How to Minimize 5 Unexpected Carrier Surcharges That Are Feasting On Your Bottom LinePosted on October 23, 2018
While the focus tends to be on eCommerce, rising parcel shipping costs are a concern for just about any business today. With free shipping now an entrenched customer expectation, it is more important than ever for shippers to keep shipping costs in line. But as almost every carrier is adding new surcharges and accessorial fees to account for specialty services, there is a widening gap between what shippers expect to pay vs. what they are actually invoiced. With the correct parcel software and a little know-how, it is possible to minimize unexpected and unnecessary surcharges and fees.
Here are five of the most common shipping surcharges and some tips to avoid them:
1. Residential Surcharge
It has always cost a bit more to deliver to a residential address because carriers generally favor consolidated delivery points. Luckily for shippers,many customers arranged to have orders delivered to their workplace. But today with eCommerce on the rise and more people working from virtual home offices, there are more residential deliveries than ever.
If you can’t negotiate lower residential surcharges, there are some convenient delivery alternatives such as offering parcel pick-up at stores or major carrier retail locations. If alternative delivery services are not an option, it is at least important to know there will be a surcharge for a residential delivery. That’s not always easy as each carrier may have a different view of whether an address is residential or commercial. It is important to have a system in place that can check residential vs. commercial at the time of ordering and time of shipping. Auditing carrier bills is a great way to ensure you are not overpaying.
2. Fuel Surcharge
Anyone who has stopped at the pump lately knows that the price of fuel is on the rise and it is not expected to slow down anytime soon. And when it comes to shipping, those increases are passed along by carriers to shippers. This year, carriers have raised fuel charges more than once.
While negotiating fuel surcharges is difficult, implementing an omnichannel fulfillment can result in fulfilling orders closer to your customers, meaning fewer miles traveled and less fuel. Having centralized pick-up locations such as in-store or hold-at locations may help to offset some of those costs as well. Of course, having systems in place to accurately calculate fuel surcharges is a must if you expect to close the expected vs. actual cost gap.
3. Third-Party Billing Surcharge
One of the more recent additions to carrier surcharges, third-party billing has added yet another level of fees to shipping. Anytime a parcel is billed to a third-party that is not related to your account, the carrier is apt to ding the delivery with a surcharge. The most common use-case is when you use a third-party fulfillment center.
While occasionally there might not be a way around third-party surcharges, by adding the fulfillment facility to a master account and reducing drop shipping, you will be able to limit the impact to your bottom line.
4. Address Correction Fees
Your customers know their address. Well, you would think they do. But too often the smallest of details are not included on orders, such as a suite or apartment number. When information is left out of an address,the carrier may have to do a bit of extra legwork,and you will pay the price.
The right parcel shipping software can help you fill in the blanks when processing the shipment and printing labels, helping reduce those costs by cutting the work you and the carrier need to do to deliver the package to the correct doorstep.
5. Dim Fees
eCommerce volumes have created a parcel carrier capacity crunch, making it more important than ever for carriers to make the most of the space they have. Increasingly, parcel and freight carriers are applying space-based rating logic to penalize those who ship containers that are light relative to their size. If you ship air, you will pay more.
Making transportation cost-effective packing decisions is not something that WMS, OMS, or ERP systems do (and yes they should!). Asking packers to take carton sizes, carrier dim factors, and other complex packing rules into account during the rush to get orders out the door is a lot to ask. The result? Shippers are paying more dim fees than ever. Fortunately, adding cartonization algorithms can automate packing decisions, making it clear how to pack cartons and pallets to minimize dim fees.
While fees and surcharges may not be totally unavoidable, using parcel shipping software can reduce accessorial charges.