In today’s market, it is not possible to conduct a successful business without shipping raw materials from diffused geographical locations and then delivering finished goods to the most profitable customers.
But what is a shipping surcharge even? A Shipping Surcharge is a kind of handling fee that is intended to add the prices of the additional care and effort that goes into delivering the right product at the right time to the right place.
However, shipping costs are slowly rising, and maintaining costs is becoming difficult for individual small and medium businesses. You can indeed propound the most lucrative shipping strategy for your company by knowing the right tips and tricks to avoid these charges.
What Do Shipping Surcharges Include?
To help your company profit from shipping, you must first know the exact amount you pay in the form of temporary shipping surcharges and permanent fees.
A Shipping Charge can include the following things:
- Delivery charges: What is a delivery surcharge? The delivery charges usually depend on the amount of area covered as well as the nature of the location, i.e., corporate, residential, etc. Most private shipping companies charge extra for delivering to regions outside the usual range.
- Additional charges: Additional charges can be rather miscellaneous: festival charges, weekend charges, handling of packages over 48 inches, handling super heavy or fragile packages, handling chemical containers, and packages meant for strict adults.
- Signature requirement: Packages that need signatures for successful delivery must be delivered when the customer is at home. Further, in some packages, someone over 21 must sign.
- International shipping charges: International shipping requires meeting import taxes, excise duty taxes, freight costs, and many other rules and regulations which kicks your shipping cost into a completely different bracket!
- Declared value surcharge: Packages with a determined value of over 100 USD are handled with additional protection to make sure the valuables are kept intact and this of course requires additional payment.
The 4 Types Of Shipping Surcharge
Customers and clients must remember to regularly check and confirm the shipping prices as these surcharges usually go up every year. A shortage of resources or a rise in labor fees or gas prices can also bring an immediate increase!
Gas prices fluctuate almost regularly, and private shipping companies add a specific amount of additional charge to create a ceiling for unnatural hikes. On lucky days, they can maintain extra profit when the prices go down.
Saturdays and Sundays are the times when most companies are closed, and finding labor to handle and deliver packages becomes difficult. These expedited additional fees are usually a fixed requirement fee added to the total bill the moment the customer makes a request for weekend delivery. Another kind of expedited charge could be same day or next day delivery charge for emergencies!
Oversized or Fragile Package Surcharge
Companies set certain restrictions on how many workers are assigned to each package and how much space or what fraction of weight it will occupy in the multiple delivery vehicles used to transport it from one location to another. In oversized packages, both requirements are exceeded, which is why the company levies an additional charge to stay profitable. Fragile boxes must be dealt with by trained workers and stored in unique places, so these, too, cost extra.
Residential Delivery Charges
What is a location surcharge concerning residential homes? Delivering to residential addresses can take up additional time, and the employees will need to prepare accordingly. For businesses that operate at home, and this includes farms, some amount of extra charge is always levied.
How Much Does Shipping Surcharge Cost?
The basic shipping costs are calculated based on the weight of the package and the number of zones through which the box will pass within the United States. Additional Shipping Surcharge is calculated in the following manner:
- Nonmachinable shipping surcharges are applied between 0.15 USD and 0.21 USD by USPS. FedEx charges about 4.2 USD for this. For UPS, this amount is 3.8 USD.
- Additional insurance at USPS costs about 2.25 USD. It can go up to 9.5 USD for extra coverage.
- Signature delivery with USPS will cost you around 2.65 USD to 8.45 USD.
- Overweight packages with FedEx over 70 lbs are charged 230 USD per shipment.
- FedEx will charge about 4.4 USD for residential deliveries.UPS charges about 5 USD for the same service.
- If there is address correction involved, FedEx will charge about 16 USD. UPS will charge about 16.4 USD for the same.
7 Tips For Reducing Shipping Surcharge In Daily Business
It is always a good idea to try and reduce production and shipping costs systematically so that you can profit at a large margin at the end of the year.
- Combine Orders In One Package: If your customer has ordered multiple items of different kinds, these can. Still, these groups, during shipping, always do that, given that the packages do not go overweight. If it is overweight, do not hesitate to calculate the overweight shipping fee against the shipping surcharge for multiple parcels and choose the most affordable option.
- Always Double Check The Address: Address checking is a simple mistake that can cost you quite a lot of money every time it happens. Either double-check the address manually or put in an automatic system for it. You can easily do both, too! Avoid Shipping to residential addresses if you can help it. Similarly, do not push for signature delivery unless it is an ethical requirement.
- Look For Package Deals: Hopping on contracts with discounted shipping or negotiating for reduced shipping surcharge are equally impressive alternatives. Regular shippers, couriers, and shipment facilities will often provide long-term contracts that benefit both parties. You can also negotiate directly with the agents for individual packages, especially if you are a second or third-time customer.
- Invest To Reduce Package Weight: Buying lightweight and sustainable bubble wraps, packaging paper and cardboard boxes can help you make the narrow cut of keeping your shipment within the weight limit. Avoid using extra space for decorations or fluffy packaging paper because some shipping companies will charge you based on the size of the package.
- Always Do A Comparative Analysis: While there are three or four major shipping facilities available all over the US, many small courier companies are working on a regional or National basis that are not that well known yet. Hence, by doing your research and switching to the right handler you can reduce your shipping cost.
- Use Third-Party Insurance: How to further reduce your shipping surcharges? Choose a third-party insurance that offers more benefits to you than these big companies. The additional benefit to doing this is that you get third-party legal coverage in case something goes wrong!
Today we went over the different types of shipping surcharges and were able to successfully understand the complex nature of shipping surcharge meaning and implementation. There are several companies out there today that use state-of-the-art, virtual technology to simplify the shipping process and reduce the costs not only them but also the companies they are collaborating with.