How to Avoid the Third Party Billing Fee?

third party shipping fee warehouse

While UPS added a Third Party Billing Fee last year,  as part of their announcement of 2018 rate increases, FedEx will add one as well. Read more about the pre-existing UPS Third-Party Billing Fee.

But what is a third party shipper and why might you use one?

So there can be many reasons that you might pay the bill on goods that aren’t shipped from to or from your location. The most common use-case is when you are using a fulfillment center or distribution center for shipping. If the fulfillment center is the origin of the shipment but the bills are being sent elsewhere like to your corporate headquarters then you are using a third party shipper. You may also be facilitating a lot of shipping in between contractors or vendors and covering all the shipping on your account.

This scenario occurs when the seller of goods (third party) neither houses or ships the goods. They may sell from a website and when the item is purchased, they notify the manufacturer who then ships the product. This technique offers businesses the flexibility of selling without the costs of storage.

In summary, in the case of a third party shipper neither the shipper nor receiver is billed. Rather, a third entity pays for the shipping. 

Third Party Billing Fee

Why is this new fee a big problem for Third Party Shippers? The introduction of the Third Party Billing Fee will affect many industries who already see low-margin profits. In fact, UPS customers saw a 2.5% increase in shipment costs with the Third Party Billing Fee last year. For a business already seeing low-profit margins and continuing rising costs for shipping (like DIM weight increases), this can be catastrophic. Also – the additional fee will be on every single package shipped this way and will come directly off the bottom line.

How to Avoid the Third Party Billing Fee

So what can you do to guard against these inflated costs?  Franklin Parcel has a plan. A good place to start is with your electronic billing.

First, opt in for electronic billing. Then simply change the billing address to the the address of the third party shipper. Since you are now being billed electronically, you will no longer receive paper invoices but you also won’t care what address is listed for you billing address. This should help circumnavigate the “Third Party Billing” charge entirely. Sign up below to learn other ways we can help you mitigate these types of charges and discover even more ways to increase your bottom line.

Sign up for our Newsletter and Ben will personally send you his top shipping optimization tips and tricks.