Money-Saving Parcel Shipping Tips: Avoiding the Dreaded Residential Surcharge and More

"There's no place like home" is usually a positive saying, isn't it? Most small and mid-sized business (SMB) shippers, however, don't feel that way when it comes to the notorious residential surcharge!

This fee can cause headaches and eat into profits for SMBs, especially when they haven't accounted for it in their budgets. Fortunately, all it takes is a little education and adaptation to minimize the impact that residential delivery fees will have on your bottom line. Let's start saving your business some money!

The origins of the residential surcharge

As most shippers know, this fee is imposed whenever a package is required to be delivered to a place of residence instead of a place of business. Its origins trace back to the early 2000s, when e-commerce shipping started to take off. This surge in residential deliveries presented small package shipping carriers with several profitability challenges, including:

• Increased traffic
• Lower speed limits
• Fewer packages per stop
• No loading docks at the destination
• Higher risk of theft due to "porch pirates"

These challenges all added up to home deliveries being a lot less cost-efficient for carriers, which is why many of them began to impose a residential surcharge to help offset these extra costs.

E-commerce has continued to grow, especially in the last few years, and the residential surcharge has increased with it.

How to save money on residential small package shipping

So what can SMBs do to lessen the impact of the residential surcharge? Let's cover some best practices that can help you minimize (or even avoid!) the dreaded residential delivery fee, as well as other money-saving recommendations.

Choose commercial delivery

This is an easy one: avoid a residential fee by not delivering to a residence! When practical, encourage your recipients to have their parcels delivered to and held at a commercial location, such as a UPS Access Point^®. Since the hold location doesn't qualify as a residence, the residential surcharge won't be applied.

Another great option is UPS SurePost^®, which often uses the U.S. Postal Service for the last mile of delivery now available for commercial addresses.

There are benefits baked into both of these options for your customers as well, since they won't have to arrange their schedule to be home for the delivery and they also won't have to worry about porch piracy.

Opt for options that are more budget-friendly

If your customer and/or goods don't require a high shipping speed, some economical shipping options come without the residential surcharge. As mentioned above, UPS SurePost can be a solid choice.

UPS Simple Rate, which charges by package size rather than weight, is another surcharge-free option. Finally, delivery within 5 days via UPS Ground can be a cost-effective option, and you won't have to pay the residential surcharge.

Find more favorable rates

Proactively looking for better rates is always a good idea. SMBs don't often have the same bargaining power with carriers that larger companies do, but there are ways to get more competitive rates. Consider partnering with a third-party logistics (3PL) provider, which can typically negotiate better rates on your behalf or provide favorable pricing through their carrier relationships — including significant discounts for e-commerce businesses. Worldwide Express offers a menu of affordable shipping options, along with expertise that ensures you're getting the best bang for your shipping buck.

Prioritize proper packaging

Residential surcharges are far from the only unexpected fees that can ruin your day. Oversize and overweight charges are all too common, but can be avoided by proper packaging and efficient use of space. Choose a box closely fitting the product's size to avoid paying dimensional (DIM) weight rates, which are applied when a low-weight parcel takes up an excessive amount of space.

Unless your items need the extra protection of corrugated cardboard, using poly bags and padded mailers instead of large boxes is a smart tactic. These materials weigh less and take up less space than cardboard, which can translate into lower shipping costs.

Get free packaging for express shipping

Nothing beats free! Did you know that UPS provides a wide range of boxes, envelopes and tubes at no cost as a perk to Worldwide Express customers? Taking advantage of free packaging can help offset some of the cost of express shipping. Worldwide Express makes it easy to order these supplies through SpeedShip™, our proprietary transportation management system (TMS).

Engage with the experts

Don't let residential delivery fees drag your spirits and your budget down! Follow the tips above and reach out to a 3PL like Worldwide Express. Our shipping experts have decades of experience helping tens of thousands of SMBs just like yours discover more ways to save on deliveries, streamline their operations and refine their shipping strategy. As the nation's largest non-retail reseller of UPS services, we're uniquely positioned to give our customers an unbeatable combination of comprehensive shipping options, proprietary shipping technology and customized service. Let Worldwide Express be the driving force that takes your SMB's residential delivery logistics to the next level!

Request a custom, complimentary shipping consultation today.