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FEDEX REFUNDSUPS REFUNDS

What Is a FedEx Third Party Billing Surcharge?

By Last updated on: April 23, 2019

Third-party shipping and drop shipping is a huge part of today’s e-commerce landscape. As a result, it is vital to understand this fee and know how it is affecting your daily shipping costs. The FedEx third party billing charge applies to express and ground services. Currently, the additional fee is 2.5% of transportation charges, surcharges and value added servive fees (not including duties, taxes, and ancillary clearance service fees)

Third Party Billing Surcharge
A surcharge will apply to shipments that are billed to a third party. The surcharge applies when an account unrelated to the shipper, as solely determined by FedEx, is billed as a third party for the shipment. It will be charged to the third-party payer. See the Billing section in the FedEx Express Terms and Conditions and the FedEx Ground Tariff for the definition of a Bill Third Party shipment.

The sender is ultimately responsible for all charges and fees if the recipient or third party fails or refuses to pay for the shipments. Be aware that the complete package cost could be rebilled back to your account if you are the shipper. The FedEx money-back guarantee still applies to packages with the FedEx third party billing surcharge. Remember, if the package arrives even 60 seconds late, you have the option to have the shipping charges refunded.

What is “Bill Third Party”

There are basically three different ways to pay for a shipping charges with FedEx:

  • Bill Sender – charges apply to the sender’s account number. The sender’s FedEx account number must appear on the airbill and be in good credit standing.
  • Bill Recipient – charges are applied to the recipient. (This is not C.O.D. service.) The recipient’s FedEx account number must be on the airbill at the time of shipment, or by the recipient at the time of delivery, and must be in good credit standing. But, if the account number is not provided, the recipient must pay for the shipment upon delivery.
  • Bill Third Party – charges apply to someone other than the sender or recipient. Charges for U.S. shipments may apply only to a third party in the U.S. This is our focus today.

When the bill sender or third party option is selected to pay duty-and-tax charges, the payer is invoiced for all applicable ancillary service fees. This includes fees assessed for clearance in the destination country, including all fees resulting from ancillary services requested by the recipient.

FedEx third party billing surcharge

How can to reduce FedEx third party billing surcharges?

Our first reaction to this fee is to of course negotiate with your carrier representative to have this fee removed or discounted. A full FedEx agreement renegotiation should include concessions for all the fees that are impacting your shipping spend. Before you head down this path, know your data. Ask yourself the following questions:

  • How much per year does the FedEx third party billing surcharge cost my company?
  • What percentage of my packages are effected by the UPS third party billing fee?
  • What percentage of my company’s total shipping spend is due to this fee?
UPS Third Party Billing

If you are seeing this fee have a true impact on your transportation costs then try for a contract negotiation concession. Otherwise, ask for a large discount on FedEx ground third party package rates to compensate for the additional charge. For instance, the contract could stipulate a 30% discount on UPS ground residential charges and a 35% discount on FedEx ground residential third party charges.

Another answer we have seen would be to change your FedEx billing address to the location of your drop-shipper. If you use FedEx online billing, the paper invoices will never be sent and you are able to view the invoice online. We do not have any confirmation of the validity of this work around, so if you have done this drop us a line and provide some feedback!

Final considerations

If you are shipping on another person’s FedEx account as per their request, be aware of possible chargebacks. Monitor your FedEx invoice on a regular basis for chargebacks. For more information, click the link below.

Brian Gibbs

Author Brian Gibbs

More posts by Brian Gibbs

Brian Gibbs | President of Refund Retriever

Brian Gibbs founded Refund Retriever in 2006 while running his first eBay based business and seeing the shortcomings of other shipment auditing companies. Refund Retriever's primary focus is FedEx and UPS parcel invoice auditing. After graduating from Texas A&M University in 2001, he then graduated from the University of Houston in 2004 with a JD and MBA. Gibbs has been featured in Forbes, Entrepreneur and other publications discussing parcel auditing, shipping, e-commerce and more. Learn more at www.refundretriever.com or call (800) 441-8085 for more information.

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