What Is a Surcharge? Tips To Reduce For Your Ecom Business

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    Every online business is impacted by shipping surcharges and additional charges imposed by the transporter after the package delivery. However, it’s often not certain what the fees are or how they’re determined. So we set out to discover the ways that surcharges affect eCommerce companies. To find out, we looked up the most commonly used surcharges, what they are, how to avoid them, and how to challenge the charges.

    What Is a Surcharge?

    Surcharge is an additional cost in the form of a fee and tax, which can be added to the price of a product or service above the price originally quoted. Surcharges are often added to an existing tax and cannot be included in the advertised product or service cost. The surcharge depends on the circumstances and may be fixed in amount, or a percentage of the fee could be imposed due to a governing body’s requirement to generate additional income or to cover the increased cost of prices for commodities.

    What is the shipping surcharge?

    The shipping charge is an added cost added to the shipping cost by the transporter. The surcharge is used to compensate for any additional charges incurred in handling, special services, delivery circumstances, or other costs incurred to shipping items with special needs or conditions. A variety of shipping charges are often added to shipping charges. 

    Types of Shipping Surcharges

    To aid in your efforts to ship, think about what the most frequently charged surcharges are as determined by Refund Retriever Based on their reporting and data – and how they might affect your company.

    1. Residential surcharges.

    Residential Surcharges apply to deliveries to residential addresses and also to companies operating out of homes. Therefore, for each residential delivery, an additional cost per delivery could be imposed.

    2. Delivery area surcharges.  

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    Delivery Area Surcharges are charged for addresses classified as rural or not within an area within a certain distance from the FedEx or UPS hub. The main reason for this charge is that it is applied to the longer distance needed for delivery to be carried out.

    3. Additional handling charges.

    The Additional Handling Surcharges refer to flat rate charges apply to packages longer than 48 inches in length.

    4. Direct signature surcharge.

    Direct Signature Surcharge is an amount that is charged for the essential task of obtaining the signature of the person who delivers the package.

    5. Declared value surcharges.

    Declared Value Surcharges (DVS) are provided to help shippers have greater peace of mind when shipping packages that are worth more than $100. The surcharge lets shippers determine the value of their package in the event that something should occur – whether stolen, damaged, or lost and protects their investment in shipping.

    6. OS extra surcharge.

    OS Extra Surcharge defines “other shipping” surcharges and can vary significantly from freight costs to international fees and many more. The best way to be aware of the possibility of OS surcharges and other surcharges is to establish an auditing process that alerts you of any charges that are not correctly debited on your credit card.

    7. Indirect signature surcharges.

    Indirect Signature Surcharges are based on the signature, but they don’t require the signature of the individual to whom the package is addressed. Therefore, it is usually less costly than adult and direct signature specifications and costs.

    8. Service surcharges for the week.

    Weekly Service Charges (WSS) are fees that change every two weeks based on the fluctuations in fuel prices and in accordance with the fuel prices of the two preceding weeks.

    9. Print return label surcharges.

    Charges for Print Return Labels can only be applicable if the shipper used a return label supplied to them.

    10. Adult signature required surcharge.

    A Surcharge for Adult Signature Required is a cost for deliveries that only allow adults over the age of 21 to sign the delivery note for the item to be delivered.

    What is the reason that shipping charges for eCommerce are increasing, and what does this mean for customers of e-commerce?

    Typically, shipping costs for eCommerce are introduced in Q4 to make it easier for shipping companies to keep up with the demand of consumers. Since the epidemic of COVID-19, the surcharges were added to orders early in the calendar year. However, shipping costs in Q4 are higher than before. Some carriers don’t even provide deadlines for these charges.

    What is the reason why postage costs and shipping prices rising? It’s partly because of changes made by the US postal service, which were made at the time of the epidemic. Due to these modifications, the post office will add the cost of a $0.25 fee to orders that weigh less than 10 pounds. Then, up to $5 for packages that weigh up to 70 pounds.

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    It’s Not Just the Post Office Raising Shipping Rates

    Furthermore, both FedEx, as well as UPS have increased their own shipping and postage rates. In an announcement on the 20th of September, 2021, FedEx Express, FedEx Ground, and FedEx Home Delivery shipping costs will be increased by 5.9 percent from the 3rd of January, 2022. UPS made the same announcement in August concerning the changes they made in their UPS Ground rates for service.

    As shipping companies increase their shipping costs and prices, they will eventually charge those costs to their customers. For e-commerce companies, passing on shipping costs to customers could affect the completion rate of purchases.

    How can you avoid the surcharge fee to save the shipping costs of your eCommerce business?

    surcharge payments
    • Get a better understanding of the way shipping surcharges affect the cost of shipping and discover what options could be able to reduce or eliminate them.
    • Make sure you double-check your address. You could also purchase shipping software that reviews and rectifies the relevant addresses for delivery to avoid associated surcharges.
    • It can be difficult trying to track charges since they fluctuate often. For example, charges for fuel for private carriers are updated every week, while the others are usually adjusted yearly or bi-annually. Employing a third-party logistics service will allow businesses to track their shipments and accounting.
    • Look into other local or regional shipping options if you routinely transport to these areas.
    • Be aware of the different types of packages that carriers consider to be “oversized packages.”
    • Make sure you plan the costs into your calculations for delivery charges for residential deliveries. Then forward this to the recipient or mail items to a company address instead.
    • Find a way to negotiate lower fuel surcharges while considering the current market conditions for fuel.

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