Avoid Shipping Surcharge: 7 Effective Strategies
With the surge in ecommerce shipping, businesses are facing an increasing number of shipping surcharge is imposed by carriers like UPS, FedEx, DHL, and USPS.
These shipping surcharges are additional fees that apply to shipments based on various factors, including fuel costs, package dimensions, residential deliveries, and peak-season demand.
Whether you’re an ecommerce seller, a manufacturer, or a logistics provider, carrier-imposed surcharges can significantly impact your profit margins and operational efficiency.
What Is Shipping Surcharge?
A shipping surcharge is an additional fee applied by shipping carriers to cover the extra costs of transporting a package.
Unlike base shipping rates, which are determined by weight, dimensions, and distance, surcharges compensate carriers for specific delivery challenges, such as fuel fluctuations, oversized packages, remote delivery areas, or peak-season congestion.
Shipping surcharges vary between carriers and may be applied on a per-package or per-shipment basis. While they are sometimes unavoidable, understanding the different types of surcharges can help businesses proactively manage shipping costs.
Why Do Shipping Companies Impose Shipping Surcharge?
Shipping carriers implement surcharges to cover operational costs and ensure profitability in scenarios where standard shipping rates do not account for additional expenses.
To compensate for fuel price changes, carriers apply a definition of fuel surcharge based on market rates.
Residential, rural, or remote locations increase fuel consumption and transit time, leading to delivery area surcharge.
Oversized, overweight, and fragile shipments require manual handling, resulting in additional handling surcharges.
High-volume periods, such as holidays and sales events, drive demand surcharge to compensate for increased carrier workload. If an address is incorrect, an address correction surcharge is added to rectify the mistake.
9 Most Prevailing Shipping Surcharge
Fuel Surcharge
The definition of fuel surcharge refers to a variable fee added to compensate for fluctuating fuel prices.
Carriers adjust this surcharge weekly or monthly based on current fuel rates. Freight surcharge fee meaning also applies to air and ocean freight, increasing shipping costs for global shippers.
Residential Delivery Surcharges
A residential delivery surcharge applies when shipping to a home address instead of a commercial location.
Carriers charge extra because residential areas may have limited access, higher delivery times, or require additional fuel consumption.
Delivery Area Surcharges
A delivery area surcharge is applied to shipments sent to remote, rural, or difficult-to-reach locations.
This surcharge compensates for longer transit times and additional fuel usage. Businesses shipping frequently to rural areas should negotiate lower rates with carriers.
Additional Handling Surcharges
Carriers apply additional handling surcharges to packages that exceed specific weight, size, or shape limitations. These surcharges apply to items that require manual sorting, heavy lifting, or special handling equipment.
Oversize and Overweight Package Surcharges
Large packages are subject to oversize and overweight package surcharges, which vary depending on the carrier.
FedEx, Forceget, and UPS impose a large package charge with peak surcharge, increasing costs during holiday seasons.
Address Correction Surcharge
If a package is labeled with an incorrect or incomplete address, carriers charge an address correction surcharge to update the details and reroute the shipment. This surcharge is avoidable by double-checking addresses before shipping.
Weekend and Specific Day Surcharges
Delivering on weekends, holidays, or specific scheduled days may lead to weekend and specific day surcharges.
Businesses should plan shipments strategically to avoid unnecessary weekend delivery fees.
Signature Requirement Surcharges
For high-value or sensitive shipments, carriers require signature upon delivery, leading to a signature requirement surcharge.
This fee ensures that the package is received by an authorized individual.
Peak Season and Holiday Surcharges
During peak shopping periods, such as Black Friday, Cyber Monday, and Christmas, carriers impose peak season and holiday surcharges to compensate for increased demand and operational strain.
Industries Most Affected by Shipping Surcharges
Shipping surcharges affect various industries differently, depending on factors such as product size, shipping volume, destination, and urgency.
Some businesses are impacted more than others due to their reliance on specialized shipping methods, large or heavy shipments, and expedited delivery needs.
1. Ecommerce & Retail
Ecommerce businesses frequently face peak season surcharges, residential delivery surcharges, and fuel fees due to the high volume of orders shipped directly to consumers.
Companies selling through Amazon, Shopify, eBay, and Walmart often need multi-carrier shipping solutions to keep costs manageable.
2. Automotive & Industrial Suppliers
Automotive and industrial equipment manufacturers deal with oversized and overweight package surcharges.
Large, heavy parts require special handling, and many shipments fall into the large package charge with peak surcharge category. These industries must find cost-effective freight solutions to reduce expenses.
3. Pharmaceuticals & Healthcare
Medical supply companies rely on fast, temperature-controlled shipping for delivering sensitive products.
They often face signature requirement surcharges, weekend delivery surcharges, and special handling fees to ensure compliance with healthcare regulations.
4. Electronics & Technology
Expensive electronics and gadgets require secure handling, tracking, and delivery confirmation.
These shipments often come with signature requirement surcharges, address correction fees, and peak season price increases due to high consumer demand, especially during shopping events like Black Friday and Cyber Monday.
5. Fashion & Luxury Goods
Luxury brands need expedited shipping and secure handling to protect high-value items.
They often experience higher shipping surcharges fees due to signature requirements, special handling surcharges, and residential delivery fees when customers order directly from their website.
6. Food & Beverage Industry
Perishable goods require express delivery, often with temperature control. This leads to higher freight fees meaning, weekend delivery surcharges, and additional handling fees. Businesses shipping frozen foods, organic products, or meal kits need specialized logistics solutions to minimize costs.
How Shipping Surcharge Is Calculated by Carriers
Shipping carriers determine surcharge fees based on package weight, dimensions, destination, and delivery urgency.
The total cost of shipping depends on several key factors, and businesses must understand how surcharges are applied to avoid unnecessary expenses.
The definition of fuel surcharge refers to the additional fee imposed by carriers to offset fluctuating fuel prices. These charges are calculated based on the current fuel index, with rates updated weekly or monthly.
Shipping carriers use dimensional weight (DIM weight) pricing to determine costs. If a package is large but lightweight, the carrier applies dimensional weight pricing instead of actual weight, leading to higher charges.
Formula for Dimensional Weight Calculation:
Dimensional Weight = (Length x Width x Height) ÷ DIM Factor
For example, UPS, Forceget, FedEx, and DHL each have different DIM factors, meaning shipping costs vary across carriers for the same package size.
Carriers divide delivery areas into zones based on distance from the shipment’s origin. The farther the delivery location, the higher the delivery area surcharges.
Packages that exceed carrier size restrictions are charged additional handling fees or oversized package surcharges. These fees apply to:
- Packages weighing over 50 lbs.
- Shipments exceeding 48 inches in length.
- Items that require manual sorting.
Mistyped addresses or missing unit numbers lead to address correction surcharges. If a delivery attempt fails due to an incorrect or incomplete address, additional charges apply to correct the issue and reattempt delivery.
During holiday seasons, carriers impose peak season and holiday surcharges to compensate for higher shipping volumes and increased operational strain.
7 Effective Strategies to Avoid or Lessen Shipping Surcharge
Shipping surcharges can significantly impact business profitability. Companies can take proactive steps to minimize or eliminate unnecessary surcharge fees.
1. One of the best ways to avoid shipping surcharges is to optimize packaging size and weight. Since carriers use dimensional weight pricing, businesses should use smaller, more compact packaging to lower costs, reduce empty space within boxes by using custom-fitted packaging, and avoid using unnecessarily large boxes for lightweight products.
2. For high-volume shippers, negotiating discounted rates with carriers is an effective way to offset shipping surcharge costs. Many carriers offer volume-based discounts or customized pricing agreements based on shipping volume and frequency.
3. Address correction surcharges are avoidable by using address verification software before shipping. Businesses should double-check shipping details before printing labels, use address validation tools to prevent errors, and ensure customer-provided addresses are complete and formatted correctly.
4. Peak season shipping surcharge meaning are the highest during Q4. To minimize costs, ship orders early to avoid last-minute rush fees, offer pre-holiday promotions to encourage early purchases, and consider alternative carriers with lower peak-season pricing.
5. Using third-party logistic (3PL) providers like Forceget can help businesses avoid excessive carrier-imposed surcharges. Benefits include warehousing and distribution centers closer to customers, reducing delivery area surcharges, discounted bulk shipping rates to minimize freight surcharges fees, and more flexible carrier options to avoid unnecessary surcharges.
6. Customers often choose expedited shipping due to urgency. Businesses can encourage customers to select standard shipping by offering free shipping incentives for non-urgent orders, loyalty program rewards for standard shipping selections, and order bundling discounts to reduce per-package costs.