How do I know if a shipping address is residential or commercial, and why does it matter? Shipping a package is simple, right? 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 businesses and individuals, this difference complicates the decision process of which carrier to use. Residential vs. commercial shipping: it makes a difference which you use!
Estimated reading time: 3 minutes
Residential vs. commercial delivery?
- 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.
Why does it generally cost less to ship to a commercial address? That’s because it’s less expensive to deliver to densely clustered commercial addresses. Residences are often scattered throughout sprawling neighborhoods.
Why is residential delivery more than commercial delivery?
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 a carrier to bundle or group many deliveries in a small geographic area. Therefore, commercial delivery is less expensive than residential delivery.
FedEx Residential Fee Surcharge
| FedEx Services | Cost (2021) | Cost (2022) |
| Domestic Air Express Services and all Ground Services | $4.95 per package | $5.30 per package |
| International Air Express Services | $4.95 per package | $5.30 per package |
| FedEx Home Delivery | $4.35 per package | $4.75 per package |
UPS Residential Fee Surcharge
| UPS Services | Cost (2020) | Cost (2022) |
| Air Express Services and 3-Day Select | $4.70 per package | $5.35 per package |
| Ground Service | $4.10 per package | $4.85 per package |
| Standard to/from Canada and Standard from Mexico: | $4.10 per package | $4.85 per package |
| International Air Services | $4.70 per package | $5.35 per package |
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. A successful contract negotiation is a balancing act. Some shippers choose to 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 get in touch with Refund Retriever at 800-441-8085 or Brian@RefundRetriever.com. Refund Retriever can help control residential vs commercial shipping costs.
