Demystifying Shipping Surcharges: A Deep Dive into Extra Fees You May Encounter with FedEx, UPS, and USPS
Updated September 25th, 2023.
This installment is part 4 of our ongoing series of articles for US-focused eCommerce and physical product brands. Our goal in this series is to help you become proficient in everything related to shipping via small parcel carriers like FedEx, UPS, and USPS in the United States.
Previous installments in this series include:
Beyond basic shipping costs, carriers often charge additional fees and surcharges that can impact your overall shipping expenses.
These charges can seem cryptic at first, but understanding them can help you accurately anticipate costs and make informed decisions about your shipping options. This guide will provide nuanced detail about ten common surcharges you may encounter when shipping with FedEx, UPS, and USPS.
For more detail on specific surcharge amounts, reference this 6 page FedEx guide which shows each surcharge and how it increased from 2022 to 2023. For simplicity, we’ll reference FedEx’s surcharges throughout this article but note that UPS charges nearly identical fees as well.
1. Address Correction Fee
Both FedEx and UPS charge an Address Correction Fee when they must update an address in order to successfully deliver a package. This fee reflects the extra resources required to amend delivery details and reroute the package. The USPS does not charge this fee as they generally return packages with incorrect addresses to the sender.
Current FedEx Charge: $21 for an address correction 2023! Ouch!!!
2. Additional Handling Surcharge
All three carriers—FedEx, UPS, and USPS—impose an Additional Handling Surcharge for packages that require special handling due to their size, weight, or packaging. The specific triggers for this surcharge vary by carrier, but they typically involve oversized or unusually shaped packages.
Current FedEx Charge: $18.50 - $36, depending on shipment billable weight and destination zone.
FedEx and UPS Additional Handling Surcharges: A Detailed Breakdown
When it comes to the logistics of shipping, it's important to understand the nuances of how carriers like FedEx and UPS calculate their fees. One often overlooked but crucial aspect of these costs is the Additional Handling Surcharge, a fee applied to packages that require extra handling due to their weight, dimensions, or packaging.
FedEx Additional Handling Surcharge
FedEx determines the Additional Handling Surcharge based on three factors: weight, dimension, and packaging. In 2023, the Additional Handling Surcharge rates for domestic express and ground services are zoned-based, meaning the cost varies depending on the shipping zone. Here's how FedEx calculates the Additional Handling Surcharge:
Weight: If the actual weight of a package is greater than 50 pounds for U.S. Express & Ground Services (or 70 pounds for International Express & Ground Services), an additional fee is levied. The charges for 2023 vary from $29.00 (Zone 2) to $36.00 (Zone 7+).
Dimensions: Additional charges apply if a package's longest side exceeds 48 inches, or if it measures more than 30 inches along the second-longest side, or if the package is greater than 105 inches in length and girth (calculated as length + 2x(height) + 2x(width)). The 2023 charges for such packages range from $18.50 (Zone 2) to $25.00 (Zone 7+).
Packaging: Non-standard packaging can also incur additional fees. This includes packages not fully encased in an outer shipping container, encased in a container not made of cardboard, covered in shrink or stretch wrap, cylindrical packages, packages bound with metal, plastic, or cloth banding, or packages with wheels, casters, handles, or straps. Charges for non-standard packaging in 2023 range from $16.50 (Zone 2) to $21.00 (Zone 7+).
Note that from January 16, 2023, FedEx applies a Peak Additional Handling Surcharge, adding an extra charge of $3.45 per package during peak times【9†source】.
To avoid these charges, companies can negotiate their contracts with FedEx, possibly achieving fee reductions of 25-75%. They can also seek to alter the definitions of weight and dimension limits that trigger the Additional Handling Surcharge.
UPS Additional Handling Surcharge
UPS's approach to calculating the Additional Handling Surcharge is similar to FedEx's, though the specifics differ. Here's an overview of the factors UPS considers:
Weight: Like FedEx, UPS applies an additional fee for packages that exceed a certain weight. As of January 24, 2023, the Additional Handling Surcharge for packages exceeding 70 lbs for UPS Express and Ground services will be $35.00.
Dimensions: UPS applies an Additional Handling Surcharge to packages with dimensions exceeding certain limits, much like FedEx.
Packaging: Packages with non-standard packaging can also incur the Additional Handling Surcharge. The specifics of what UPS considers non-standard packaging were not retrieved.
Just like FedEx, UPS applies a Peak Additional Handling Surcharge, adding an extra fee during peak times.
High volume shippers can employ strategies to avoid these charges, much like with FedEx, including negotiating contract terms with UPS to alter definitions and reduce fees.
Remember, effective shipping spend management is vital for any business, especially in the densely populated e-commerce market. By understanding these surcharges and how to potentially avoid them, you can help your business gain a competitive edge.
Disclaimer: Prices mentioned are as of this writing in May 2023 and are subject to change.
3. Oversize Package Surcharge
For particularly large items, FedEx and UPS impose an Oversize Package Surcharge. This surcharge applies when a package exceeds carrier-defined length or girth limits. The USPS does not specifically charge an Oversize Package Surcharge; instead, they use dimensional weight pricing for larger items.
Current FedEx Charge: $135 - $200, depending on shipment billable weight and destination zone. That cost range is not a typo. This one hurts.
The Oversize Package Surcharge is a separate fee that FedEx and UPS charge for particularly large packages. It is important to note that while a package could be subject to both the Additional Handling Surcharge and the Oversize Package Surcharge, they are distinct fees that are triggered by different package characteristics. The Oversize Package Surcharge specifically applies when the length plus girth [(2 x width) + (2 x height)] of a package exceeds 130 inches, or when the length of a package exceeds 96 inches.
Now, let's elaborate on how the Oversize Package Surcharge is calculated:
The calculation involves measuring the package's size in terms of length and girth. If the length plus girth [(2 x width) + (2 x height)] exceeds 130 inches, or if the length exceeds 96 inches, the package is considered oversize and will be subject to the Oversize Package Surcharge.
The exact cost of the Oversize Package Surcharge can vary based on several factors, including the destination of the package and the specific service being used. However, as of this writing, FedEx charges a minimum of $90 for the Oversize Package Surcharge for most domestic shipments. It never hurts to check the FedEx rate and service guide for the latest information, especially when it comes to annual updates to surcharges.
Let's consider a real-world example: shipping a large piece of furniture, like a couch.
Let's say the couch is packed in a box with the following dimensions:
- Length: 96 inches
- Width: 40 inches
- Height: 36 inches
To check if this package qualifies for the Oversize Package Surcharge, we need to calculate the length plus girth (where girth = 2 x width + 2 x height).
Using the given dimensions, we calculate:
Length + Girth = Length + (2 x Width) + (2 x Height)
= 96 inches + (2 x 40 inches) + (2 x 36 inches)
= 96 inches + 80 inches + 72 inches
= 248 inches
According to FedEx and UPS guidelines, a package is considered "oversize" if its length plus girth exceeds 130 inches, or its length exceeds 96 inches. In our example, the length plus girth (248 inches) far exceeds the limit, so this package would indeed be subject to the Oversize Package Surcharge.
As of the latest data available, FedEx would charge a minimum of $90 as an Oversize Package Surcharge for this shipment. Remember to confirm the current rates directly with FedEx, as they can change over time.
This example illustrates the importance of understanding the impact of package size on shipping costs. When shipping large items, consider exploring different packaging or freight options to potentially save on surcharges like this one.
Understanding these nuances between different types of surcharges can help you package your products more efficiently, potentially avoiding these extra costs. Always remember that efficient packaging not only helps save on shipping costs but also contributes to a more sustainable shipping process.
4. Residential Delivery Surcharge
For eCommerce and similar shippers, the Residential Surcharge is the most common and painful of all surcharges because it applies to nearly every shipment.
In particular, this fee applies to shipments delivered to home or private residence, including locations where a business is operated from a home. The Residential Surcharge takes into account the additional costs associated with residential deliveries, which (supposedly) tend to be more time-consuming and costlier due to factors such as less dense delivery routes and fewer packages per stop compared to commercial deliveries. The USPS does not impose a Residential Delivery Surcharge.
While both FedEx and UPS charge this surcharge, their conditions and charges might differ slightly, and they're subject to change.
FedEx Residential Surcharge
FedEx applies a Residential Delivery Charge to U.S. domestic and international package services. The charge applies to all FedEx Ground and FedEx Home Delivery shipments to a home or private residence. This includes deliveries to locations where a business is operated from the home.
A workaround for FedEx’s residential surcharge with Residential Delivery shipments, most often via FedEx Home Delivery, is to consider using FedEx Ground Economy (formerly FedEx SmartPost). Instead of a $5+ residential surcharge, Ground Economy typically charges a ~$1 “delivery fee" to both residential and commercial addresses. Ground Economy is typically a good option for lighter / smaller parcels (i.e. under 10 pounds), but can be used for larger shipments as well if rates are negotiated with FedEx accordingly.
Also, remember, everything is negotiable, including the Home Delivery / Ground Residential Surcharge and the Ground Economy Delivery Fee.
UPS Residential Surcharge
UPS similarly applies a Residential Surcharge to shipments that are delivered to a home or private residence. This includes a location where a company operates out of a home. This surcharge applies to domestic and international shipments for UPS Ground, UPS Hundredweight Service, UPS Standard, and UPS Air Services.
Just like FedEx, the exact cost of the Residential Surcharge with UPS can depend on the type of service used.
How to Manage Residential Surcharges
There are a few strategies businesses can use to manage and potentially mitigate the impact of Residential Surcharges on their shipping costs.
One of the most effective strategies is to validate and confirm addresses before shipping. Many shipping software solutions offer address validation services, which can identify whether an address is residential or commercial. This can help you accurately calculate shipping costs upfront, avoid unexpected surcharges, and charge shipping & handling to your customers accordingly.
Another strategy is to consider the overall balance of residential vs. commercial deliveries your business makes. If a significant portion of your deliveries are residential, it may be worth discussing with FedEx or UPS about the possibility of getting a discounted rate on the Residential Surcharge. This would depend on your volume and your relationship with the carrier. Again, looking at alternatives such as FedEx Ground Economy (~$1 delivery fee) or UPS SurePost (no residential surcharge) can also help reduce costs in some scenarios.
Understanding the Residential Surcharge and when it's assessed is crucial for accurately estimating shipping costs and choosing the most cost-effective and efficient shipping options for your business. Always consider this surcharge when calculating your shipping costs, especially if your business frequently ships to residential addresses.
As one last point, especially for lighter weight shipments, don’t forget to consider USPS as a viable alternative to avoid residential surcharges from FedEx and UPS. USPS Priority Mail and First Class Parcel Mail do not carry residential surcharges of any kind.
5. Fuel Surcharge
FedEx and UPS apply a Fuel Surcharge to account for variations in fuel prices. This surcharge is variable and is adjusted on a weekly basis in response to changes in the price of fuel. The USPS does not charge a Fuel Surcharge.
More specifically, FedEx and UPS calculate their Fuel Surcharge based on a percentage of the base shipping rate, and this percentage fluctuates weekly in response to changes in the U.S. Gulf Coast (USGC) spot price for a gallon of kerosene-type jet fuel.
You can follow actual FedEx fuel surcharges on this page. Similarly, UPS’ fuel surcharges are located here.
If you commonly ship with either carrier, these fuel surcharge pages are worth bookmarking and checking every several weeks to understand how fluctuations in the fuel surcharge will impact your shipping expenses. Through 2022 and 2023, we saw swings in fuel surcharges that impacted overall shipping costs by as much as 10% in just a few months. Check often to ensure you are not caught off guard.
6. Delivery Area Surcharges
Both FedEx and UPS charge a Delivery Area Surcharge (DAS) for deliveries to certain remote or less accessible ZIP codes within the United States. The USPS does not apply a DAS.
Current FedEx Charge: $3.70 - $12.00, depending on service level and destination. The most common DAS and Extended DAS (EDAS) surcharges we see range from $5.30 - $7.15 on residential deliveries.
FedEx & UPS Delivery Area Surcharge Explained
The FedEx and UPS Delivery Area Surcharge (DAS) is an additional fee assessed by the carrier on shipments delivered to select ZIP codes within the United States. These ZIP codes are typically reflecting areas that are less accessible or more costly to service (as defined by the carrier, unfortunately).
The DAS applies to both expedited and ground shipments, including residential and commercial deliveries. The specific fee associated with the DAS depends on the nature of the destination (residential or commercial) and its designation (Remote or Extended).
In the case of residential deliveries:
- For a destination designated as "Extended," FedEx applies a DAS per package to all FedEx Express and FedEx Ground shipments.
- For a destination designated as "Remote," FedEx applies a higher DAS per package to all FedEx Express and FedEx Ground shipments.
Commercial deliveries to "Extended" and "Remote" areas also attract a DAS, although the fees are typically lower than their residential counterparts.
As of January 2023, FedEx implemented changes to the DAS for certain ZIP codes in the contiguous U.S. designated as "Remote." For these areas, a DAS of $13.25 per package is applied to domestic package shipments. Again, everything is negotiable with the carriers, or you can avoid some of these charges by working with a 3PL like Rush Order.
The list of ZIP codes subject to FedEx's DAS is subject to change and is updated regularly by FedEx. For the most accurate and up-to-date information, FedEx provides a downloadable PDF of the ZIP codes subject to the DAS on its website.
Here is the FedEx page where the list of applicable ZIP codes can be viewed or downloaded. Unfortunately, the list of DAS-applicable zip codes is quite long and will likely apply to lots of your shipments. In a recent study, Rush Order found that DAS was assessed on nearly 15% of e-commerce shipments and EDAS was assessed on 6% of shipments. If you’re adding several dollars to each shipment 21% or more of the time, this needs to be included in calculations of your unit economics and resulting margins.
7. “Return Label” and “Print Return Label” Surcharges
In today’s world of online shopping, returns are more prevalent than ever before. It's important to understand the intricacies of return shipping, particularly the associated costs like the Return Label Surcharge and Print Return Label Surcharge.
What is the Return Label Fee?
The Return Label Fee is imposed by FedEx and UPS for the creation of a return label. When you generate a return shipping label for your customer to send back an item, this surcharge is applied. This often surprises eCommerce shippers who were otherwise unaware of this surcharge’s existence.
It’s critical to understand that this surcharge isn't part of the standard shipping cost—it's an additional fee. It's levied on top of the base rate and other potential fees, such as fuel surcharges.
How Much Does the Return Label Cost?
The cost of the Return Label Fee varies between carriers and can change over time. As of this writing in 2023, FedEx charges $1.05 for every return label emailed or printed. The UPS fee is typically very similar.
An Important Negotiation Point
One of the key aspects of optimizing your shipping costs is negotiating with your carrier, and the Return Label Fee can be a significant negotiation point. Given the rise of e-commerce and the accompanying increase in returns, the cost of return labels can add up quickly.
It's worth discussing with your FedEx or UPS account manager the possibility of completely waiving or at least reducing this fee. This negotiation can be particularly effective if your business has a high volume of returns or if you are considering offering free returns to your customers.
Your negotiation strength could be bolstered by your total shipping volume (including outgoing packages and returns), your historical relationship with the carrier, and your willingness to commit to a long-term contract. Each carrier negotiation is unique and will depend on your specific business characteristics and the carrier’s policies. Of course, leveraging a 3PL’s shipping rates is another option. For example, Rush Order’s clients benefit from no Return Label Fees whatsoever.
Remember, return shipping is a crucial part of the customer experience. A smooth and easy return process can lead to higher customer satisfaction, repeat business, and a better reputation for your company. So, while it's essential to manage costs, also consider the value of offering a hassle-free return process to your customers.
8. Signature Required Surcharge
All three carriers—FedEx, UPS, and USPS—offer options for delivery confirmation requiring a signature. Different levels of this service are available (e.g., adult signature, direct signature, etc.), each coming with its own surcharge.
Current FedEx Charge: $6.35 - $7.65, depending on service level. This fee, again, is negotiable and may not be as important to require for your shipments as you might think. Keep in mind that signature requirements often prevent “porch theft”, but they also often result in returned shipments when customers are not home to sign.
9. Peak Surcharge
FedEx and UPS may apply a Peak Surcharge during exceptionally busy periods, typically around the holiday season, to account for increased operating costs.
Understanding Peak Season Surcharges
Peak season surcharges are additional fees that major carriers like FedEx and UPS often impose during their busiest times of the year, typically around the holiday season. These charges are designed to offset the increased operational costs associated with the surge in volume during these periods.
FedEx Peak Season Surcharges
FedEx usually announces its peak season surcharges a few months before the holiday season. The surcharges typically apply to shipments that meet specific criteria, such as those requiring additional handling or those that are oversized. These surcharges are in addition to other fees and apply to all US and international shipments. As an example of what to expect, here is a link to the FedEx 2022 peak season surcharges.
UPS Peak Season Surcharges
Like FedEx, UPS also imposes peak season surcharges due to the increased operational costs associated with the surge in shipping volume during the holiday season. These surcharges typically apply to residential shipments, large packages, and packages that exceed maximum size limits.
UPS usually announces its peak season surcharges in advance of the holiday season, and they typically apply for a specified period, usually from November to January.
In conclusion, peak season surcharges are a common practice among major carriers to offset the increased operational costs during their busiest times of the year. By understanding these surcharges, businesses can better plan their shipping strategy and budget during the holiday season.
It's important to note that the information provided here is general in nature, and the specific peak season surcharges may vary each year. Therefore, it's always recommended to check the latest information from the carrier's official resources.
10. Hazardous Materials Surcharge
Some materials require special handling due to their potential risks. In particular, lithium batteries often used in electronic devices like laptops, smartphones, and electric vehicles fall into this category. Shipping these items entails navigating through the labyrinth of Hazardous Materials labeling and declaration requirements.
Understanding the Hazardous Materials Surcharge
The Hazardous Materials Surcharge is a fee imposed by shipping carriers like FedEx, UPS, and USPS on shipments containing hazardous materials. These materials, including certain chemicals, explosives, and yes, lithium batteries, pose potential safety risks during transit and require special handling and packaging. As an example, as of this writing in 2023, FedEx’s hazmat surcharge exceeds $48 in many instances.
Shipping Large Lithium Batteries
Shipping lithium batteries deserves its own separate article and, more accurately, its own guide book. Larger batteries, as well as batteries not “contained” inside of a given product pose unique challenges due to their high energy content and potential to catch fire if damaged.
Because of these risks, shipping carriers apply additional safety regulations and surcharges to shipments containing large lithium batteries. For example, these shipments might require special packaging, handling, and labeling, and they may not be eligible for all shipping services or destinations.
In particular, the USPS is the most restrictive carrier when it comes to shipping batteries. Many USPS shipments are carried in the cargo areas of commercial aircraft with passengers sitting above. This makes transport of hazardous materials a non-starter for USPS. In contrast, FedEx and UPS fly their own dedicated cargo planes and, when labeling and documentation rules are appropriately followed by the shipper, hazardous materials like lithium batteries can be carried in the air.
Best Practices for Shipping Lithium Batteries and other Hazardous Materials
To navigate the complex rules and regulations surrounding lithium battery shipping, it's essential to keep a few key best practices in mind:
Stay Updated on Regulations: Regulations for shipping hazardous materials can change frequently. Ensure you stay up-to-date with the latest rules from your shipping carrier and regulatory bodies like the Department of Transportation (DOT) and the International Air Transport Association (IATA). At Rush Order, our compliance team handles this on behalf of our clients and we stay in regular communication to alert specific clients when new rules will impact their shipments in terms of handling requirements and/or costs.
Use Appropriate Packaging: Lithium batteries must be packed securely to prevent short-circuiting and damage during transit. Your shipping carrier will likely provide specific packaging guidelines.
Label Clearly: Packages containing lithium batteries require specific labeling to alert handlers to the contents. This typically includes a "Class 9" hazardous materials label and a "Cargo Aircraft Only" label, or UN3480 or UN3481 warning label.
Train Your Staff: If your business frequently ships lithium batteries, make sure your staff is properly trained in the correct packaging and handling procedures. This is actually a legal requirement from the DOT, FAA, and IATA. For example, in the US, if you are audited by the DOT or FAA and it’s discovered you have untrained staff handling hazardous material shipments (including any lithium batteries), fines start in the tens of thousands of dollars. Again, 3PLs like Rush Order keep staff current on their training and certifications.
11. FedEx and UPS Weekly Service Charge
The FedEx and UPS weekly service charge, often referred to as the "weekly pickup fee," is a fee assessed to shippers who schedule regular daily pickups from FedEx, rather than dropping off their shipments at a FedEx location or scheduling one-time pickups. This fee is designed to cover the convenience and operational costs associated with having a FedEx or UPS driver come to a shipper's location on a predetermined, recurring basis. The exact amount of this fee can vary based on the type of service (e.g., FedEx Ground vs. FedEx Express) and the specific agreement between the shipper and FedEx / UPS.
To avoid or reduce this charge, businesses have several options:
Drop Off Shipments: Instead of scheduling regular pickups, businesses can drop off their shipments at FedEx locations, such as FedEx Office stores, drop boxes, or authorized ship centers. This eliminates the need for a weekly pickup and its associated fee.
Negotiate with FedEx and UPS: If a business has a significant shipping volume or has been a long-term customer, they may have leverage to negotiate the weekly service charge with their FedEx or UPS account representative. FedEx and UPS, like many businesses, values customer loyalty and may be willing to reduce or waive the fee to maintain a relationship.
Evaluate Shipping Volume: If a business is close to a threshold where the weekly service charge might be reduced or waived (based on shipping volume or revenue), they might consider adjusting their shipping practices to reach that threshold.
Evaluate Weekly Service Charges with Alternative Carriers: Consider evaluating other carriers who might offer more favorable terms or not have a weekly service charge. This can be used as a negotiation point with FedEx / UPS, or as an actual switch to reduce costs. Options in the US included The US Postal Service (USPS), mail share partners like OSM, Pitney Bowes, and DHL Ecommerce who function as a cheaper solution but still use USPS for last mile delivery, and other regional carriers like OnTrac.
Work with a 3PL (Third-Party Logistics Provider): Partnering with a 3PL like Rush Order can offer businesses access to negotiated rates and services due to the 3PL's shipping volume and established relationships with carriers, including FedEx and UPS. Many 3PLs have pre-negotiated terms that can waive or significantly reduce fees like the weekly service charge. Additionally, 3PLs can provide expertise in optimizing shipping operations, potentially leading to further cost savings and operational efficiencies. By leveraging the scale and expertise of a 3PL, businesses can often bypass many fees and benefit from more favorable shipping terms.
Honorable Mention: Other Common Carrier Surcharges
As previously noted, the actual list of all carrier surcharges is quite long and complex. Here is a list of a few others you should have on your “radar” and potentially research further if you think they may apply to you. As always, please feel free to contact Rush Order with questions or to discuss how we may be able to help your business reduce overall shipping and surcharge expenses.
Peak Surcharge: During periods of high demand, typically around the holiday season, FedEx may impose a Peak Surcharge to account for increased operating costs.
Declared Value Surcharge: If you declare a value that exceeds the carrier's liability limit for a shipment, FedEx will apply a Declared Value Surcharge.
Saturday Pickup Surcharge: FedEx and UPS offer Saturday pickup options for an additional surcharge. This surcharge applies to packages picked up over the weekend. FedEx, UPS, and USPS do not charge an additional fee for Saturday delivery as this is now part of their regular service.
Non-Machinable Surcharge: This applies to FedEx & UPS packages that have an actual weight of less than 20 pounds but, due to their dimensions or packaging, cannot be sorted by the carriers’ automated systems.
Third-Party Billing Surcharge: If a shipment is billed to a third party, FedEx & UPS apply this surcharge. If you plan on shipping frequently on third party accounts, this one is definitely worth negotiating.
Parting Thoughts
While this list is not exhaustive, it covers some of the most commonly encountered surcharges when shipping with FedEx, UPS, and USPS. By understanding these additional fees, businesses can better anticipate their shipping costs, optimize their shipping processes, and ultimately save money. As you plan your shipping strategy, keep these surcharges in mind to ensure a smooth and cost-effective delivery experience for both your business and your customers.
For additional help or to learn more about Rush Order’s order fulfillment services and shipping rates, please feel free to schedule free consultation.
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