Ecommerce shippers often rely on surcharges to cover the cost of shipping in specific circumstances. Some retailers even use them as a revenue driver. Keep reading to understand when surcharges make sense and how much they should be.  

Shipping surcharge costs are common in the ecommerce world. They’re a reliable way to minimize monetary losses due to shipping, particularly if free or low-cost shipping is a part of your strategy. The financial burden is passed on to the customer too, and not just the retailer.

A shipping surcharge is an additional fee retailers can add on top of the base transportation cost. Surcharges are added for a variety of reasons, but they are commonly used to offset the cost of:

  • Residential address delivery
  • Weekend or overnight delivery
  • Signature requirements
  • Handling oversized or bulky items
  • Special packaging requirements

Consider this example: a popular creamery sells its ice creams, toppings, and t-shirts online. Because the t-shirts and toppings it sells (think sprinkles, nuts, and candies) are not perishable, they can be shipped using any method.

The ice creams, however, need to be shipped either overnight or with a two-day service, and require extra packaging.

To make up for this expense, the creamery decides to add a surcharge on all orders that include ice cream. This helps cover the cost for the dry ice and foam packaging, as well as the cost to ship items overnight.

Common Shipping Surcharges and Fees 

Retailers can apply surcharges to cover virtually any expense. But typically, these fees are added because a carrier has billed them to the retailer. The most common surcharges carriers use include: 

Service to Remote Areas

If a carrier needs to deliver outside its usual delivery range, they’ll likely charge a fee to do so. These areas tend to be very remote and not easily accessible, so delivery takes a lot longer than average. The exception here are government entities, like USPS, which are required to serve all areas, even the most remote, without a surcharge. 

Ground Fuel or Air Fuel Surcharges

These fees are tacked on to shipments to cover a carrier’s fuel cost. They typically range from 4-10% depending on the time of year. These prices are adjusted weekly based on the current cost of fuel. 

Accessorial Surcharges

If a shipment requires the use of additional services or machinery, you will be charged an accessorial fee. An accessorial might be charged for things like liftgate service, re-delivery or address correction.

Expedited Delivery Surcharges

Any shipping method that’s time-sensitive will incur a surcharge for the service. Weekend delivery surcharges, express service surcharges, and overnight shipping surcharges are the most common. Saturday delivery fees are especially common with carriers that deliver on weekends.  

Learn more about weekend delivery from USPS, UPS and FedEx.

Additional Handling Surcharge

If you’re shipping large, bulky, or fragile items, they’ll require special handling. Of course, this will also come at a cost. Beyond needing to pay for the actual delivery service, these surcharges specifically cover the special treatment these packages require.

Signature-on-Delivery Surcharge 

If you need the security of a required signature at pickup, popular for items like medication and electronics, carriers will charge a fee to perform the service.

Residential Surcharges

Packages delivered to residential areas typically come with a fee. Because commercial areas are more highly concentrated, they’re naturally more efficient delivery hubs. The extra time required to find, park, and deliver to a home comes at the cost of a residential delivery fee. 

Declared Value Surcharges

If you’re shipping high-value goods, you may be charged a surcharge for the liability. This is usually a separate fee from any insurance surcharges.

Print Return Label Surcharges

If retailers include a return shipping label in their packages, they’ll be charged a print return label surcharge if a customer ends up using it. If they never use the label, the retailer will never be charged.

OS Extra Surcharge

These charges cover just about anything else. OS (other shipping) surcharges might cover an international shipping fee, a carton neutral fee, freight fees, or something else entirely. These extra charges can come as a surprise, so it’s important to have a system in place to monitor each shipping invoice. 

What Surcharges Do UPS, Fedex and USPS Charge?

Each carrier has a complex system for determining surcharges, which means it’s vital for retailers to be aware of them to understand the fees they might be incurring. Here are the ways the three largest carriers in the U.S. do it.

UPS: UPS has a complex set of factors that determine when surcharges are applied, and how much they are. Key UPS shipping surcharges include: 

Residential delivery surcharge$4.45 domestic, up to $200 international
Fuel surcharge Varies weekly
Remote area surcharge$3.10 – $5.90
Peak surchargeVaries, typically added during the holidays
Address correction$18
Liftgate serivce$137 – $451 per use
Signature required$5.55
Saturday delivery $4 – $16 domestic, up to $160 international

Fedex: Fedex also calculates surcharges using hundreds of factors. Key Fedex shipping surcharges include:

Residential delivery surcharge$4.35+
Additional handling surcharge $14-25 parcel, $195 freight
Fuel surcharge5% + (Varies weekly)
Remote area surcharge $3.25-$31.50
Address correction$18 parcel, $93 freight
Liftgate service$137 – $451
Adult signature required$6.70
Saturday delivery $16

USPS: Because USPS is not a private company, it typically charges fewer additional surcharges than its competitors. Of course, this also means its services are somewhat limited in comparison. However, some surcharges still apply

Signature confirmation$2.70-$3.20
Fragile handling $11.35
Oversized handling (70 lbs.+)$13.97-$210
Non-machineable package$0.20 

The Do’s and Don’ts of Shipping Surcharges

There’s a lot to take in when it comes to understanding all these fees. But above all, it’s most important for retailers to be aware of what carriers are charging them, so that they can pass the correct amount on to customers. Here are some helpful tips for developing a surcharge strategy:

The Do’s:

Verify a Customer’s Address Type

Avoid unnecessary delays, residential delivery surcharges, and address correction fees by double checking customer addresses before they’re even submitted. ShipperHQ’s Address Validation can automate this process for you, and determine that customers have entered addresses and address types correctly.

If a shipment is going to a residential address, it’s a good idea to add on a residential surcharge.

Explore Local and Regional Carrier Options

Before committing to one (or a few) carriers, understand what options you have. Some carriers have larger footprints than others in certain areas of the country. If you’re able to work with carriers that have great coverage on certain areas, you may be able to bypass the remote area surcharges you’d get with other carriers.

If a customer is in a remote area not covered by any available carriers, it’s a good idea to add on a surcharge for their delivery.

Tack on Surcharges to Product Costs

If you’re constantly struggling to remain revenue-neutral on shipping, or if you want to make pricing a revenue-driver itself, consider adding a shipping surcharge to the cost of products themselves. This keeps the surcharge transparent, which is more appealing to most customers. It also gives you flexibility in shipping costs, allowing you to easily cover the unexpected fees that will inevitably arise.

To turn shipping into a revenue-driver, or to cover the cost of all surcharges via a blanket fee, rolling surcharges into product costs may be a good idea. 

The Don’ts 

Assume Customers Understand Shipping Costs

Virtually none of your customers have the insight into shipping costs and processes that you do. Be sure that whatever costs you’re adding at checkout are clear and reasonable. If you add a surcharge, be sure to identify it by name and keep it at a fair price to avoid losing customers over the fee.

No matter what the surcharge is for, if it shows up in the checkout process, be sure it’s clear, consistent and fair.

Charge Fees Without Explaining Why

To minimize frustrations from customers on surcharges, be sure to clearly and explicitly explain what the fees are for and why you are charging them. If surcharges are common in your shipping strategy, consider creating a shipping policy or FAQ page that breaks down all extra fees.

If you apply surcharges often, consider how you can let your customers know about them to avoid surprising them at checkout.

Stick with Manual Processes, Especially for B2B Shipments

ShipperHQ’s Shipping Rate Management Platform lets retailers automate their shipping processes so operations are more efficient and less costly. With Multi-Origin Shipping, you can ship items from the closest warehouse location. With Dimensional Packing, you can establish packing rules. And ShipperHQ’s Shipping Rules lets you design custom rules of all kinds to optimize your shipping experience at checkout.

Solutions for Surcharges

With ShipperHQ, retailers can become the master of their shipping strategy. Powerful automation tools allow you to minimize the number of surcharges you receive, limiting the surcharges you charge your customers. 

If you do need – or want – to set up surcharges, it’s simple and straightforward in the ShipperHQ dashboard. Create and iterate on surcharges at any time to keep customers satisfied with their shipping experience, and coming back for more.


See more shipping strategy tips in our Shipping Strategy Checklist: 

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Author

Amanda Laviana is a Senior Copywriter on the ShipperHQ marketing team. She brings nearly a decade of copywriting experience to the table, and has worked across many facets of the e-commerce and shipping tech landscape. Amanda enjoys blogging, traveling, cooking, and waiting on miniature dachshund hand and paw.