With the increases in UPS surcharges in June, now is a good time to revisit some of the ways shipping costs are calculated, and how they can cost you more than you think. If you missed these announcements, here are the three changes:
- On June 4, 2018, UPS surcharges increased on oversized shipments (this includes both the Over Maximum Limits and Oversize Pallet Handling Surcharge) from $500 to $650—an increase of 30%
- Also on June 4, UPS began imposing a Shipping Charge Correction Audit fee (we’ll explain more on that in a bit)
- On June 11, the ground fuel surcharge increased 0.5%
These increases can severely affect your bottom line, particularly if you ship large packages. Let’s go over how some of the above charges are calculated, what some of the terms mean, and what you can do to avoid paying extra fees when you ship.
What are Maximum Limits and Oversize Pallet Handling?
The UPS formula for measuring standard-shaped packages is as follows:
Length + 2x Width + 2x Height
- Step 1 Determining Length
- Measure the longest side of the package, rounding to the nearest inch. This is your length.
- Step 2 Determining Girth (2x Width + 2x Height)
- Measure the width of the package, rounding to the nearest inch. Multiply this number by 2.
- Measure the height of the package, rounding to the nearest inch. Multiply this number by 2.
- Add these two numbers together. This is your girth.
- Step 3 Add the length and the girth together. This is your package measurement.
- Step 4 Weigh the package to obtain its actual weight.
Once you’ve obtained the length, girth, and weight of your package, you need to know whether or not that exceeds the limitations set by UPS. Below is the summary of those limitations:
- Packages can be up to 150 lbs
- Packages can be up to 165 inches in length and girth combined
- Packages can be up to 108 inches in length
- Packages with a large size-to-weight ratio (meaning they are light but large) require special pricing and dimensional weight calculations (use ShippingEasy’s free DIM weight calculator to help with this)
More on the Audit Fee and Fuel Surcharge
UPS is penalizing you for making them do extra work. The Audit Fee works to basically change the way business owners ship to try and make shippers more accurate in their calculations. As stated by UPS:
- The Audit Fee will be assessed if the average shipping charge correction in an invoice week is more than $5.00. The Audit Fee will be the greater of $1.00 per package subject to a shipping charge correction or 6% of the total amount of shipping charge corrections during the applicable invoicing period. Review the applicable UPS Rate and Service Guide starting on June 4, 2018 for further detail.
If you ship using UPS, it’s wise to measure twice and ship once in order to avoid these fees adding up on your monthly invoices.
The UPS Fuel Charge, a fee also assessed by FedEx but not USPS, varies by week based on the National U.S. Average On Highway Diesel Fuel Price as reported by the U.S. Energy Information Administration (EIA).
This is calculated for the week that is two weeks prior to the adjustment, rounded to the nearest cent. For example, the surcharge for the week of June 25, 2018 is based on the National U.S. Average On Highway Diesel Fuel Price for the week of June 11, 2018.
The UPS surcharges for Ground Fuel will be set in relation to the following table, but are subject to change without prior notice:
How to save money shipping packages
This article isn’t all bad news. You can avoid some of the surcharges and fees, optimize your packaging for better shipping, and compare and contrast your way to savings by using a little bit of strategic smarts.
Optimize your packaging
Using any old box you have laying around may save you from having to buy boxes (hint: not really—you can actually get free shipping supplies from all three major carriers!), but it is not the optimal way to ship.
If the box is too big, you end up stuffing it with packing materials to keep the product from moving around, which can add weight. You also run the risk of paying more based on the size of the package, as we mentioned above with Dimensional Weight. Try to find packaging that fits as closely as possible to the size of your products.
Rate shop and don’t stick with one carrier
This is where we remind you of the power of a shipping solution. The amount of time you’d spend visiting the USPS, FedEx, and UPS websites, entering all the information in, and comparing between tabs, could quickly and easily be saved in a single interface.
With a simple drop down, you can assess packaging, enter dimensions, and choose between different carriers to see who offers the best rates for your package destination and delivery window.
As it turns out, USPS has an average on-time delivery percentage of 88.2% as of the end of Q2 this year (on-time delivery statistics for UPS and FedEx are not readily available outside of holiday season reporting). Near 90% on-time delivery is not bad considering the volume of packages (constantly increasing thanks to rising e-commerce sales) they handle.
As a reminder, USPS does not charge a fuel surcharge, and the vast majority of packages are arriving on time for a fraction of the cost. With many customers expecting free or discounted shipping, it’s crucial to your business to cut shipping costs in every way possible. There are some instances where FedEx and UPS win out, so quick comparisons are key to e-commerce success.
ShippingEasy also has an award-winning Customer Success team available by phone, email, and in-app chat, plus onboarding, to help you optimize, answer any questions you have, and make sure you’re getting the best savings on your shipping. Take us for a spin, FREE for 30 days, and see how easy it is to optimize your shipping, automate your processes, and get ready for the upcoming back-to-school and holiday seasons!