Mitigate Shipping Surcharges with Address Validation

A picture may be worth a thousand words. But if you are engaged in retail or e-commerce, the next few hundred words in this blog are going to potentially be worth thousands of dollars to you – or more.

The reason is that the holiday shipping season is upon us, and there are two major sets of fees you need to understand and manage: holiday surcharges and address correction fees. Let’s look at both of these fees, and what you can do about them.

Ho, ho, ho – introducing the holiday surcharge

There is no surprise that e-commerce and last-mile delivery has been booming during the 2020 pandemic, and now a historically busy holiday season is looming for major carriers such as UPS, FedEx and USPS as delivery capacity is strained to its limits. What may be a surprise to some larger sellers, however, is that each of these carriers now charge a per-package surcharge for commercial shipments during the season, with USPS being the latest to join in the act.

These fees apply mainly to large commercial shippers – for example, UPS’s fees apply to customers shipping over 25,000 packages per week, and FedEx has also stated that their surcharge is aimed at larger customers. Here are some of the current fees you can expect:

 

As for the holiday periods involved, they are Oct. 18-Dec. 27 for USPS, Nov. 2-Jan. 17 for FedEx SmartPost, and “until the end of the COVID-19 pandemic” for FedEx Express.

Address correction surcharges

Beyond holiday surcharges, there is another large delivery fee that is with us year-round: carrier fees for address correction.

Why would an address need to be corrected in the first place? Let’s say you ship a package to a client working in a 40-story building, and leave off the suite number. Or make a typo in the address or ZIP code, or put it in the wrong format for the carrier. Or ship to an address that isn’t deliverable by the service you’ve chosen. Any shipment that breaks the stride of a major carrier at the point of delivery puts you at risk of fairly substantial per-package fees.

This surcharge is currently $17 per correction for each of the “big three” shippers. This is almost a third more than what these fees were just three years ago, and reflects a new and more time-critical environment for last-mile delivery. But unlike the new holiday surcharge, these fees are avoidable with proper planning and the right technology.

How to avoid address correction surcharges

Holiday fees may be largely unavoidable for high-volume shippers this year. However, shippers still may be able to use this knowledge to optimize things like the number of packages being sent, or the timing of deliveries.

As for address correction fees – which apply to shippers of any size, and can particularly eat into the profits of smaller operations – this is one area where a little planning can save a LOT of money. Let’s look at the math: the same $17 you would pay for ONE surcharge could also pay for validating and correcting roughly 3,000 addresses using one of our Address Validation services – which, in the case of a 3% rate of bad addresses, would save you over $1,500 in address correction surcharges! Not to mention preserving your customer relationships and brand reputation with each of those customers.

Delivery surcharges are one area where an ounce of prevention is truly worth a pound of cure. More importantly, it underscores how contact data quality is increasingly critical in a world that is rapidly shifting to e-commerce. We’re always here to help you find cost-effective ways to navigate this new business environment, during the holidays and beyond.

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