How to Lower Delivery Area Surcharges

by | Jan 2, 2020

3 min read


You did it! You made it through the holiday shipping rush. No more feverishly assembling orders to be rushed off so they can make it in time to brighten your customers’ holidays. Now you can relax, right?

Nope — it’s time to get organized for 2020. If your shipping costs got out of control in 2019, you need to rein it in this year. And with ever-rising shipping costs, it’s not going to be easy.

As always, sneaky surcharges are going to be budget-busters if you aren’t careful. One of the toughest to get under control? The dreaded delivery area surcharge.


Delivery area surcharge challenges

This surcharge is an expensive issue because you can’t control where your customer wants their package delivered — whether that’s an apartment in a bustling downtown building or a ranch in the middle of nowhere.

It probably won’t shock you to learn that last-mile delivery accounts for 41% of the cost in the supply chain — and it will only get more costly in 2020. UPS and FedEx now have nearly 25,000 ZIP codes on their delivery area surcharge and extended delivery area surcharge lists after adding about 2,000 codes for the coming year.

Shippers and carriers have tried many methods to cut these costs while maintaining palatable delivery times for rural shoppers. Even academics have given it a try: Texas A&M University studied whether the state could use existing rural transportation services to help far-flung eCommerce customers get their packages faster. (Their conclusion? Yes, if they could drum up enough awareness of the service.)

By and large, there hasn’t been a magic bullet for reducing these costs. But there are a number of ways you can give it a go.


How to combat delivery area surcharges

The best way to avoid these charges is to avoid shipping to these costlier ZIP codes when possible. You can:

  1. Offer customers to ship to one of your locations if you have retail stores.
  2. Encourage shoppers to ship to their workplace, which is more likely to be in a commercial area, allowing you to also avoid residential surcharges.
  3. Make shoppers aware of alternative options like lockers and access points. UPS and FedEx both offer these options. UPS even incentivizes customers to re-direct their packages to a pickup location, making it cheaper for them — and you — to get customers their packages safely and quickly.


Nudge customers in the right direction

So how do you get shoppers to choose these options when it’s so much easier for them to just let a package come to their home? One option: Use microcopy in your checkout process to prod shoppers toward options that are less costly for you.

Microcopy isn’t fine print that tricks, overwhelms or confuses shoppers — it’s just the opposite. It’s short, often witty, bits of copy that reassure and guide the shopper toward completing their purchase.

Try directing shoppers toward preferred shipping options with copy next to them like “Banish porch pirates” or “Protect your package.” A few short words from you can go a long way toward easing a customer’s mind and helping them safely ship their order.


You can’t win them all

Delivery area surcharges will always be a challenge. Ultimately, you need to keep customers happy by shipping them their orders in a timely manner no matter where they want them delivered.

That makes it all the more important to keep close tabs on all the other surcharges that could affect your unique business. Take a look at our General Rate Increase guide for 2020 to find out how to do it.

Topics: Customer Experience, Delivery Area Surcharge