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Residential vs Commercial Shipping?

By Last updated on: July 25, 2023

How do I know if a shipping address is residential or commercial, and why does it matter? Shipping a package is simple. Box items and apply a shipping label. The carrier then takes the box to your recipient. So why does it cost different amounts? Why do carriers want to know if you are sending to a business vs. a residence? As an eCommerce merchant selling to companies and individuals, this difference complicates which carrier to use. Residential vs. commercial shipping: it makes a difference which you use!

Estimated reading time: 4 minutes

Residential vs. Commercial Shipping Types

  • A residential delivery: final delivery to a home or private residence, including a business operating out of a home.
  • A commercial delivery: final delivery to a business.
residential vs commercial shipping Refund Retriever

Why does it generally cost less to ship to a commercial address? That’s because delivering to densely clustered commercial addresses is less expensive. Residences are often scattered throughout sprawling neighborhoods.

Why are residential vs. commercial shipping different prices?

You may have noticed that residential shipping fees are higher than commercial ones as an online seller. Residential addresses are spread out. Generally, residential addresses have more overhead costs. Plus, it takes more time, consumes more gas, and does more vehicle wear and tear.

Last-mile delivery is the most expensive part of any small parcel cost. Commercial addresses are usually in high-density areas. This allows carriers to bundle or group many deliveries in a small space. Therefore, commercial delivery is less expensive than residential delivery.

FedEx Residential Fee Surcharge

FedEx ServicesCost (2021)Cost (2022)Cost (2023)
Domestic Air Express Services and all Ground Services$4.95 per package$5.30 per package$5.80 per package
International Air Express Services$4.95 per package$5.30 per package$5.80 per package
FedEx Home Delivery$4.35 per package$4.75 per package$5.15 per package
residential vs commercial shipping FedEx

UPS Residential Fee Surcharge 

UPS ServicesCost (2020)Cost (2022)Cost (2023)
Air Express Services and 3-Day Select$4.70 per package$5.35 per package$5.85 per package
Ground Service$4.10 per package$4.85 per package$5.25 per package
Standard to/from Canada and Standard from Mexico:$4.10 per package$4.85 per package$5.50 per package
International Air Services$4.70 per package$5.35 per package$5.85 per package
residential shipping UPS

Can residential surcharge fees be waived or negotiated?

YES! A shipper can negotiate with FedEx and UPS to reduce or eliminate residential fees. In short, a large volume shipper can combine transportation charge discounts with accessorial fee discounts. Successful contract negotiation is a balancing act. Some shippers receive a lower transportation fee discount for a complete waiver of the residential surcharge.

Refund Retriever can help you with any questions regarding residential vs. commercial shipping. Therefore, to learn more about our parcel auditing services, please contact Refund Retriever at 800-441-8085 or Refund Retriever can help control residential vs commercial shipping costs.

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 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 or call (800) 441-8085 for more information.

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