Shipping is an expensive part of any ecommerce business. Therefore, it is wise to cut corners wherever you can to save on costs and grow your business. However, that may not be as easy as it sounds.
Your shipping bills can contain additional expenses over existing shipping fees that can put a dent in your wallet and deter your plans to save on shipping costs.
One of such expenses is an oversize charge, which unfortunately is a common expense for businesses dealing with particularly large products such as pianos, washing machines, refrigerators, etc to name a few.
With the right optimization techniques, businesses dealing in large goods can reduce the impact of oversize charges. But first, let’s understand the basics.
What is an Oversize Charge?
An oversize charge is a surcharge levied on packages that exceed the carrier’s permitted weight. This charge is applied to the package’s actual weight or dimensional weight, whichever is higher.
Major carriers such as FedEx and UPS treat oversized packages differently according to their own calculation and nomenclature.
FedEx Oversize Charge
A FedEx Oversize Charge is applied to packages that exceed 96 inches in length or 130 inches in length and girth.
As we mentioned, the surcharge will be based on the greater of the package’s actual rounded weight or dimensional weight with 90 lb as the minimum billable weight.
FedEx also suggests that the package shape and dimensions may change during transit, affecting the package’s dimensional weight and surcharge eligibility. In such cases, FedEx may make appropriate adjustments to the charges at any time.
UPS Large Package Surcharge
A Large Package Surcharge is applied to each UPS package when its length plus girth [(2 x width) + (2 x height)] combined exceeds 300 cm but does not exceed the maximum UPS size of 400 cm.
Large Packages are subject to a minimum billable weight of 40 kg in addition to the surcharge itself.
UPS does not apply an Additional Handling charge when a Large Package Surcharge is levied.
Catching up with the Price Hike for Oversize Charges in 2022
If these surcharges don’t worry you enough, keep in mind that FedEx and UPS increase the rates of these surcharges YoY. Not to forget the additional peak surcharge during the holiday season.
In 2022, both FedEx and UPS increased the rates of their services by an average of 5.9%. This applies to oversize and large packages as well, making you, the retailer, feel the brunt end of the price hike.
Here’s a quick rundown of the FedEx and UPS Oversized and Large Package price hike.
FedEx price hike for Oversize Charges in 2022
As of January 24, any packages sent under FedEx Express and Ground services will cost a minimum of $110 to a maximum of $145 (which was $105 in 2021) based on the designated FedEx zone of the destination.
Similarly, FedEx Home Delivery will cost anywhere between $135 to $170 from a common $130 for all zones in 2021.
That’s not all! Oversize Packages under International Express and International Ground services will now cost $145 per shipment, a significant increase over $105 the previous year.
UPS price hike for Large Package Surcharge in 2022
Just like FedEx, UPS too has increased the rates for Large Packages with effect from December 26, 2021.
Commercial packages that are considered large and oversized can cost you between $110 to $140 based on the zone under which the destination is marked.
Residential packages, on the other hand, are even more expensive and can cost you between $135 to $165, with an increase of $10, $15, and $20 based on the respective zones.
While this rate change did not come as a surprise to many, it shows shipping carriers’ stand on oversized packages. They have made it downright difficult for shippers to ship heavier items without paying a pretty penny.
What Do Oversize Charges Mean for Your Business?
While retailers are still coming to terms with the effect the price hike will have on their margins, those who deal with furniture, gym equipment, mattresses, home appliances, etc are worried even more. These particular retailers will now have to come up with other inventive means to make up for the loss.
Shipping carriers would no doubt get the better end of the deal when such products are shipped. But, the main motive behind the rate hike seems to be the need to compensate for their significant losses due to COVID-19 without regard for ecommerce businesses, who went through the same ordeal.
However, all things considered. There are still ways for your business to make sure that the damage as a result of Oversized Packages surcharges and regular increases in their rates is trivial.
What You Can Do to Minimize the Impact of This (Significant) Hike
- Try renegotiating the terms of your contract with your shipping carrier (in this case FedEx or UPS) and work out a cheaper alternative if you are a bulk shipper.
- Consider choosing Freight services if your profit margins are affected too much (delivery usually takes 4-6 business days).
- If the alternate service options aren’t working out, you could consider shipping with other carriers who can accommodate oversized packages at better rates.
- If the product consists of various parts that could be divided and shipped, then you could dismantle it and then send it. This would work with automobile parts, electronics, gym equipment, furniture, or bikes.
- In the case of mattresses, investing in compression boxes or packaging might be a tad more cost-effective than paying the oversize price.
How Lateshipment.Com Can Help
Does your company have an issue with oversized packages? Many shippers really have no idea of what they are paying for when they pay an invoice from their shipping carrier.
In this case, LateShipment.com can help you reduce your shipping costs from additional expenses such as Oversized charges.
Firstly, LateShipment.com helps you regularly audit your shipping invoices and claim eligible refunds to recover up to 20% of your shipping cost.
Apart from delivery issues, this also includes incorrect surcharges and billing errors such as duplicate entries and complex DIM weight errors, helping you save up to $170 per package in 2022.
That’s not all! We can also help you renegotiate your contract with your shipping partner.
LateShipment.com provides you with carrier performance reports that let you dig deeper to uncover gaps, know where you’re seeing profits, and review areas where you’re not.
The reports equip you with good data while renegotiating contracts with shipping carriers and can help things work in your favor.
Not just that, keeping a close watch on carrier performances and claiming regular refunds also ensures better service quality by your shipping carriers.
In conclusion, LateShipment.com’s automated Parcel Audit and Refunds solution can help you with these Oversized Charges and Large Package Surcharge with FedEx and UPS respectively.
