Shipping fee surcharges for additional, supplemental, or value-added services can easily account for up to 40 percent of your overall FedEx or UPS invoice costs. After doing some research with our data, we found something interesting. FedEx invoices consistently have a higher percentage of accessorial fees over similar-sized UPS invoices. Our random sample data for FedEx produced a 25 to 35 percent accessorial fee cost from the invoice total. UPS invoices produced an 8 to 16 percent accessorial fee cost from each invoice. The chart below will show many invoices we split into three categories: transportation charges, fuel surcharges, and accessorial fees.
This leads us to another question, does FedEx charge more fees as a whole or are the fees charged just more expensive than UPS? This is a topic we will explore in depth down the road. Fuel surcharges are also a key component of your accessorial charges. It will typically account for 3 to 6% of the total invoice cost, as you can see from our sample data.
How to reduce accessorial fees:
The initial step is to quantify the financial impact of accessorial or value-added surcharges on your invoices. How much of your yearly shipping cost goes to additional fees? After identifying the scope of impact on your business, you’ll have the capacity to distinguish which accessorials are avoidable. Finally, budget for the accessorials that you cannot avoid so that your bill has no surprises at the end of the month. In terms of accessorial surcharges, here are a few things you need to know:
- What percentage of your cost per package is made up of accessorial?
- Is there a trend? Is that percentage trending higher? Have there been any recent spikes or unexpected drops?
- Which accessorial charges have the most significant impact? Which occurs most frequently? Which is costing the most?
- Is there a specific class of service that attracts more accessorial charges than others or on particular accounts?
Your shipping data is the best weapon to reduce the budget-busting impact of these additional charges. Refund Retriever’s free logistic reporting, included with our parcel audit, can determine what accessorial charges have the largest cost of transportation impact. Logistics reporting can reveal shipping intelligence that will save your company money on FedEx and UPS shipping. Whether it’s a UPS audit or a FedEx audit, you’ll see that there are more than 100 of these accessorial charges, comprising roughly 10 to 40 percent of your overall shipping costs.
All shipping fees charges are negotiable.
Review those with the carrier. But make sure the fee reduction you negotiate impacts your shipping costs. Some clients will ask for lower additional handling or address correction fees, then reduce the usage of the fees internally, so there is no quantifiable reduction from the previous negotiation. Data is needed if you want a $.50 reduction in the residential surcharge fee. Know how many packages and how much it will save you in one year. In addition to late shipment refunds, Refund Retriever can assist you in negotiating your carrier agreements by targeting specific discounts and concessions. We can help identify the biggest bang for the buck.
Since 2006, Refund Retriever’s parcel audit refund technology has been providing business shippers the transportation insight they need to reduce logistics and freight spending. We thoroughly understand today’s complex carrier pricing environment and have helped large and small business shippers achieve best-in-class pricing.
