How Much Do You Know About Surcharges?

by | Jun 15, 2020 | Videos

 

We haven’t found a shipper yet who likes surcharges, but they’re a frustrating fact of shipping life, unfortunately. The best you can do is make yourself aware of the surcharges that are most likely to affect your business and seek out ways to lower them. 

Surcharges are carriers’ way of passing their costs on to you. When they have to do extra work to get your packages where they need to go, you pay the price — literally. 

With 1.3 trillion data points about shippers and their costs in our system, we know a thing or two about surcharges and which ones affect shippers the most. Surcharges can get overwhelming in a hurry, so we put together some quick info to help sort it out.

Check out our video above or read on!

 

5 budget-busting surcharges to watch out for

  1. Address Correction: This surcharge occurs any time the carrier has to fix the address on a package for you. Even slight differences from the actual address can incur the charge. Both UPS and FedEx charge $17 to $119 to correct the address for you, depending on the shipment type.
  2. Residential Delivery: This surcharge kicks in when a delivery is going to a location that carriers have designated as residential. With UPS, you’ll pay $4.10 to $4.70 for ground or air, or $140 for freight shipments. With FedEx, you’ll be charged $4 to $4.65 for ground or air and $150 for freight.
  3. Delivery Area and Extended Area: The Delivery Area Surcharge (DAS) and Extended Area Surcharge (EAS) both occur when your shipment is being delivered to a remote area, as defined by a set of more than 25,000 ZIP codes. For DAS, UPS and FedEx add $2.95 to $4.40 to your shipment. For EAS, you’ll pay $3.45 to $5.40 with both carriers, or even $27 extra for a shipment on a pallet.
  4. Additional Handling: This surcharge is for packages that need extra attention from the carrier, based either on their weight or dimensions. Both UPS and FedEx charge $15 for packages that require extra handling based on dimensions and $24 when based on weight. They will charge you based on the larger of the two.
  5. Oversize/Large Package: This surcharge, called Oversize by FedEx and Large Package by UPS, is levied on shipments that exceed certain size limits. For both carriers, that means packages larger than 96 inches in length or 130 inches in length and girth (two times the width plus two times the height of the package).

 

How surcharges affect your shipping costs

Surcharges can account for 30 percent of your shipping invoices, making packages cost far more than you might have planned.

For instance, thanks to a lower threshold in 2020 for weight-based additional handling surcharges, a 51-pound ground package shipped this year costs nearly $26 more than last year. If you plan your shipping spend only around the General Rate Increase (4.9% for 2020), you might find your budget out of whack because of the increases in individual surcharges. It’s crucial to stay up to date on all surcharges — especially the ones most likely to affect your shipping profile — so that you aren’t shocked when your invoices roll in.

 

How you can stay ahead of surcharges

Beating surcharges starts with knowing which ones are affecting your business the most.

  • Dig deep into your own data. Understanding your own shipping profile as well as your carrier does is no easy task, but it’s important. It puts you in a better position to negotiate your carrier contract and to make decisions about your shipping operations.
  • Revamp your operations. Once you’ve got a handle on your data, you can review your product mix and placement, your routing guidelines and distribution network, and your packaging to get everything ship-shape.
  • Let technology do the work. Analyzing your own data and looking for surcharges and ways to improve is a full-time job in itself — unless you have help. Look for solutions that sort and analyze your data and then deliver you actionable reports you can use to make changes that matter.

 

Get the full scoop on surcharges

For more on these shipping costs and actionable tips on getting them under control, check out our eBook, 5 Budget-Busting Surcharges & How to Lower Them. It’s packed with the info you need to know to avoid surcharge surprises.

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