Understanding Shipping Surcharges

All ecommerce businesses are affected by shipping surcharges.Below are examples of common types of surcharge fees and how they may affect your bottom line.

What Are Surcharges?

Often referred to as a “service fee” or “handling charge”, surcharges are additional expenses applied on top of already existing shipping fees. Varying from temporary surcharges – such as holiday surcharges applied during peak shipping periods – to permanent fees that range from fuel surcharges to large package surcharges, there is a wide range of additional expenses that shipper’s need to know about. The question is, however, do you?

To help understand the depth and details of these additional expenses, it’s first important to recognize that all carriers have different surcharges. UPS, for example, has different surcharges than FedEx even if many are similar – and both have complex and often overlooked surcharges incorporated into their shipping contracts. Details such as transit time and pickup locations can all influence potential surcharges, with many shipper’s unaware of these fine-print details. As a result, ecommerce businesses often spend much more on their parcel overhead than they need to – despite opportunities that exist for them to avoid surcharges or potentially save money.

Types of Shipping Surcharges

To help strengthen your shipping efforts, consider what some of the most common surcharges are – as identified by Refund Retriever based on their data and reporting – and how they may impact your business.

1. Residential surcharges.

Residential Surcharges are applied to deliveries made to home addresses and include businesses that operate out of a home. For each residential delivery, an additional charge per shipment may apply.

2. Delivery area surcharges.

Delivery Area Surcharges are applied to addresses that are deemed as rural or outside of a specific range from a FedEx or UPS hub. Essentially, this surcharge is applied for the extended distance it requires for the delivery to be made.

3. Additional handling surcharges.

Additional Handling Surcharges are flat rate fees applied to packages over 48 inches long.

4. Direct signature surcharge.

Direct Signature Surcharge Is a fee applied for the necessary task of receiving a signature upon delivery of a package.

5. Declared value surcharges.

Declared Value Surcharges are offered to give shippers more peace of mind on packages worth $100 or more. This surcharge allows shippers to identify the value of the package in case something should happen – whether it be lost, damaged or stolen – and helps protect their shipping investment.

6. OS extra surcharge.

OS Extra Surcharge defines “other shipping” surcharges and varies widely from freight fees to international fees and more. The best way to monitor potential OS surcharges – and all surcharges – is to have an auditing system in place that alerts you to any fees inaccurately charged to your account.

7. Indirect signature surcharges.

Indirect Signature Surcharges require signature although they do not require the signature of the person whom the package is being sent to. This is typically less expensive than direct and adult signature requirements and rates.

8. Weekly service surcharges.

Weekly Service Surcharges are surcharges that vary every two weeks based on the fluctuation of fuel charges and adjust according to the fuel rates of each two weeks prior.

9. Print return label surcharges.

Print Return Label Surcharges are applied only if shippers used a return label provided to them.

10. Adult signature required surcharge.

Adult Signature Required Surcharge is a fee added to deliveries that will only allow for adults 21 and older to sign for the package/s being delivered.

Things To Remember About Shipping Surcharges

While the above surcharges may not influence all of your shipments, when they do… they add up. Unfortunately, however, there is no clear way to quantify and segregate the surcharges with various carriers – however through reports generated from parcel auditing companies such as Refund Retriever, shippers can gain more clarity to their shipping overhead while also gaining more confidence in their shipping efforts.

All ecommerce businesses are affected by shipping surcharges.Below are examples of common types of surcharge fees and how they may affect your bottom line.

Conclusion

Finally, as you aim to understand surcharges also aim to gain full transparency in your shipping expenses, as well. The best way to do this is to incorporate a parcel auditing strategy into your shipment monitoring – allowing you to easily capture parcel errors, inaccurate shipping expenses made and other key data details that can ultimately help you save money on your parcel overhead.

Our Expert

Brian Gibbs, President of Refund Retriever. Gibbs founded Refund Retriever in 2006 while running his first eBay-based business and seeing the shortcomings of other shipment auditing companies. Refund Retriever's primary focus is FedEx and UPS parcel invoice auditing. After graduating from Texas A&M University in 2001, he then graduated from the University of Houston in 2004 with a JD and MBA. Gibbs has been featured in Forbes, Entrepreneur and other publications discussing parcel auditing, shipping, ecommerce and more. Learn more about Refund Retriever.