Taking a deep dive into your invoice from FedEx or UPS is a smart move for any shipper. But, once you dig into your statement line by line, chances are you’ll see extra charges that may puzzle you. Those unexpected fees are likely shipping surcharges - costs added to your base price by the carrier. 

Though undeniably complicated, it’s important to have a basic understanding of the surcharges your carrier of choice, FedEx or UPS, may apply to your shipment. The more you know about surcharge types and how they impact your bill, the better you can manage your costs. Taking a look at the most common and costly FedEx and UPS surcharges is a great way to become familiar with what you may see on your bill.

Oversized surcharges

When it comes to parcel shipping, oversized shipment charges often lead the way in expensive fees. Ecommerce has led to larger and more irregular-sized shipments in their networks, and both FedEx and UPS implement pricing strategies to offset the extra costs associated with it. Surcharges related to shipment size and specifications are a way to combat packages that could be transported using another service, like LTL freight. These fees are based on both size and weight limits, and vary between carrier. 

FedEx and UPS charge different amounts for these fees, though both can be well into the hundreds of dollars. Even more importantly, the definition of what is considered “oversized” can change and the amount charged increases annually at the very least.

FedEx has three separate fees for larger shipments, and each has a different set of criteria.

• Oversized – Applies if your package exceeds 96 inches in length or 130 inches in length and girth combined.
• Unauthorized – Applies if your package exceeds 108 inches in length, 165 inches in length and girth combined, or 105 pounds in weight.
• Additional Handling – Applies if your package exceeds 48 inches in length, 30 inches in width, and 105 inches in length and girth combined; or if your packages weighs more than 50 pounds (domestic) or 70 pounds (international).

UPS also charges fees based on a shipment’s size or whether it has handling requirements.

• Large Package – Applies if your package exceeds 96 inches in length or 130 inches in length and girth combined.
• Additional Handling – Applies if your package exceeds 48 inches in length, 30 inches in width, or 105 inches in length and girth combined; or if your package weighs more than 50 pounds (domestic) or 70 pounds (international).
• Over Maximum Limits – Applies if your package exceeds 150 pounds in weight, 108 inches in length, or 165 inches in length and girth combined.

These are the qualifications that apply as of 2021. Keep in mind it’s always important to stay up to date on changes and amendments throughout the year.

Peak surcharges

There are certain times when U.S. shipping volume spikes due to an increase in demand. This spike can be caused by seasonal fluctuations, the economy, or any number of other factors. When more shipments are entering the network, it can be a struggle for carriers to meet this demand. Peak surcharges are fees implemented during these times to help offset the extra work it takes to get these packages delivered, and to help weed out the harder to manage, less profitable shippers. Because demand has surged during the pandemic, we’ve seen an unprecedented amount of peak surcharges for both FedEx and UPS, with adjustments being made as needed. As demand stays elevated, they’re likely to continue, which is why it’s important to review what circumstances dictate these charges. 

Any shipments that require an extra level of effort (either by package characteristics, frequency, extra services required, etc.) are most likely to incur peak surcharges. The first step in determining whether you’ll be seeing peak surcharges is reviewing a few important factors that put your shipments at risk. Larger packages and those that require additional handling like those we’ve outlined above have been historically affected, and continue to be targeted. In addition to the size of the package, if you’re a large shipper who’s seen an increase in volume, you’ve likely seen a significant spike in your costs due to additional peak surcharges. 

Prior to the pandemic, peak surcharges were typically only applied during the holiday season, since that’s when FedEx and UPS saw a consistent increase in package volume. How much the fees cost and what packages they applied to varied by carrier and by year. However there are some trends you can note and typically expect. Just like the peak surcharges that have come along as a result of the pandemic, larger shipments are often targeted with extra fees during the holidays. Residential deliveries are also often hit with peak surcharges since so many people are ordering holiday gifts for loved ones during this time of year, straining the carriers’ networks. 

Fuel surcharges

Fuel costs are another common surcharge that will apply to each and every shipping invoice you receive. As commuters, we are well aware that fuel prices are a large component of transportation costs. Whether you’re shipping small package via delivery van, a full trailer, or by plane, you can imagine how much higher those costs can climb. As fuel consumers, we are also aware that the price of fuel does not stay consistent for any set period of time. Something has to be done so that carriers can be sure they aren’t losing money on fuel costs when they fluctuate.

Fuel surcharges are intended to provide an average cost of fuel, so the carrier is protected from loss if fuel prices rise during the term of a contract. Even still, there is no benchmark surcharge amount. The cost can vary by carrier, and as the price of fuel fluctuates, that surcharge will be amended. There are three primary factors that are used to calculate a fuel surcharge: Base Fuel Rate, Base Fuel Mileage, and Source and Interval of the Average Fuel Price. A Base Fuel Rate is the price that determines when a fuel surcharge is to be activated and applied to a bill. Base Fuel Mileage is the miles per gallon that a truck averages on the road. Source and Interval of the Average Fuel Price is a government determined figure and the only component of fuel surcharges that is regulated.

While there isn’t much that you can do to challenge fuel surcharges, it’s important to understand that they exist to protect the carrier from lost profit. Both FedEx and UPS publish up-to-date fuel surcharge information so that you know how this variable affects the cost of your shipment transportation. 

Residential delivery charges

Out of all the surcharges that exist, it’s essential for retailers to understand the impact of residential delivery when planning their shipping costs. A “residential delivery” is defined as one that a carrier must make to a home, whether it’s a single-family dwelling, apartment building, condo complex, or a dorm on a college campus. These charges are necessary for carriers so that they can offset the inconvenience of handing off one shipment to a single location - clearly less efficient than delivering to businesses. 

Both FedEx and UPS apply residential delivery fees to a variety of scenarios. It’s important to know that businesses operating out of the home will be marked as residential. Additionally, if either the declared delivery location (what’s on the label) or the actual delivery address (in the case of an error) is determined to be residential, the fee will apply. These circumstances are important because while you want to keep costs low, trying to pull one over on the carrier is never a good idea.  

Pick-up fees

Both FedEx and UPS implement fees for a variety of pick-up services. Generally, the fee is calculated depending on the immediacy of the pick-up and the type of location. FedEx breaks down pick-up types into three main categories for its FedEx Express and FedEx Ground services: on-call, return on-call, and regular stop. Each pick-up type has a fee that ranges from no charge to a set cost per package. For regular shippers, there is a maximum weekly fee for cost-savings and convenience.

UPS also offers a variety of pick-up options that are associated with their own charges. Commonly used pick-up options include: UPS On-Call Pickup®, UPS Smart Pickup®, day-specific, and on-route pick-ups. Like with FedEx, as needed services are charged by pick-up or package. Regularly scheduled pick-ups are charged weekly fees that may fluctuate, usually depending on shipment volume.

It’s important to know that pick-up fees are higher for residential locations, metro areas, and inside pick-up services. As in the case of most surcharges, these fees can change, and you should always consult either carrier’s latest service guide for a complete picture of costs. If using pick-up services is cost prohibitive for you, you should consider reviewing drop-off locations as an alternative. 

Third-party billing fees

Both FedEx and UPS charge third-party billing fees. These fees are a percentage of the total bill, including base charges and any accessorials needed. As of 2021, UPS and FedEx charge 4.5%. That percentage might sound low, but it can add up fast. If your business is using multiple manufacturers or suppliers to help fulfill your orders, you will be seeing third-party billing fees for each order. It’s also important to note that this fee may cost more in the future, as it has already seen some increases in the past.

FedEx and UPS started instituting a third-party billing largely in response to the increased use of drop shipping by ecommerce retailers. Drop shipping is a process where, rather than keeping inventory on hand, sellers may use a supplier or manufacturer to fulfill and ship orders directly to the customer. As the third-party bill-to, the seller is neither the shipper nor receiver, but is paying the shipping charges.

If you’re often using third-party billing as an option, it may be possible to negotiate rates with your carrier. You may be able to get the fee removed through your agreement, or lower the percentage charged, especially if you’re creating a lot of business for the carrier. 

Other notable surcharges

We’ve covered common surcharges that will impact your shipping invoice the most. However, there are several other service fees that you may see.

• Address correction - associated with changes a carrier must make to correct a given address
• Signature services  - proof of delivery via signature in order to protect against liability
• Weekend pick-up/delivery – completing shipments outside a carrier’s normal hours of operation
• Delivery area – extra effort it takes to drive out to hard to reach locations, such as rural areas

A general rule of thumb to always remember: if your shipment needs services that require extra effort from the carrier, there is probably an associated charge.

How to prepare for these fees

Most FedEx and UPS surcharges are simply part of the business, and are unavoidable. As a component of your total shipping invoice, you should take the time and effort to understand why they’ve been implemented. Most importantly, a thorough knowledge of the basics can help identify how they will impact your business based on your unique shipping needs. It’s unbelievably important to stay up-to-date on surcharge adjustments and increases by looking at annual service guides periodically. Auditing parcel invoices regularly can help identify which surcharges you’re seeing most frequently. 

By understanding how these fees impact your shipping spend, you can create a better plan of action for both your shipping operations and your pricing strategy. Working with a 3PL that is familiar with FedEx and UPS surcharges can help take the stress out of sorting through the data. At PartnerShip, we can help simplify things for your business – from conducting a shipping analysis to publishing resources that offer a Cliff’s Notes version of service guide mayhem.

Small businesses have it tough, and the fact that volume shipping discounts aren’t always an option makes shipping expensive. The good news is that small retailers have options to decrease shipping expenses without having to rely on volume discounts. Check out our helpful video to learn how. 

If you regularly ship with UPS or FedEx, you’ve likely encountered dimensional (DIM) weight pricing whether you realized it or not. Essentially it’s a way for the carriers to charge you more for larger, but lighter, packages. And if you’re not careful, it can drive up your costs significantly.

What is dimensional weight pricing?
Dimensional weight pricing is a way to rate your packages based on density in relation to weight. What that means is that instead of rating your package purely based on its actual weight, it also takes into account how much space your package takes up on the carriers’ delivery vehicles.

How do you calculate dimensional weight pricing?
Luckily for you, we have a DIM weight calculator you can use. But if you’re curious about the formula behind it, it’s fairly simple. Start by calculating the cubic size of your package – multiply length by width by height. Then take that total and divide it by 139, which is the dimensional divisor determined by FedEx and UPS. If the resulting DIM weight is higher than your actual weight, the DIM weight becomes the weight you’ll be rated on – otherwise known as your billable weight.

Let’s look at a couple simple examples. If you have a 12x12x12 box, the dimensional weight will be 12 lbs. So if you’re shipping 15 lbs. of books, your package will be rated based on the actual weight of 15 lbs. But if you’re shipping 5 lbs. of ping pong balls, your package will be rated based on the DIM weight of 12 lbs. since it’s the higher weight.

Why is dimensional weight pricing used?
UPS and FedEx want to discourage shippers from using unnecessarily large packaging, and there is one main reason for this. The larger your package is, the more space it occupies on their planes and trucks. This in turn, leaves less room for other packages. UPS and FedEx make more money and work far more efficiently if they’re able to fill up their delivery vehicles with more packages.

The history of dimensional weight pricing
Once upon a time, not all shipments were subject to DIM weight pricing. The DIM factor that FedEx and UPS use has also changed over time – and not in a way that’s favorable to shippers. While the DIM weight formula and shipment qualifications have remained steady for a few years now, there’s no guarantee that it’ll stay that way. Let this be a lesson on how important it is to stay alert on any announced changes from both carriers.

How do you avoid overpaying due to dimensional weight pricing?
The most important thing you should be doing to avoid DIM weight pricing is right-sizing your packaging. You need to consider both the size of the item you’re shipping and also how fragile it is. Items that are at a greater risk of damage will need more cushioning, which will take up more space. Try to find packaging that allows enough room for the needed cushioning, but no more. The smaller you can make your package, while still keeping your item safe, the better.

There are a few resources available that you can use to find the right packaging for the items you’re shipping. UPS has a Packaging Advisor tool on their website that allows you to select your merchandise category and enter your dimensions to get customized packaging and cushioning guidelines.

FedEx also has a number of packaging guides based on the type of item you’re shipping. But beyond that, FedEx even has a Packaging Lab where you can send your packaging in for durability testing or request a design consultation to improve the efficiency of your packaging. Many of the services are free if you have an account.

Keeping your small package costs low
While ensuring you have efficient packaging to avoid DIM weight pricing is one way to help reduce your shipping costs, another is securing discounts with the carriers. That can be difficult for small and medium sized businesses to negotiate on their own. However, when you work with PartnerShip you can access savings that are typically reserved for high volume shippers. Contact our team to learn more.

In a time where managing business operating expenses is extra important, one of the first places you should look is reducing shipping costs. But analyzing your small package shipping for areas of improvement can be a time-intensive, detail-oriented process. Not everyone has the time to audit invoices and compare rates. For those who want to get the job done quickly and easily, you’re in luck: there are five quick small pack hacks that smart shippers can easily implement to help reduce costs. 

1. Obtain discounts with carriers
   Lots of shippers don’t realize that the pricing structure you are currently using with your carrier may be negotiable, and there are different types of discounts that your account may receive. FedEx and UPS often offer discounts for new accounts when created online, but shippers beware: these discounts are usually temporary, and your pricing may fluctuate based on terms and conditions. You may lose the discounts entirely if you aren’t meeting shipping minimums and your pricing is subject to change at any time. 

   The more you ship, the better the discounts you’re likely to receive directly from FedEx or UPS. However, even if you have a lower shipping volume, there are still ways for you to obtain discounts. If your business belongs to a trade association or a local chamber, you may have access to discounted rates through your membership. PartnerShip manages over 130 association shipping programs that offer FedEx discounts. If you’re a member of an industry group, look into your member benefits or reach out to our team to find out if you’re eligible.

2. Take advantage of free packaging

   The packaging and supplies you need to properly contain your shipments are important, but can be costly. However that doesn’t mean you should skimp on new materials or reuse old packaging – doing so can compromise the integrity of your shipment and increase the risk of damage. The good news is, some carriers offer free shipping supplies to help ensure your package is secure. Both UPS and FedEx offer free packaging supplies for customers that you can order online and have delivered, free of charge. With free envelopes, packing tubes, boxes, and poly bags, you can be sure your small package shipment will travel safely to its final destination, all while creating some space in your shipping budget.

3. Make the most of Multiweight and Hundredweight options

   From insurance plans to your cable bill, everyone knows you can save money from bundling. That same principal can also apply to your shipping. Both FedEx and UPS offer options for customers who are shipping multiple packages to the same location that can help you save money versus the rates you would pay if they’re considered individual packages. For businesses shipping frequently to the same locations, FedEx multiweight pricing is an efficient and cost-effective service option. UPS has a similar program called UPS Hundredweight. 

   There is a catch for shippers interested in these options — it isn’t available to just any business. FedEx Multiweight and UPS Hundredweight must be negotiated into your contract, or offered as a part of comprehensive shipping program, like the association programs managed by PartnerShip.

4. Avoid dimensional weight pricing

   To combat the increase in bulky packages entering their systems, FedEx and UPS have implemented dimensional (DIM) weight pricing. With DIM weight pricing, cost is calculated based on package volume, rather than weight. The higher the volume, the more space it takes up in delivery vehicles, which means there is less room for other packages. If a package isn’t particularly heavy but is taking up a lot of space, that’s costly for the carriers. 

   After calculating your DIM weight, measure the result against your package’s actual weight; the greater of the two will become your billable weight. The best way that you can offset volume-based pricing is to take a hard look at your current packaging procedures. Unused space is a cost-conscious shipper’s worst enemy, so don’t use a package that’s oversized for the product inside and consolidate your orders when possible to ensure you’re not wasting space.

5. Take control of inbound shipping

   Another way to save on small package shipping is by taking control of your inbound shipping procedures. It’s common practice for many businesses to allow their inbound small package orders to be arranged by the vendor. But often times that leads to higher order costs for you. By instructing your vendor to ship through your account, you can reduce your costs through a few simple steps:

   • Review your vendor invoices to determine whether you have access to better pricing through your FedEx/UPS account vs. your vendor’s account.
   • Create routing instructions that include clear directions on which carrier, account, and service to use for your shipments. 
   • Ensure vendor compliance by providing your routing instructions to your vendors and regularly reviewing your invoices for accurate pricing.

While taking an in-depth look at how to minimize operating expenses can be time-consuming, these small package hacks give you a few quick ways to ship smarter. For more ways to save, PartnerShip can help.

It’s even more important to cut costs where you can, as FedEx and UPS rates are on the rise. Our free guide will help you easily identify the highest rate increases so you can more easily manage your budget.  

It’s been a wild and unpredictable year, but there’s one thing you can count on as we head into 2021 – the annual FedEx and UPS rate increases. For the fourth year in a row, both carriers announced an average increase of 4.9% for air and ground parcel services. The new rates for UPS will go into effect on December 27, while the new rates for FedEx will go into effect a week later on January 4.

How to budget your parcel costs for 2021
While it may be tempting to budget for a 4.9% increase, you have to dig a little deeper to uncover how much your costs will actually go up in 2021. The actual rate increases vary quite a bit depending on the service you use and your package characteristics.

Both carriers have made the new rates for 2021 available:

• FedEx 2021 standard rates
• UPS 2021 daily rates

You will also need to account for updates to FedEx and UPS surcharges. Common surcharges like Residential Delivery and Address Correction will be more expensive in the new year. But on top of that, FedEx and UPS have both made changes that could cause a package to incur a fee that it wouldn’t have in the past. For example, they both broadened the qualifications for their Additional Handling fee and have updated the list of zip codes for Delivery Area surcharges.

You can view a complete list of the changes that the carriers have each posted:

• FedEx surcharge changes
• UPS surcharge changes

How to analyze the 2021 FedEx and UPS rate increases
While it’s imperative for you to be aware of the changes coming ahead in the new year, combing through every detail of the new rate charts is challenging and time-consuming. A good place to start is to identify the changes that will have the most significant impact on your budget. First, take a look at your shipments from the last year and identify trends for the services you typically use, your package characteristics, and zip codes. From there you can use the new report from PartnerShip, which highlights the areas with the highest increases and outlines the important changes.

The state of the parcel industry
Aside from the general rate increases, it’s important to understand what’s happening within the parcel industry. Within the past several months, the coronavirus pandemic has brought on a great deal of logistical challenges. Carrier networks have been strained as they struggle to keep up with demand and deal with restrictions. As a result, both FedEx and UPS have instituted peak surcharges.

Most notably, since the beginning of the pandemic FedEx and UPS have been applying peak surcharges to international shipments. Air cargo capacity has been limited which has disrupted the global supply chain and driven costs up.

Additionally, residential deliveries have increased substantially as more people are relying on online shopping. High-volume B2C shippers specifically have been ramping up their business. FedEx and UPS have responded to this increased demand by instituting peak surcharges. Instead of simply applying a surcharge on all residential shipments during the holiday season like they’ve done in the past, UPS and FedEx are applying it to those shippers with a large volume of packages or those who are experiencing a significant increase. That’s good news for many small businesses, but tough on those larger ecommerce retailers.

Even if these peak surcharges don’t apply to your business right now, it doesn’t mean that you’ll forever be immune. There are still a lot of unknowns related to the coronavirus pandemic and how it will continue to impact the supply chain. You will need to stay vigilant and keep up to date on announcements from FedEx and UPS.

What you can do to combat rising shipping costs
With everything the industry is experiencing right now, shippers don’t exactly hold the power. Add the general rate increases on top of that, and you may feel helpless against rising costs. However, there are things you can do to mitigate the damages. Download our guide to the 2021 FedEx and UPS rate increases to help identify the problem areas. Then contact PartnerShip to find out if you qualify for one of our discount shipping programs, and we'll help you ship smarter.

2020 has been a year unlike any other. With the holiday season upon us, managing your shipment timelines is more important than ever. Most carriers have strict cut-off dates to ensure your holiday cheer is delivered on time, and with COVID-19 stretching available carriers extra thin this year, it’s more important than ever to plan accordingly. Whether you’re shipping small packages to customers, or need to order seasonal supplies for your business, we’ve broken down the most important holiday shipping dates that you need to know.

Freight carrier holiday schedule

• UPS Freight will be closed November 26-27, December 24-25, and January 1. There will be modified service hours on New Year’s Eve, December 31.
• YRC Freight will be closed November 26-27, December 23-25, and January 1-2.
• XPO Logistics will be closed November 26-27, December 24-25, and January 1.
• Old Dominion will be closed November 26, December 24-25, and January 1. There will be limited service hours on November 27 and December 31.
• New Penn will be closed November 26-27, December 23-25, December 31, and January 1.
• Pitt Ohio will be closed November 26-27, December 24-25, and January 1.
• Reddaway will be closed November 26-27, December 24-25, and January 1. There will be limited service hours on December 23 and December 31.
• Dayton Freight will be closed November 26-27, December 24-25, and January 1.
• R&L Carriers will be closed November 26-27, December 24-25, and January 1.
• Estes will be closed November 26-27, December 24-25, and January 1.
• Central Transport will be closed November 26 and December 25. There will be limited service hours on November 27 and December 24.
• Roadrunner will be closed November 26-27, December 24-25, and January 1.
• FedEx Freight will be closed November 26-28, December 24-25, and January 1. 
• Holland will be closed November 26-27, December 24-25, and January 1. There will be limited service November 27, December 23, and December 31.
• AAA Cooper will be closed November 26-27, December 24-25, and January 1.
• ArcBest will be closed November 26-27, December 24-25, and January 1.

Small package carrier closures and deadline dates

With a holiday season projected to be bigger than any other, it’s super important to review holiday carrier schedules and deadlines. For your shipments moving with FedEx, make sure to reference the FedEx holiday schedule so you can plan ahead. If you're using UPS to ship during the season, remember to check the UPS year-end holiday schedule beforehand.

PartnerShip schedule

If the unprecedented volume of holiday shipments has you saying "no, no, no" instead of "ho, ho, ho," the experts at PartnerShip can help. Please keep in mind that our office will be closed on November 26-27, December 25, and January 1. Happy Holidays from PartnerShip, and hang in there -  we're welcoming 2021 with open arms!

As a consumer, it might feel like it’s too soon to start thinking about the holidays, but retailers know that waiting is not an option. If you’re an ecommerce seller, you’ve probably already been stocking up your inventory and preparing for the increase in traffic to your site. As you’re getting ready for this busy time of year, keep these crucial holiday shipping strategies in mind.

1. Reduce your parcel rates
   Shipping orders to your customers can get expensive, fast. While some of the big players in ecommerce can negotiate discounted rates directly with FedEx and UPS, that doesn’t mean that the smaller sellers have to suffer. If you belong to a trade association or a chamber of commerce, check out their member benefits. Many groups offer parcel discounts with UPS or FedEx that are included as part of your membership.


2. Consider on-demand warehousing options
   If you don’t need year-round warehouse space, but your orders ramp up significantly during the holiday season, consider using on-demand warehousing. This can help alleviate the pressure on your existing operations, in a time when it’s crucial that everything runs smoothly. A key part of this strategy is also the added ability to reach your customers sooner. It’s no secret that meeting customer expectations for deliveries is essential to your business, and with the right warehousing partner, you’ll be able to reduce transit times and gain access to cost-effective expedited services.


3. Clearly communicate shipping deadlines
   There are some of us who are guilty of waiting until the last minute to do their holiday shopping. When’s the last day to order for Christmas? Do you offer expedited options or any special seasonal guarantees that could give you a leg up over the competition? Managing customer expectations for holiday shipping will increase your customer satisfaction. Clearly communicate this information on your website, during the purchasing process, and in emails to your subscribers.


4. Consider special promotions
   Now is the time to pull out all the stops to maximize your sales. People are looking to buy, and it’s your job to incentivize them to spend their hard earned dollars on your site. According to a report by the National Retail Federation, 50% of shoppers cited a limited-time sale or promotion as the reason they were swayed to purchase an item they were on the fence about.
   
   Even more notable, 64% of shoppers said that free shipping has influenced them to make a purchase. Offering free shipping has become the new normal in the world of ecommerce. If you’re worried about the costs of “free shipping” there are several different strategies you could try. For example, try setting the free shipping threshold above your average order amount to increase the amount people spend when making a purchase on your site. When executed properly, consumers will be more likely to add items to their cart to meet the minimum and it becomes a win-win.


5. Set up a streamlined returns process
   With increased holiday sales comes the inevitable – returns. According to a Narvar Consumer Report, 74% of customers said return shipping fees will prevent them from making a purchase. On the flip side, 72% said that a “no questions asked” return policy would make them more likely to buy from a retailer. The influence of the return policy on the purchase decision is undeniable. Make your return policy as customer friendly as possible and communicate it clearly at the beginning of the shopping experience. Also, take proactive steps like providing return labels in the original order and offering in-store returns so it is less of a headache for you and your customers.

Striking a balance between appealing customer promotions and the right holiday shipping strategies can help make your season bright. If you need to reduce your parcel costs or could use some help with storage and fulfillment, PartnerShip has you covered. Our shipping and warehousing services set ecommerce sellers up for success. Contact us today to learn how you can ship smarter.

When evaluating ways to lower your shipping costs, you don't want to overlook the impact that packaging has on your bottom line. In fact, there are a few high cost culprits that may surprise you. Learn how to package your parcel shipments more cost effectively with these 4 simple tips.

Looking for an intro into the fundamentals of proper packaging? We have the ultimate guide.

The ever-rising cost of parcel shipping is a hot topic. FedEx and UPS raise their rates regularly and find clever, new ways to recoup costs. The changes aren’t always clear and can catch shippers by surprise. However, if you have a solid understanding of what determines small package rates and what to look out for, you’ll be in a good position to manage your costs.

How parcel shipping rates are determined

• Weight. No surprise here, but how much your shipment weighs plays a large part in how much it will cost to ship. If you take a look at the service guides for UPS and FedEx, you’ll notice that the heavier the package, the higher the rate.
• Dimensions. You can’t look at just the weight alone. In fact, your package dimensions could cause your shipment to be rated at a higher weight, thanks to what is known as dimensional (DIM) weight pricing. Carriers use this to ensure you’re paying for the space that your shipment takes up in their delivery vehicles. Larger packages take up more room, leaving less space for other deliveries. To avoid this increase in your parcel shipping costs, it’s imperative that you’re efficient with your packaging.
• Service. If you need your shipment to get to its destination sooner rather than later, you’re going to pay for it. Air services that offer delivery overnight or next day will cost you the most. In comparison, if you can plan for some extra time, using a ground service will save you.
• Distance. Your origin and destination ZIP codes play a big part in determining your rate. The farther your shipment needs to travel, the more you’ll pay. This is based on groups of ZIP codes that parcel carriers refer to as zones.
• Fuel. This is a tricky one to put your finger on because both UPS and FedEx will make adjustments on a weekly basis based on information published by the U.S. Energy Information Administration (EIA). The surcharge is a percentage and applies to the base rate, as well as a number of accessorial charges.
• Surcharges. Based on your shipment’s characteristics, you can be hit with additional fees known as accessorials or surcharges. These fees are assessed for things like residential deliveries, additional handling, and oversized dimensions. The best thing you can do is educate yourself on the common fees so you can budget for the unavoidable ones or make some changes to avoid the ones you can.
• Discounts. Not every account is created equal. You may be able to secure discounts directly with your carrier if you have significant volume. For everyone else, you can get discounts by working with a third-party like PartnerShip.

The history of FedEx and UPS rate changes
At the end of every year, FedEx and UPS both announce a general rate increase (GRI). In recent history, it has been an average increase of 4.9%. However, that is only an average – meaning that some rates will actually increase by more or less based on service and package characteristics. Throughout the year, keep track of the type of parcel shipments you process – the services you’re using, the weight and dimensions, and zip codes. That way you’ll be able to focus on determining the rate increases that will affect you the most when the time comes. This information can be overwhelming to go through, so get help where you can. PartnerShip publishes a guide to the rate increases every year that can be a great resource for when you’re planning your budget.

Changes to parcel shipping costs to look out for
It’s hard to predict exactly what changes FedEx and UPS will make to their rates, but it’s important to note that they don’t leave them untouched outside of the GRI. In fact, over the past few years they have been making more changes throughout the year. These changes tend to affect surcharges rather than the base rates. Not only how much they’ll cost you, but also how they’re defined. For instance, FedEx and UPS recently lowered the weight threshold for the Additional Handling fee. That means that more packages will get dinged with that surcharge. Obviously this isn’t a rate increase, but it’s a way that your costs could increase.

FedEx and UPS also make changes based on long-term industry trends, seasonal demand, or unforeseen changes in the market. When their networks are strained the most, FedEx and UPS are bound to react. For example, during past peak holiday seasons when online orders are known to be at an all-time high, UPS instituted a surcharge for residential shipments. And most recently, during the COVID-19 pandemic, FedEx and UPS instituted a temporary surcharge on international shipments due to air cargo capacity being limited.

The bottom line on parcel shipping
Understanding all of the factors that make up your parcel rates is the first step to uncovering opportunities to cut your costs. Along with having that solid foundation of knowledge, keep a good record of your parcel shipments and their details so you can accurately forecast your needs and make adjustments. Lastly, stay on top of the latest updates from FedEx and UPS by reviewing their published changes and signing up for service alerts.

You don’t have to navigate these changes alone. PartnerShip provides resources to help you make sense of parcel shipping rates and can help you cut your costs. Contact us to get started.

UPS and FedEx rates are slated to go up in 2020 by an average of 4.9%. The changes will go in effect for UPS on December 29, while the FedEx rates go into place on January 6.

If you’re planning to budget for your costs to go up 4.9% in the next year, you better think twice. The announced average doesn’t paint a complete picture. The rates for some packages will be increasing less than 4.9%, but that means that the cost to ship other packages is increasing far more. What you’re shipping, where you’re shipping it to, and what service you’re using will ultimately determine how much you should budget for your shipping costs in the new year.

• FedEx 2020 standard list rates
• UPS 2020 daily rates

FedEx and UPS surcharges
The rates, however, are only one part of the equation. You also have to take into account the additional fees that UPS and FedEx tack on. It’s more important than ever to be mindful of what could qualify your packages for these surcharges. Not only do the costs increase year over year, but the carriers also make adjustments to how the charges are defined – making it more likely that your packages will be hit with them.

A prime example of this is the change both FedEx and UPS made to their Additional Handling fee for 2020. They’ve lowered the weight threshold to 50 pounds from 70 pounds, which means your costs could go up significantly if you ship packages within that window.

• FedEx surcharge updates for 2020
• UPS surcharge updates for 2020

Industry trends
Online shopping has had a profound effect on the parcel industry and the way that FedEx and UPS operate. The carriers are moving more residential deliveries and an increased amount of larger packages, as consumers have become accustomed to being able to order almost anything online and receiving it in 2 days or less.

The changes FedEx and UPS have instituted in recent years and are making in 2020 are a direct response to these industry trends. In the past several years, they’ve broadened the use of dimensional weight pricing, added new peak surcharges, and drastically increased the surcharges for larger packages.

Understanding the 2020 rate increases
We know how daunting it is to analyze the 2020 FedEx and UPS rates, so we’ve done the hard work for you. In our free white paper, we break down the new rate charts and simplify some of the complicated changes. It’s the best way to find out what will cost you the most in the year ahead. Looking for ways to offset the rate increases? We can also help with that. Contact us to find out if you qualify for one of our discount shipping programs.