If you’re looking for a way to boost your online sales, offering low-cost shipping rates is a great place to start. In 2022 alone, 48% of shoppers reported that extra costs, like shipping, caused them to abandon their cart.
While finding competitive shipping rates can help combat this problem, it’s also vital to consider how extra costs like accessorial charges impact the overall cost of shipping. By understanding what these shipping fees are and where they come from, you can more effectively control the cost you’ll pass along to your customers. This knowledge will also help you to create and carry out strategies to save money on accessorial fees.
Let’s look at what accessorial charges are, why they are applied, and what you can do to minimize their impact on your business.
What Are Accessorial Charges?
Accessorial charges, also called value-added services, are extra shipping costs applied to freight and parcel shipments. Typically, these charges are added to cover the cost of extra time, labor, or care required to honor special shipping requests.
Accessorial fees vary based on the type of shipment. For example, accessorial charges for a freight shipment might include inside delivery or liftgate service needed for larger packages. Since parcel deliveries are smaller, accessorial charges cover things like address correction, fuel/residential surcharges, and signature on delivery.
Common Types of Accessorial Charges When Shipping Parcels
Even though accessorial charges increase the cost of shipping, it enables entrepreneurs like you to make a positive impact on the customer experience. That’s because these value-added services make it possible to ship packages exactly the way your customer desires.
Let’s take a look at the most common types of accessorial charges and when they apply.
When a destination address doesn’t reflect what a carrier’s system says it should be, address correction shipping surcharges apply. These fees, which costs around $20, ensure parcels reach the correct address. Shippo’s software can verify the address before handing off to the carrier.
Additional fees apply to parcels requiring special handling due to things like a package’s heavy weight, fragile items inside the package, or custom packaging. Depending on the reason, costs range anywhere from around $18 to $40.
Collect on Delivery (C.O.D.)
If payment for a parcel must be collected upon delivery of a parcel, a C.O.D. charge applies. This option, which gives customers the ability to pay via cash or check for their items, costs about $18 depending on the carrier.
Chargeback for Consignee Billing Shipments
Some shipments are set up in such a way that the consignee, or the person receiving the package, is responsible for paying the shipping fees associated with it. If a package is shipped to an unauthorized consignee or if the consignee refuses to pay the associated fees, a chargeback surcharge is billed to the shipper in the amount of about $20.
Delivery Confirmation Signature Required
A delivery confirmation signature allows shippers to provide proof that a package was delivered and received by a specific individual at the destination. This service carries a surcharge of approximately $6.
Delivery Confirmation Adult Signature Required
When an adult’s signature is required before delivery can take place, it entails an accessorial charge of $7.65.
Dangerous Goods (Hazardous Materials)
Shipping hazardous materials requires special handling to protect the health and well-being of carriers and customers alike. This service typically ranges from $35 to $145.
Shipping perishable items requires taking special precautions against spoiling, such as using dry ice. This shipping surcharge runs at around $7.
Delivery Area Surcharge
When a parcel’s destination falls outside of a carrier’s typical delivery area, extra shipping surcharges apply. The cost of these fees depends on the type of delivery service being used and can cost up to $7.15 with UPS.
If a parcel must be stopped or redirected mid-journey, a delivery intercept charge is applied. This fee, which can cost up to $20, is only applied if the intercept is successful.
When gas prices rise above a certain, pre-determined price, delivery companies apply an additional fuel surcharge to mitigate the impact on their profits. This fee depends on the difference between the ceiling price and the cost of fuel and is typically charged by the gallon. With Shippo, you won’t have to worry about this charge for USPS, UPS, and certain FedEx shipments.
Large Package Surcharge
When a package exceeds certain dimensions, special handling is required, which incurs a large package surcharge. This fee, which is determined based on the size of the package, can cost up to $200.
Missing/Invalid Account Number or Refusal Fee
Most carriers allow shippers to bill shipping charges to an account holder’s account number. If the account number provided is invalid or the consignee refuses a package, an extra fee applies, up to $19.50.
Over Maximum Limits
When a parcel’s weight or dimensions falls outside of a carrier’s predetermined maximum limits, carriers will charge an additional fee which can be substantial. For USPS, weight limits can’t exceed 70 lbs while UPS’s limit is 150 lbs. The maximum size for UPS shipments is also larger, being 108 inches in length or 165 inches in length plus girth.
A package pickup fee is assessed when a shipper opts to have a carrier pick up parcels rather than drop them off. This charge typically costs as little as $2. With Shippo, you can schedule to have USPS reps pick up your packages for free.
When freight charges change after a package has been received by the carrier, a rebill fee is often assessed. This most commonly happens when a package is different from what was quoted, but it can also occur if a quote expires or a price change goes into effect.
Remote Area Surcharge
Remote area shipping surcharges apply to shipments that fall outside of a certain range from a carrier’s hub. These fees cover the extra time and fuel that is required to deliver to such areas and usually cost between $13 and $38.
Residential surcharges are accessorial charges applied to shipments going to addresses deemed as residential by the carrier. The cost is around $5.25. Carriers such as USPS don’t enforce this as an accessorial charge. UPS shipments with Shippo are also not affected by this.
Shipping to an Access Point or Parcel Locker
Shipping to a partnered retail location of the carrier allows customers the flexibility to pick up their packages from a safe location on their own schedule. UPS does not charge extra fees for shipping to these Access Points, though other carriers may charge a fee for the convenience.
Who Pays for Accessorial Charges?
The person responsible for paying for accessorial charges depends on your business model. For example, you can opt to pass the price of these shipping surcharges on to the customer after delivery. However, many businesses instead opt to pay for these charges at the time of buying a label in order to give customers the best post-purchase experience possible.
How to Save Money on Accessorial Fees
The best way to save money on accessorial fees is to be mindful of how you’re shipping parcels. Simple practices such as measuring boxes correctly and double-checking addresses, for example, can eliminate them entirely.
However, some accessorial charges can’t be avoided. That’s why it’s essential to create other strategies to lessen their impact on your store.
You also have the option of baking the cost of accessorial charges into the cost of your products. This is a common practice among e-commerce store owners since it makes shipping costs easier to swallow for customers. By accounting for shipping surcharges and including them in product prices, you can protect your profits from being absorbed by unexpected fees.
The ultimate way to reduce the impact of accessorial fees on your business is by using Shippo. With our platform, you can avoid fuel and residential surcharges, get automated address confirmation, take advantage of free pickups via the postal service, and enjoy discounts on shipping rates from the nations top carriers!