UPS and FedEx Residential Surcharge Definition, Application, and Review

UPS and FedEx each have a residential surcharge that you are likely to encounter. This charge arises when you ship commercial to a location that the carriers deem to be residential. It’s not always clear when that might be the case, and with a little bit of strategy you may be able to reduce this cost over time or at least be aware of how it’s impacting your bottom line.

UPS Residential Delivery

Unlike deliveries to a commercial business, shipments delivered to a non-commercial address have an additional fee added to the bill. In the UPS system, it is called a residential surcharge. This fee will apply to a shipment if either the delivery address entered in the UPS shipping system or the actual delivery address is considered “residential” by the carrier.

Why the quotes? Well, it’s not always clear what constitutes a residence. The fee will apply to any delivery to or from a location that is a home, whether or not there is a business co-located there. UPS gives the explanation that any address that is a house and does not have an entrance open to the general public is deserving of this charge. This causes obvious problems in areas of suburban renewal, where many former houses are now entirely places of business and located in commercial zones.

This charge is often delivered in combination with delivery area surcharges and extended delivery area surcharges. Some very unlucky shippers can get hit with multiple charges, drastically increasing the cost of delivery. This is an area that is best analyzed, understood, and then planned for with additional margins or shipping costs.

Additional charges in 2016 for this fee break down as follows depending on the level of delivery service selected:

• UPS Air Services and UPS 3 Day Select^®: $3.65
• UPS Ground service: $3.25
• UPS Ground with Freight Pricing: $30.30 per shipment
• UPS Standard to/from Canada and UPS Standard from Mexico: $3.25
• UPS International Air Services (U.S. Imports and UPS International Air
• Services to Canada): $3.65
• UPS Worldwide Express Freight™: $125.00

Effective January 2017 – UPS will be increasing the fee for residential surcharges:

• The residential surcharge will apply for all UPS International Air and UPS Standard Services.
• The residential surcharge for U.S. UPS Ground Service and UPS Standard to/from Canada and Mexico shipments will increase $0.15 to $3.40 per shipment.
• The residential surcharge for U.S. UPS Air Services, UPS 3 Day Select, and UPS International Air Services will increase $0.35 to $4.00 per shipment.
• The residential surcharge for UPS Hundredweight Service^® shipments will increase $1.30 to $32.90, and the residential surcharge for UPS Worldwide Express Freight shipments will increase $5.00 to $130.00 per shipment.

FedEx Residential and Home Delivery

Similar to UPS, FedEx also applies the residential delivery charge to shipments to a home or private residence, including locations where a business is operated from a home, or to any shipment for which the shipper has designated the delivery address as a residence.

Unlike UPS, FedEx has multiple delivery networks that handle Express, Commercial Ground, and residential package deliveries independently. Consequently, there is more than one method to ship a FedEx package to a residence. You can ship the package FedEx Ground and pay the surcharge, or you can ship with the Home Delivery network, which has different shipping rates. To better understand these options, you may want to read our article on the difference between FedEx Ground and Home Delivery.

Let’s imagine a delivery that could utilize either service. If you send the package via FedEx Ground, they will add a residential delivery charge to the standard ground package cost.  This charge was $3.65 per package in 2016.

However, if that same shipment was placed in the FedEx Home Delivery network to begin with, FedEx would apply a Home Delivery surcharge of $3.25 per package. Although the differences in these fees may not seem like much, when shipping high-volume packages and utilizing the wrong network, they can add up quickly and can cost shippers many lost dollars.

In 2017, these fees will be increasing to $3.85 per package for FedEx Ground Residential and $3.45 per package for FedEx Home Delivery. It is important that shippers understand these differences so that they can ship packages in the right network and avoid unnecessary additional fees.

FedEx residential fees for specific services:

• U.S Express, U.S. Ground, and International Ground services for 2016 are $3.65 per package and increasing to $3.85 per package in 2017.
• International Express package services (to Canada, and U.S. import-rated packages from all origins) are also $3.65 per package for 2016 and increasing to $3.85 per package for 2017.
• The maximum charge with FedEx Express Multiweight or FedEx Ground Multiweight pricing is $31.60 per package for 2016 and increasing $1.70 to $33.30 per package for 2017.
• FedEx Home Delivery charges are $3.25 per package for 2016 and increasing to $3.45 per package in 2017.