01 and $300, and $1.30 per $100 of declared value for shipments valued in excess of $300.
Other surcharges levied by FedEx include:
-Third-party billing surcharges
-International fuel surcharges
-Delivery/pick up charges applicable to less accessible areas
-Hazardous material surcharges for items like lithium batteries, and radioactive materials
UPS
Declared value surcharge
A minimum of $3.20 plus $1.07 for every additional $100.00 above $300.00 or for each fraction of the total declared value.
International Air Freight Regulatory Fee
$0.15 per kilogram of billable weight per shipment, with a minimum charge of $10 per shipment.
Demand surcharge
The UPS Worldwide Express Plus surcharge is $0.10 per lb, UPS Worldwide Saver surcharge is $0.10 per lb, and UPS Worldwide Express Freight surchargeis $0.35 per lb.
Other UPS surcharges include:
-Fuel surcharges based on US Gulf Coast kerosene-type fuel prices
-The UPS Carbon Fee, applicable to shippers who want to reduce carbon emissions for their shipped products
7 ways to avoid shipping surcharges
While you cannot avoid specific costs like fuel or peak season surcharges, you can avoid the others! Read on to know how.
1. Consider longer transit times
When shipments have extended transit times, there is a lower risk of containers being rolled or delayed during peak seasons. High demand and shorter transit times increase the likelihood of containers getting held up, leading to additional surcharges. Choosing longer transit times provides a buffer, minimizing the impact of peak season surcharges on your shipping costs.
2. Automate your shipping processes
Automating shipping processes can significantly mitigate shipping surcharges by enhancing efficiency and reducing the likelihood of errors. Automated systems streamline tasks such as documentation, scheduling, and tracking, minimizing delays and preventing common issues that lead to surcharges, such as missed addresses on packages or inaccurate package weight information. Real-time data provided by automation allows for better decision-making, optimizing routes and transit times. By eliminating manual errors and delays, automated shipping processes contribute to a smoother operation, helping you cut down on unnecessary surcharges.
3. Know products and their requirements
To avoid shipping surcharges, a crucial step is having a thorough understanding of your products and their specific requirements. This involves considering factors such as weight and size, ensuring compliance with each courier’s individual specifications. Different couriers have varying weight limits for packages. Pay attention to dimensions, volumetric weight, and girth measurement is essential, as surcharges may apply in these areas. Ensure your packaging can smoothly fit traverse sorting center processing belts to prevent non-conveyable surcharges.
4. Optimize international shipping routes
Knowledge of various ways to transport products from one location to another can help prevent transportation surcharges. For instance, you may decide to send an item to another state by a truck. You can decide to further send it to another location through a truck. Moreover, you can avoid international shipping during on-peak seasons.
5. Choose Prepaid Shipping
Since prepaid shipping helps lock the shipping costs upfront, costs do not change according to fluctuating fuel prices, carrier rate changes. Moreover, merchants can also negotiate volume-based discounts with carriers, which may lead to lower surcharge costs.
6.Opt For Poly Mailers
Did you know that the market for polyethylene mailers is expected to grow at a rate of 5% per year from 2021 to 2028 and reach $1.7 billion? Use poly mailers to reduce poly mailers as they are made of light-weight material.
7. Smartly Plan Package Returns
If you have to return any packages, do so strategically! Make sure you’re not returning packages on a weekend, or else you may end up paying extra money. You can consolidate all items to be returned to avoid paying extra carrier surcharges on a piece rate basis.
Summing it up
Now, you have knowledge about what a shipping or freight surcharge means in the first place, and the types of shipping surcharges. As a next step, it’s critical to avoid them. Review your shipping surcharges on an annual or biannual basis to keep track of your costs. Consider negotiating contracts with shipping service providers, and remember that while you can reduce logistics surcharges, you can’t get rid of them completely. Happy shipping!