What Are the Residential Delivery Surcharges that Each Carrier Charges and Why

What Are the Residential Delivery Surcharges that Each Carrier Charges and Why

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Residential surcharges and added fees to invoices amount to shippers receiving a higher-than-anticipated bill. Further, carrier margins are on the upswing, and out-of-control rates can easily become a bigger problem by the time each invoice is assessed a residential surcharge, if necessary. Looking at the relatively limited options for carriers and the resulting higher rates passed along to shippers Supply Chain Dive mentions “The lack of competitors delivering parcels in North America (90%+ volume handled only by FedEx, UPS, and US Postal Service) has led to sky-rocketing margins for the carriers, and out-of-control rates for shippers.” Understanding these surcharges, whether it’s a UPS Ground residential surcharge or a weekend delivery surcharge, is critical to understanding total costs. Additionally, both UPS and FedEx residential surcharges can be implemented in tandem with other expenses, such as peak surcharges. For those reasons, it’s important to understand the concept of residential delivery surcharges and their reach. 

Why Carriers Implement Residential Delivery Surcharges

Residential delivery typically has more challenges than commercial delivery, causing the carrier to go to greater lengths in the final mile. Recent announcements of a new FedEx and UPS surcharge have put residential delivery concerns back on the table. Essentially, these surcharges are a way to account for the stop-and-go traffic typical of residential delivery, and they’re likely to continue increasing as capacity runs tight in the coming months. Even more important is the fact that there’s not simply one residential delivery surcharge, and some carriers may actually use different terminology to denote the same thing: such as a FedEx home delivery residential surcharge versus understanding what is the UPS residential surcharge. Slight changes in the nomenclature have little bearing on the actual expense, but without knowing those realities, it’s easy to lose track of your actual shipping expenses. 

Types of Residential Delivery Surcharges

With a UPS residential surcharge, it’s difficult to pin down an exact cost. The FedEx ground residential surcharge may differ from a package subject to the FedEx home delivery residential surcharge in a specific zone or ZIPcode. Yet, the costs keep rising and growing more complex. This is because surcharges may stack, and a single delivery could have several distinct surcharges attached. For reference, here are the top types of residential surcharges that may all be combined for any given shipment.

Oversize Package Surcharges

This applies to shipments that exceed the weight or size limit for private carriers, resulting in a substantial increase in costs for shippers. The weight threshold will depend on the delivery network the shipper chooses. If a package goes overweight and exceeds the proper size thresholds, shippers may face multiple surcharges.

Weekend Delivery Surcharges

Saturday deliveries can add excessive expense to the shippers’ costs for shipments, including Saturday pickup services. Shipping packages through USPS Priority Mail can help shippers avoid the increased cost of weekend surcharges. USPS does not add a surcharge for Saturday deliveries, allowing shippers to save money on fees and customers to receive packages as expected.

Signature Surcharges

Certain packages, including age-restricted items, may incur a surcharge for obtaining a signature upon delivery. The carrier service will determine the price for this service. Packages that require an adult signature must be signed for by someone 21 or older. In other cases, the package requires the signature of the person whose name is listed on the package (for a direct surcharge) or the signature of anyone in the residence (an indirect surcharge). The type of signature and its requirements affect the surcharge cost.

Address Correction

If an error occurs with a package, this can increase costs for a shipper due to the correction needed for the delivery. For instance, having an incomplete or incorrect address results in the carrier having to seek the proper information. 

Delivery Area Surcharge

A delivery area surcharge occurs when a shipment’s destination resides outside the standard delivery area for the network. 

Declared Value Surcharge

If a package exceeds the carrier’s liability limit, a declared value surcharge applies. Understanding the costs of UPS surcharge and others can help.

Weekly Service Surcharge

This surcharge applies to shippers that regularly schedule pickups with carriers every week. Different carriers will have different surcharges, 

What Shippers Can Do About Surcharges

To avoid residential surcharges from continuously adding costs to invoices, shippers can gain knowledge and track surcharges. Properly understanding the added fees and the purpose carriers have for the costs can help shippers better prepare  for shipments and the alternatives. For shippers facing the uncertainty of increasing residential delivery costs, it’s important to follow these steps. 

  • Track all residential delivery surcharges: Tracking residential surcharges can show shippers which carriers have a higher all-in cost. 
  • Analyze surcharges to understand their rationale: Analyzing and acknowledging the different types of surcharges can allow shippers to know when such fees will occur in the business and possibly how to prevent their added costs.
  • Know what each carrier charges for residential: Knowing the specific surcharge differences across each carrier can help shippers find the right carrier without losing track of total shipping costs. 
  • Track surcharges across all available granularities, including zone, delivery day, and more: Tracking surcharges across multiple granularities helps shippers identify trends in transportation that can be altered to lower expenses, such as leveraging zone skipping or hub injection.
  • Use data to hold carriers accountable for their performance: Tracking data, including the standard processes of data ingestion, cleansing, normalization, anomaly detection and correction, and analyzing helps to create the right KPIs, which further help shippers stay mindful of residential delivery surcharges and avoid unnecessary costs.
  • Audit all invoices to ensure surcharges validity and accuracy: Auditing invoices helps ensure shippers pay the proper amount for surcharges, and using advanced technology powered by auditing companies can provide shippers peace of mind in tracking cost accuracy.

Keep Residential Delivery Surcharges Under Control With Intelligent Audit

Shippers have the opportunity to gain control of invoices and understand the costs residential surcharges add to the bill. With peak season rapidly approaching, shippers can use auditing services more than ever. To learn more about saving costs associated with surcharges, and the benefits of freight auditing, request a consultation with Intelligent Audit today.

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