• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile

  • CORONAVIRUS
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • REGIONS
    • Asia Pacific
    • Canada
    • China
    • Europe
    • Latin America
    • Middle East/Africa
    • North America
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Blogs » Think Tank » Five Ways to Manage Shipping Costs as Fuel Surcharges Soar

Think Tank
Think Tank RSS FeedRSS

Logistics / LTL/Truckload Services / Supply Chain Finance & Revenue Management / Supply Chains in Crisis

Five Ways to Manage Shipping Costs as Fuel Surcharges Soar

0320_DieselFuel.png

A close-up view of a diesel pump as trucks refuel. Photo: Getty.

July 7, 2022
Jeff Macak, SCB Contributor

Navigating accessorial charges — the additional fees that carriers charge on top of base delivery costs — is among the most challenging aspects of managing shipping costs for online merchants.

The list of accessorial fees is long and confusing. Now, high fuel costs are further complicating shippers’ efforts and driving up costs. Not only are they seeing such charges on their invoices, in many cases they’re also finding a fuel surcharge added to many line-item surcharges. As the cost of fuel continues to rise and fuel surcharges are piled onto other fees, businesses and their customers are feeling the pinch of higher shipping costs.

There are hundreds of accessorial charges that carriers apply to deliveries. Residential deliveries incur surcharges, as do signature-required deliveries, bulky items, peak-season deliveries, and those to areas that may not have the density that carriers desire. Oftentimes shippers aren’t aware that packages are subject to surcharges until after they receive an invoice and investigate the charges. When this happens, it’s frustrating for shippers to discover they must pay for delivery services they believed were covered by the contract.

In some cases, shippers can adjust in order to avoid certain surcharges — for example, by shrinking or using differently shaped packaging, or switching to lighter materials. However, there are times that shippers simply must pay the extra costs, such as when they ship to customers in zip codes where delivery area surcharges (DAS) are applied. 

Businesses know it’s important to keep shipping costs at bay, because expensive shipping rates cause online shoppers to abandon their carts at checkout. Moreover, if merchants want to offer shipping deals to drive sales conversions while remaining profitable, they need affordable rates.

Managing shipping costs can feel overwhelming. Rate tables can get complicated, and descriptions of surcharges are buried inside carriers’ terms and service guides. For business owners, it takes significant time and effort to learn about the different fees and when they’re applied. Following are suggestions for shippers on how to begin managing costs as fuel surcharges continue to surge and drive the price of shipping higher.

Know your shipping patterns. Understanding which products you ship regularly, the shipping categories that those items fall under, and where your customers live makes it easier to control costs. Take time to study your shipping habits. Are you shipping primarily to residential addresses? Do your shipments require adult signatures? It might seem like a simple step, but the more effort you put into clearly defining and understanding your current shipping patterns, the easier it will be to identify which surcharges are most problematic.

Identify your most common surcharges. Audit invoices and identify which surcharges are costing you the most. Then examine whether there are changes you can make to avoid some of those fees. For example, you could eliminate the residential accessorial charge and related fuel surcharge on a portion of your shipments by encouraging customers to have orders shipped to a commercial pickup location instead of their home. According to one study, nearly one in five online shoppers will choose shipping to a pickup location when offered. That potentially means shippers could eliminate up to 20% of their residential and remote area surcharges, along with part of their fuel surcharges, by converting some residential shipments to commercial shipments.

Control what you can. After identifying your top surcharges, think about which ones are controllable and which are not. Then focus on making adjustments and controlling what you can. As a shipper, you can’t change where your customers are located, so remote area surcharges aren’t easily avoidable. However, there are plenty of aspects of shipping that you can control. Look for those opportunities, and act on them to save money.

Learn how to avoid getting charged double. Shippers are often surprised to learn that fuel surcharges can be applied to many other accessorials. That means if a shipment incurs both a residential surcharge and an oversized delivery surcharge, fuel will be applied to both — once for the residential surcharge and once for the oversized package. Preventing all avoidable accessorial charges is necessary to ensure that multiple fees aren’t assigned to individual deliveries.

Negotiate reduced charges as you grow. As shippers grow over time and increase their shipping volumes, they gain more power to negotiate a reduction in charges. This is something you should do regularly, by working with carriers to minimize expenses for both. Of course, when discounts are applied and delivery charges don’t follow published shipping fee tables, it becomes even more important to watch invoices closely, and verify that you understand charges and that they’re correct.

Fuel and other surcharges assigned by carriers can greatly impact online businesses. Taking appropriate steps to manage shipping costs can help online retailers avoid extra costs and provide better and more affordable experiences for customers.

Jeff Macak is chief operating officer at Via.Delivery.

RELATED CONTENT

RELATED VIDEOS

Wake up to live
“Supply Chains in Crisis”
updates and the latest Supply Chain News!

Subscribe to our Daily Newsletter

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • FedEx

    Can Rival Shippers Join Forces to Optimize Transportation?

    Logistics
  • This Uber-Like Solution for Trucking Grains Could Optimize U.S. Agriculture

    Supply Chain Data Is Key to Solving Global Food Crisis

    Supply Chain Security & Risk Mgmt
  • data

    Podcast | Quantum Computing for the Supply Chain: Is It Here Yet?

    Technology
  • code

    Achieving True Visibility Through a Supply Chain Control Tower

    Data Management (Big Data/IoT/Blockchain)
  • food warehouse

    Surging Retail Inventories Are Swamping U.S. Warehouses

    Transportation & Distribution

Digital Edition

Scb august 2022 sm

100 Great Supply Chain Partners of 2022

VIEW THE LATEST ISSUE

Case Studies

  • Returns Management SaaS Saves Retail Giant $4 Million Monthly

  • 3PL Doubles Productivity With Robots to Fulfill Medical Supply Orders

  • E-Commerce Company Cuts Order Fulfillment Time by 40%

  • Fashion Retailer Halves Fulfillment Time With Omichannel Automation

  • Distributor Scales Business by Integrating Warehouse Automaton Software

Visit Our Sponsors

Yang Ming Alithya Barcoding
Blue Yonder BNSF Logistics CoEnterprise
Data Capture E2open Generix
Geodis GEP GreyOrange
Here Honeywell Intelligrated IFM
Inmar Keelvar Kinaxis
Korber Liberty SBF Locus Robotics
Logility Lucas Systems Nvidia
Old Dominion ORTEC Parsyl
PMMI QIMA Redwood Logistics
Ryder E-commerce by Whiplash Saddle Creek Logistics Schneider Dedicated
Setlog Holding AG Ship4WD Shipwell
Tecsys TGW Systems Thomson Reuters
Tive Trailer Bridge Vecna Robotics
Verity Verusen  
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2022 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing