As each major carrier continues to increase their rates year after year, surcharges are one of the biggest areas shippers see snowball into a major expense. As frustrating as this can be, there are ways to avoid some of the most common surcharges applied by UPS and FedEx so you can save your bottom line.
Five Common Surcharges & How to Avoid Them
Third-Party Billing Surcharge
While the majority of high-volume shipping companies often collect the cost of shipping directly from customers, the few that leave that part of the bill for their carriers to collect are typically hit with the third-party billing surcharge. Both UPS and FedEx charge these fees, which are often a percentage of the total bill: 4.5% for FedEx shipments, and 5% with UPS. Handling the shipping yourself is the easy solution to minimize instances and costs associated with this surcharge.
In a previous article, we analyzed UPS and FedEx’s Address correction fees, including how their rates have increased over the past few years. As expensive as these fees can become, especially when you have a system error that causes them to accumulate, they are–luckily–very easy to avoid or correct. Both of the major parcel carriers typically email upon finding an invalid address and offer the ability to update addresses for individual packages online, so it’s easy to mitigate your costs with this surcharge.
Unlike going into a retail location to ship a single package, high-volume shipping often comes with monthly invoices and billing spaced out over monthly or quarterly intervals. As convenient as this can be for many companies, it can also mean that one employee’s misclick or dropped ball could result in forgotten payments that accrue the late payment fee. Setting up automated payments, a monthly or weekly prepayment plan, or arranging a credit extension are all different methods accessible to most shippers with both of the major carriers.
Additional Handling Surcharges
When UPS announced their GRI, the Additional Handling surcharge, which would increase anywhere from 11.5% to 18.75%, would be one of the biggest areas shippers would see an impact in their budget. FedEx wasn’t far behind them. This surcharge comes into play when a particular package is either over certain dimensions, over a certain weight, or utilizes special packaging in order to keep the perishable or hazardous goods inside safe during transit.
Over Maximum Limits/Oversize Surcharge
When the Additional Handling surcharge is applied to a package or shipment due to its size or weight, you can also expect to see FedEx’s Oversize charge or UPS’s Over Maximum Limits fee. With UPS this charge pops up on invoices when packages weigh over 145 lbs (70 kg) or are over 107 inches (274 cm) in length. With FedEx, the dimension limitations vary during the transit process, so you may not always be hit with this fee; however, if a package is over 95 inches (243 cm) long or has a combined length and width of 130 inches (330cm), the surcharge will be applied.
While not all shippers can avoid this charge because of the nature of their goods, those that can ship their products in multiple boxes can see huge savings by reducing the frequency of this fee. If you expect to ship oversized packages on a regular basis, consider bringing this up when negotiating your shipping agreement to see if your potential carrier may have concessions they can offer to offset this cost.
Avoid Surcharges with a Shipping Logistics Platform
Sometimes, avoiding surcharges isn’t possible because of the goods you’re shipping, but if you’re continuing to see these extra fees accumulate because you don’t have the manpower to dedicate to decreasing your shipping expenses, a shipping logistics platform may be the best option for you. While you could analyze your manifests and invoices line-by-line, an intelligent platform or software could automatically provide data on your surcharge totals, which you could avoid, and other areas you may be owed refunds by your carriers.
At Reveel, we designed our business intelligence and shipping logistics platform using the knowledge of experts in the shipping industry to ensure all your areas for savings are uncovered. Our easy-to-use software will use your unique shipping data to offer personalized recommendations to save you time and money, no matter how carriers change their rates or surcharges in the future. Contact us today to learn more.