The price you see on shipping labels is not necessarily the price you pay carriers. Inaccurate weight or dimensions, and changing surcharges can have a dramatic effect on the total cost you end up paying carriers. In this article we discuss why carriers can charge you fees and adjustments and how you can avoid them.
Welcome back to my blog series on optimizing shipping costs! For those who don’t know me, I’m Tyler, and I founded String to help eCommerce businesses save time and money on order fulfillment.
Today we need to talk about something that recently caught my attention that I don’t think enough people know about. Did you know that carriers can adjust the price you pay for shipping labels and apply penalty fees for inaccuracy AFTER you’ve purchased a shipping label?
Even if you did know this, what you might not know is the magnitude of the impact it can have on your monthly shipping expenses. In some cases, I’ve seen as high as 25% adjustments at the end of the billing cycle with a carrier. For businesses who ship high volume, this can mean tens of thousands of dollars a month you didn’t expect.
Before we talk about how to mitigate this issue, let’s take a step back and talk about what causes carrier adjustments. Typically, there are two primary drivers for this:
1) Surcharges that change between the time you request the shipping label and the time you ship the package.
2) Inaccuracies in the weight and dimensions used to get a shipping label.
So how might these two things manifest when it comes to receiving a carrier adjustment?
Let’s start with common surcharges you can expect. Carrier surcharges can change daily (and sometimes hourly) and are incredibly hard to predict. Carriers include surcharges for things like fuel, peak season, oversized packages, and residential delivery. Some remain more consistent than others but all of them can change regularly.
The best way to avoid being hit with these surcharge adjustments is to ship packages as soon as you can after your print a shipping label or request a rate. Because these surcharges can change so quickly, if you buy a label and don’t ship the package for a day or two, you could end up paying a totally different rate than you thought you were paying. Second, make sure that you always verify if an address is residential or not. For a carrier like FedEx, this can make a 20%+difference on the total you pay for delivery.
More importantly though (and more common) are adjustments and added fees charged by carriers for inaccurate weight and dimensions. In my first blog post, we talked about how carriers use dimensional weight to provide a shipping rate to you. You can read more about that here.In short form, if you provide a carrier with inaccurate dimensional weight, you will receive non-compliance fees that can have a meaningful impact on the total you pay for shipping.
For example, USPS levies a fee of $1.50 for providing inaccurate or no dimensions for packages with volume larger than 1 cubic foot. This charge is in ADDITION to the adjusted rate that USPS will charge. Additionally, USPS charges a non-standard fee for packages that exceed a certain volume (2+ cubic feet) or have length greater than 22”. These fees range from $4 to $25 so it’s incredibly important to pay attention to dimensions when shipping an order.
What can you do about this? Your first step should be making sure you have the accurate dimensions logged for every package you carry. Doublecheck the length, width, and height to assure you have them right. And if you use polybags or bubble mailers, pay close attention to if their packed dimensions might exceed 1 cubic foot as this is the point where fees can start to be levied for inaccurate dimensions. Your second step should be to make sure you always use the correct package when requesting a rate from a carrier. I know a ton of people who always use the same dimensions and only change the weight. This may not matter if you’re shipping packages less than 1 cubic foot but as soon as you exceed that threshold any inaccuracy can quickly add up to 10-20% extra in shipping expenses.
If it’s going to take your team too long to assure that every shipping label you request has the proper dimensions, I’d highly recommend looking at String. When I started buildingString, it’s main purpose was to alleviate the stress and financial burden of finding and entering the right package size for every order a business ships. You’ll save time, you won’t be surprised by carrier adjustments, and you’ll save money by making sure your cubic weight is as small as possible.
To see if this might be a problem for your business, I’d recommend pulling up your latest invoice from carriers and comparing the actual rate you ended up paying to the rate your shipping platform predicated based on the information you entered. You may be doing just fine but there’s a chance you’ll be surprised by the difference.
If you’ve made it this far, thank you for reading to the end and let me know if there’s anything you’d like me to discuss next week!