Most businesses can probably count on one hand the number of times a carrier invoice has come back lower than expected. You may have great rates, but somehow your shipping costs are still killing your profits. So, what gives? Unfortunately, shipping rates are only part of the story. Depending on your business’s shipping profile, the fees embedded into carrier service guides are sometimes even more of a factor in determining your costs. To save you time, here are some of the most common fees that parcel carriers dole out:
1. Address Correction Fees
Address correction fees happen anytime the carriers make a change to the provided address. At $17 a pop for both UPS and FedEx, they can start to add up fast. These corrections can happen for two reasons: either the address provided was legitimately inaccurate and needed amending, or the carriers made a minor change and charged the fee anyways (think 221B Baker St changed to 221B Baker Street... see what they did there?).
For this type of fee, investing in a Parcel TMS with address verification software can save you money in the long term by making sure your packages are going to real addresses. As for the second type, having a parcel audit technology that can identify and dispute false charges is a great way to protect your bottom line. This will also allow your team to cleanse your company’s database with corrected addresses and stop profits from leaking out. Many times, companies will ship to a bad address over and over again, but you can stop this insanity and save money at the same time.
2. Shipping Charge Correction Audit Fees
FedEx will charge what they call an additional weight fee and UPS will charge a shipping charge correction when the provided dimensions of a package are incorrect or blank, but the actual dimensions go on to affect the weight, or if the package is sent as Commercial but really delivers to a Residential address. What you may not be aware of is UPS also charges a shipping charge correction audit fee. This fee occurs when the average shipping charge correction for a given week is above $2.00 per package and the penalty is the greater of either a $1.00 per package fee for all packages subject to a shipping charge correction or six percent of the total amount of shipping charge corrections for that given time period.
Now that may be a lot of math, but what it boils down to is that entering your dimensions and destination address type accurately matters. And again, this is where having a Parcel TMS can come in handy. If your business ships mainly the same size packages, a quality Parcel TMS can save those dimensions and make sure they’re accurately added to every order, thus reducing your shipping charge corrections and additional weight fees.
3. Additional Handling Fees
When it comes to packaging, there are many factors that can end up costing you with carriers. Parcel carriers have very specific size and weight requirements for their standard rates. If your shipments go above those requirements, you’re going to be hit with an additional handling fee. There are many different ways to package items in today’s market, and at anywhere from $15-$185 in fees per shipment, it might be worth looking into other options. An in-depth packaging analysis can tell you which packages are getting hit the most and if there’s room to optimize those shipments to avoid extra fees. You can always reach out to one of the many packaging experts in the market for help with this project if you and your team are limited in capabilities or the manpower to perform this analysis.
4. Declared Value
Finally, declared value fees are a common way in which shippers are actually losing value on their shipments. Depending on your business, you may not be able to avoid insuring your packages, but there are plenty of ways to make sure you’re getting the best bang for your buck. Before you pay, make sure you know the value that the carrier will actually ensure up to. It does no good for you to pay for $3,000 of coverage if the carrier only guarantees $1,000. Also, utilizing an outside insurance company that specializes in this sector will often provide better rates and significantly reduce costs.
There are many different types of fees out there in the parcel world, and they can come at you from almost anywhere. Being mindful of some of the most common fees that the carriers can hit you with is a quick and easy way to drastically reduce your shipping costs and help protect your bottom line. Keep this guide handy and avoid these excess fees for good!
Brad A. McBride has been in the transportation industry for 30 years. He founded Zero Down Supply Chain Solutions in 2003 after many years in high-level sales and operations roles in the logistics industry. Determined to make an impact on traditional industry practices and provide considerable savings for businesses, Brad also launched FreightOptics, the cutting-edge technology that provides one-login access to view and optimize all modes of transportation. Brad can be reached at firstname.lastname@example.org