5 Tips to Avoid Overpaying on Shipping Surcharges (2.6.24)

All carriers have shipping surcharges, but there are ways to reduce the amount you pay every month with careful management and negotiation.

Do you feel like you're overpaying on the surcharges associated with your shipping contracts? If so, your bottom line is suffering because these costs can add up considerably over the course of a year.

While some surcharges are unavoidable, it is possible to negotiate lower rates if you're able to leverage carriers competing against each other. You may even be able to avoid some surcharges altogether, as some carriers are willing to waive them. You also need to watch for sudden surcharge increases during peak seasons.

By carefully evaluating carrier fees and addressing inefficiencies in them, it is possible to keep shipping surcharges down and save money every month. In this article, we’ll discuss ways to do that, including:·        

• Consider the market price of fuel, and negotiate a reduced fuel surcharge

• Negotiate oversize-package, excessive length and linear foot charges

• Use alternate options for delivery to residential addresses and negotiate the fees

• Helping your business avoid other surcharges

Consider the market price of fuel

Fuel is a significant expense for all carriers, so most of them tie fuel surcharges to the US National Average, which changes each week and leads to volatility in the amount you pay. This may seem like an area where little can be done to reduce expenses, but it’s still worth addressing.

One solution is to negotiate fuel surcharges directly with your carriers to bring the overall costs down. If you can get one carrier to offer a discount on your fuel surcharge, you can use that to negotiate with other carriers. By leveraging these negotiated costs, you can find the best possible rates for your business.

Negotiate oversize-package, excessive length and linear foot charges

When a package or shipment is over a certain threshold, your carrier could include an oversize-package, excessive length or linear foot surcharge on your invoice. These charges add up if you're continually shipping large items, which can cut into your bottom line significantly.

Be aware of these thresholds for each carrier you use. If one carrier has a larger allowance, it should be your top choice when shipping larger packages.

If you regularly ship oversize packages, you can also try negotiating lower rates and leverage carriers against each other. Some carriers, for example, are willing to offer reduced charges on oversize, overlength or shipments that take up a lot of space if you ship with them regularly.

Use alternate options for delivery to residential addresses

Businesses that deliver directly to residential addresses will run into additional surcharges from their carriers. Each carrier has a different definition of what constitutes a residential dwelling. For example, some carriers consider home-based businesses residential properties, so you'll have to pay extra when delivering to them.

Perhaps the best way to keep your costs down is to look at carriers that offer reduced surcharges on residential deliveries and/or negotiate a special flat rate for such deliveries. If you can organize your logistics department to use alternate carriers depending on what you're shipping or where you're shipping it to, you can save a significant amount of money.

Helping your business avoid other surcharges

In addition to these common surcharges, you can also expect to pay extra based on the delivery area and declared value of shipments, as well as signature requirements and weekly service charges. As with anything else, you can work around some of these costs by negotiating contract terms with your carriers and using each provider as leverage.

You may run into issues tracking and negotiating all these contacts because there's a lot to organize. Doing so, however, ensures that you have the most cost-efficient and convenient carrier in place for every type of delivery while minimizing your surcharges.

Resource Logistics Group is a transportation and logistics advisor that can provide feedback on your contracts and assist with on-going contract and pricing management. We allow you to keep control of your logistics department but provide the support you need to manage your contracts through all modes of transportation. Contact us to take advantage of our free benchmarking analysis of your carriers' LTL and FTL pricing and contract language.